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The
cut is Tesla's second this week for the high-end sedan,
following a 4% cut to $71,990 on Tuesday.
Tesla shares closed 3.3% higher at $461.30 on Wednesday and were
little changed in after-hours trade.
The company also on Tuesday reduced by 3% the price of its Model
S in China, where it had previously cut the starting price of
its Model 3 sedan.
The starting price for Model S is now a thousand times that of a
pair of red satin shorts that Tesla started selling in July for
"$69.420" to poke fun at the company's naysayers.
Tesla introduced its Model S in 2012, but in recent years the
car has faced competition from the automaker's less expensive,
mass-market Model 3 sedan, launched in 2017, which currently
starts at $37,990. The Model S makes up only around 5% of
Tesla's unit volume, said a Credit Suisse analyst in a client
note on Wednesday.
The analyst said the Model S price reduction was likely in
response to price cuts by electric vehicle startup Lucid Motors,
which sells its luxury sedan Air model at a starting price of
$69,900. That includes a $7,500 U.S. government electric vehicle
tax credit, for which Tesla vehicles are no longer eligible.
The price cuts also come as competition in the electric vehicle
market - long dominated by Tesla - heats up, with several
automakers launching new electric vehicles next year.
Germany's Daimler AG <DAIGn.DE> is scheduled to release an
electric version of its Mercedes-Benz S-class luxury sedan, the
EQS, next year. Analysts expect the EQS to be significantly more
expensive than the Model S, however, with the latest version of
the gasoline-powered S-class retailing at more than 100,000
euros ($117,500).
(Reporting by C Nivedita in Bengaluru, Tina Bellon in New York
and Yilei Sun in Beijing; Editing by Matthew Lewis and
Christopher Cushing)
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