Tesla Inc (NASDAQ:TSLA) CEO Elon Musk on Sunday explained the temporary price cut on its best-selling Model Y SUV as an attempt to increase vehicle deliveries despite the seasonal lull in demand.

What Happened: "Since most people don't love to buy cars in the middle of winter, Tesla is offering a $1000 incentive to do so," Musk said on X.

While factories need continuous production for efficiency, consumer demand is seasonal, Musk said, adding that it is the 'essential quandary' of manufacturing.

Temporary Price Cut: Tesla cut $1000 on the starting price of the rear-wheel drive (RWD) and long-range versions of the Model Y over the weekend. The price cut, the first in the U.S. since the start of 2024, leaves the Model Y RWD starting at $42,990 and the Long Range variant of the vehicle with a starting price of $47,990.

However, these price cuts are temporary and only applicable through February 29. "Prices will increase by $1,000 or more on March 1," Tesla says on its website, warning of possible price hikes with no set upper limit at the onset of spring.

Musk's post explaining the company's rationale behind the price cut seeks to quash the multiple rumors that emerged after the price cut, including speculations that the company is looking to clear existing inventory before launching a refreshed Model Y.

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