January 27, 2023

Brighton Journal

Complete News World

Tesla extends price cuts to the US and Europe to help drive sales

  • Tesla cuts prices in the US and Europe by up to 20%
  • The move followed cuts across Asia last week
  • Some models are now eligible for US tax credits
  • Model 3 price in Germany in line with Volkswagen ID 3

Jan 13 (Reuters) – Tesla (TSLA.O) It slashed the prices of its electric cars in the United States and Europe, the company’s website shows, extending a new aggressive discounting strategy after missing Wall Street estimates for deliveries.

The US price cuts, announced late Thursday US time on the Model 3 sedan and Model Y crossover, ranged between 6% and 20% over pre-rebate prices, according to Reuters calculations.

This was before accounting for up to $7,500 in federal tax credits that went into effect for several electric vehicle models at the beginning of January.

Tesla also lowered the prices of its Model X luxury crossover SUV and Model S sedan in the United States.

In Germany, it cut prices on the Model 3 and Model Y – its global best sellers – by between 1% and approximately 17% depending on the configuration. Prices have also been reduced in Austria, Switzerland and France.

For a US buyer of the long-running Model Y, Tesla’s new price combined with the US subsidy that went into effect this month represents a 31% discount. Additionally, Tesla’s move expanded the vehicles in its lineup that qualify for a Biden administration tax credit.

Prior to the price cut, the five-seat version of the Model Y was ineligible for this credit, a designation Tesla CEO Elon Musk called “absurd.” After the price cut, the long-running version of the Model Y will qualify for a $7,500 federal credit.

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Combined with price cuts announced last week in China and other Asian markets, the move marks a reversal in Tesla’s largest market of the strategy it has pursued through most of 2022, when demand was strong and average selling prices for its electric cars were trending higher.

“This should really drive up Tesla sales volumes for 2023,” Gary Black, a Tesla investor who has remained bullish about the company and its prospects through a recent sharp drop in share prices, said in a tweet. “It’s the right move.”

However, some users on online Tesla fan forums have complained about price cuts for disadvantaged customers who have recently purchased their car, leaving them with a low-value item in the used car market.

“I’m not very happy with these huge price fluctuations. Just a €10,000 discount like that – it definitely makes you feel like you paid way too much,” a user wrote on the Tesla Drivers and Friends forum on Friday.

In China, where Tesla cut prices last week by 6-13.5%, owners have protested at delivery centers across the country, pressing Tesla for compensation.

Prior to the price cut, Tesla stock in the US, according to models whose website shows them available immediately, was trending higher. The prices of used Tesla models have also fallen, increasing pressure on them to adjust sticker prices for new cars.

Reuters graphics

New sales leadership

The shift is Tesla’s first major move since hiring Chief Executive Officer Tom Chu for China and Asia to oversee production and sales in the United States.

Tesla cut prices in China and other Asian markets last week. Combined with previous price cuts announced in October and recent incentives, the Chinese price of the Model 3 or Model Y fell 13% to 24% from September after the latest move, Reuters calculations show.

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Tesla also cut prices in South Korea, Japan, Australia and Singapore.

Analysts said China’s price cuts will boost demand and put more pressure on its competitors there, including BYD (002594.SZ)to follow suit in what could become a price war in the largest single market for electric vehicles.

This pressure could build in Europe as well.

Tesla’s Model 3 was the best-selling electric car in Germany last month, followed by the Model Y, beating Volkswagen’s. (VOWG_p.DE) ID.4 fully electric. Volkswagen recently raised the price of its entry-level ID 3, putting it on par with the now-discounted Model 3.

Tesla missed Wall Street’s estimates for fourth-quarter deliveries. Growth in deliveries for the full year was 40% – also below Musk’s forecast of 50% growth.

Last month, Musk said that “dramatic changes in interest rates” had changed the outlook for the industry and that Tesla could cut prices to sustain volume growth, which could lead to lower earnings.

Tesla stocks are under pressure

Additional reporting by Victoria Waldersee in Berlin, Zhang Yan in Shanghai, Hyunjoo-jin in Seoul and Kevin Krolicki in Singapore; Editing by Lincoln Feast, Kenneth Maxwell and Mark Potter

Our standards: Thomson Reuters Trust Principles.