- Tesla cuts prices by up to 20% in the US and Europe
- Move follows cuts across Asia last week
- Some models now qualify for US tax credits
- Price of the Model 3 in Germany based on Volkswagen’s ID.3
Jan 13 (Portal) – Tesla (TSLA.O) has slashed prices for its electric vehicles in the United States and Europe, the automaker’s website shows, expanding a new strategy of aggressive discounting after Wall Street estimates for deliveries failed to materialize were.
U.S. price cuts, announced late Thursday U.S. time for the Model 3 sedan and Model Y crossover SUV, ranged from 6% to 20% compared to pre-cut prices, according to Portal calculations.
This is before factoring in a tax credit of up to $7,500 that went into effect on many electric vehicle models in early January.
Below is a table of price reductions by model in Germany and the United States:
Tesla also lowered prices on its Model X luxury crossover SUV and Model S sedan in the United States.
In Germany, it lowered the prices for the Model 3 and the Model Y – its top global sellers – by between around 1% and almost 17%, depending on the configuration. Prices were also reduced in Austria, Switzerland and France.
For a US buyer of the long-haul Model Y, the new Tesla price combined with the US promotion effective this month results in a 31% discount. In addition, the Tesla move expanded the vehicles in its lineup that are eligible for the Biden administration’s tax credit.
Prior to the price cut, the five-seat version of the Model Y was ineligible for that credit, a designation Tesla CEO Elon Musk had described as a “mess.” After the price cut, the long-haul version of the Model Y will qualify for the $7,500 federal loan.
Taken together with price cuts announced in China and other Asian markets last week, the move marks a reversal of the strategy Tesla followed for much of 2022, when demand was strong and average selling prices for its electric vehicles trended higher, in Tesla’s largest markets.
“This should really boost volume in 2023 (Tesla),” Gary Black, a Tesla investor who is bullish on the company and its prospects during the recent sharp decline, said in a tweet. “It’s the right move.”
Still, some users on online Tesla fan forums complained that the price cuts disadvantaged customers who recently bought their vehicle, giving them a lower-value item in the used-car market.
“I am not very pleased with these huge price fluctuations. Just dropping $10,000 like that – it definitely makes you feel like you just paid way too much,” wrote one user on a Tesla Drivers and Friends forum on Friday.
In China, where Tesla cut prices 6-13.5% last week, owners in delivery centers across the country protested, urging Tesla to seek compensation.
Prior to the price cut, Tesla inventory in the United States, as tracked by the models listed as available immediately on its website, was trending higher. Prices for used Tesla models were also down, adding pressure on Tesla to adjust new car decal prices.
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The move is Tesla’s first major step since appointing its China and Asia chief executive Tom Zhu to oversee U.S. production and sales.
Tesla cut prices in China and other Asian markets last week. Coupled with previous price cuts announced in October and recent stimulus, the Chinese price of a Model 3 or Model Y has fallen 13% to 24% since September, Portal calculations showed.
Tesla has also reduced prices in South Korea, Japan, Australia and Singapore.
Analysts had said the Chinese price cuts would boost demand and put pressure on its rivals there, including BYD (002594.SZ), to follow suit in a potential price war in the single largest electric vehicle market.
This pressure could also build up in Europe.
Tesla’s Model 3 was the best-selling electric vehicle in Germany last month, followed by the Model Y, which beat Volkswagen’s all-electric ID.4 (VOWG_p.DE). Volkswagen recently raised the price of its entry-level ID.3 model, bringing it in line with the now reduced Model 3.
Tesla missed Wall Street estimates for fourth-quarter deliveries. Full-year shipment growth was 40% — also below Musk’s own forecast of 50% growth.
Last month, Musk said “radical interest rate changes” had changed the industry-wide outlook and that Tesla could cut prices to maintain volume growth, resulting in lower earnings.
Tesla stock under pressure
Reporting by Victoria Waldersee in Berlin, Zhang Yan in Shanghai, Hyunjoo Jin in Seoul and Kevin Krolicki in Singapore; Edited by Lincoln Feast, Kenneth Maxwell and Mark Potter
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