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As competitiveness heats up, Tesla Inc. has released two lesser specification models of its less widely popular Model S as well as Model X electric cars to the United States and Canadian market, cutting their cost by ten thousand dollars.

Compared to the base models, the more affordable variants have a little shorter range and slower acceleration. As per the automobile giant’s website, the ‘Standard Range’ Model S sedan has a price of 78,490 USD, whereas the less expensive Model X sport utility is priced at 88,490 USD.

Just under five per cent of Tesla’s shipments in the second half were of the Tesla Model S and X, which represent a small portion of the company’s revenues. The S and X do not receive any price reductions, which lessens the appeal of them. In contrast to the 3 and Y, which are qualified for a 7,500 dollars US tax credit.

Elon Musk, the company’s chief executive officer, indicated in July that if interest rates kept rising, Tesla was going to keep cutting its pricing and that he was prepared to give up more profit to increase production and sales.

The cost of Tesla’s higher-spec Model Ys in China was reduced on Monday by 14,000 yuan which is approximately $1,900, raising fears of a fresh pricing war in the fiercely competitive Chinese market.

A competing attempt by Tesla to lower pricing once further in China’s mainland caused shares to fall up to as 3 per cent in early Monday trade.

Shares somewhat recovered from their initial losses to trade in the red, finishing Monday down about 1.2 per cent. The company made the announcements late on Sunday night in a Weibo post.

Sold at 299,000 & 349,000 yuan in China, two Model Y crossovers from Tesla have been marked down by 14,000 yuan, or almost two thousand dollars.

A limited-time insurance subsidy for the Model 3 will be available for 8,000 yuan, which is approximately 1,100 dollars. According to Tesla’s statement, the insurance subsidy will keep running through the end of September.

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The second half of 2023 saw a fierce pricing battle between Tesla and indigenous Chinese automakers including BYD, Nio, as well as Xpeng that severely reduced Tesla’s profit margins. Even as it increases output in its Shanghai Gigafactory, Tesla has fallen behind domestic rivals.

Tesla reduced pricing numerous times in 2022 and 2023 to reduce inventory and increase delivery, the closest estimate of sales the firm provides.