Elon Musk cuts Tesla Model S base price to $69,420

The base Tesla Model S will now retail for $69,420, CEO Elon Musk said in a tweet Tuesday, announcing that the "gauntlet has been thrown down" in response to Lucid's announcement that its 406-mile Air sedan would be priced to compete with Tesla's larger sedan. It's the sex number and the weed number. Get it?

Obvious juvenile sense of humor aside, the price also recalls a few of Musk's prior Twitter shenanigans. In July, Tesla sold a set of "Short Shorts" with “S3XY” (a play on the word sexy, made up of Tesla's model names) written in gold across the seat. Their price? $69.420. Why the extra digit? Those last three numbers referred to Musk's 2018 tweet about taking Tesla private at $420 a share, which ended up in a massive fine from the SEC and Musk being removed as Tesla chairman. It's funny though, right?

Tesla shares closed 3.3% higher at $461.30 on Wednesday and were little changed after hours.

While Musk's announcement may seem somewhat reactionary, the Model S had already experienced a fresh price cut. Tesla on Tuesday dropped the base price of its Model S "Long Range" sedan to $71,990 from $74,990 in the United States. It also trimmed the starting price of Model S by 3% in China. Earlier this month, the carmaker cut the starting price of its Chinese-made Model 3 sedans by about 8% to 249,900 yuan ($36,805).

And it's not just Lucid. 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.

Tesla's Model S was introduced in 2012, but in recent years the car has faced competition from the company's own less expensive, mass-market Model 3 sedan, launched in 2017, which currently starts at $37,990 in the U.S. The Model S makes up only around 5% of Tesla's unit volume, according to a Credit Suisse analyst note on Wednesday.

The $71,990 list price was still live on Tesla's consumer website as of early Wednesday evening; $69,420 would be a 7.4% cut in base price from the previous $74,990, which is great for new customers — but not so great for Model S resale value.

Material from Reuters was used in this report.