Because they are trying to capture the market, obviously.

Nobody is going to pay the same price for a significantly worse model. If your competitor brings out a better model at the same price point, you either a) drop your price to attract a new low-budget market, b) train a better model to retain the same high-budget market, or c) lose all your customers.

You have taken on a huge amount of VC money, and those investors aren't going to accept options A or C. What is left is option B: burn more money, build an even better model, and hope your finances last longer than the competition.

It's the classic VC-backed startup model: operate at a loss until you have killed the competition, then slowly increase prices as your customers are unable to switch to an alternative. It worked great for Uber & friends.