Tesla Already Dropping Prices on Model 3 & Cybertruck in 2025 – CleanTechnica

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We reported during most of 2024 that Tesla seemed to be facing a consumer demand problem. Tesla superfans did not like that and claimed we were wrong and irrationally hating on Tesla. As it turned out, Tesla’s sales dropped in 2024 year over year — far off of the company’s plan to grow 50% a year, on average, throughout the 2020s. Why did it seem to me that sales were not going to be great and that Tesla sales could even decline? Simple: because Tesla kept dropping prices and offering more and more incentives, including repeatedly offering significant incentives Elon Musk said they’d only offer once.

Those incentives and price cuts were often implemented in the latter half of the quarter when Tesla was trying to accelerate the movement of cars off the lot and into new homes. While Tesla has offered different incentives and price cuts for years at the end of quarters for this purpose, they seemed to be getting bigger and bigger as well as more frequent and more heavily pushed by Tesla.

What we didn’t see much of was big new incentives popping up in the first half of quarters … until now.

First of all, note that Tesla is now suddenly offering $2,500 referral bonuses for new Tesla Model 3 buyers. $2,500 is already a significant discount, but Tesla also recently dropped prices on the Model 3. For both the AWD version and the RWD version, the lease price has been cut by $50/month. Across 5 years, that would be $3,000. So, you could say that we’re looking at $5,500 in discounts on the Model 3! Or, if you consider there was already a $1,000 referral bonus option, it’s a further $4,500 discount over the default.

The Model 3 Long Range RWD went from $299/month to $249/month, while the Model 3 Long Range AWD went from $399/month to $349/month. None of this is a sign of strength or overflowing demand.

The Cybertruck, meanwhile, went from $899/mo to $749/mo. Clearly, the demand for this truck isn’t anywhere close to where it was hyped for years. More than a million “reservations” have gone poof.

Elon Musk is basically betting the house on a robotaxi grand slam. He’s convinced that Tesla will have commercially viable robotaxis on the road by the end of the year, and R&D plus AI operating costs are burning through the operations budget to make that happen. Then again, Musk has been convinced Tesla would achieve this within 6–18 months for more than 7 years. So, who knows if Tesla robotaxis are actually around the corner this time or not? However, at this point, I think it’s getting to a critical point. Tesla needs robotaxi capability in order to juice sales again. The lineup, otherwise, seems to have maxed out when it comes to consumer demand. Sales have been dropping — not just in 2024, but also in January. Perhaps that is in large part in anticipation of the new Model Y and a lower cost “Model Q,” but it seems at least as likely that the dropping sales are due to Elon Musk’s involvement in politics (which goes far outside the norm) and growing competition from other automakers that are rolling out new EV models and updates more frequently than Tesla.

If sales continue to drop, average selling price continues to drop from Tesla trying to attract new buyers, and Tesla’s operating expenses continue to grow, Tesla could find itself in territory it hasn’t been in for years — unprofitable quarters. That’s a bit extreme to assume at this point, given that the company made $8.4B in non-GAAP net income in 2024 and $2.6B in Q4. However, it’s definitely something to keep an eye on, as it is a possibility. Tesla’s automotive revenue declined from $21.6 billion to $19.8 billion in Q4 2024 versus Q4 2023, and declined from $82.4 billion to $77 billion in 2024 vs. 2023. Another ~$2 billion decline in quarterly revenue could make Tesla barely profitable.

What happens with Tesla sales trends in 2025 could be massive, especially if Tesla’s AI and robotics bets don’t pay off as quickly as hoped. A rebound in sales could mean all is great in Tesla World. A continued decline in sales could lead to unprofitable quarters for Tesla again and a serious shakeup and disruption of its long-term story. Which do you think is more likely?