Tesla Inc TSLA.O will further cut the price of its Model S “Long Range” sedan in the United States to $69,420, the electric carmaker’s chief executive, Elon Musk, announced in a tweet bit.ly/2H0JCP0 on Wednesday.
Tesla shares closed 3.3% higher at $461.30 on Wednesday and were little changed after hours.
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 gauntlet has been thrown down! The prophecy will be fulfilled. Model S price changes to $69,420 tonight!” Musk tweeted.
Tesla’s Model S was introduced in 2012, but in recent years the car has faced competition from the company’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, according to a Credit Suisse analyst note on Wednesday.
The analyst said 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, which Tesla vehicles are no longer entitled to.
The price cuts also come as competition in the electric vehicle market – long dominated by Tesla – heats up, with several carmakers 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. The EQS is expected 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).