- Tesla cuts prices in the US, Europe up to 20%
- The move follows a drop in prices across Asia last week
- Some models now qualify for US tax credits
- Model 3 price in Germany in line with Volkswagen ID.3
Jan 13 (Reuters) – Tesla ( TSLA.O ) cut the prices of its electric vehicles in the United States and Europe by up to 20%, extending an aggressive discounting strategy after missing estimates of Wall Street for 2022 deliveries.
The move, which triggered a 3.8% drop in Tesla shares in Frankfurt, came after CEO Elon Musk warned that the prospect of a recession and higher interest rates meant they could lower the – vehicle prices to support volume growth at the expense of profit.
The lower price in Tesla’s main markets marks a reversal from the strategy the automaker had followed through much of 2021 and 2022 when orders for new vehicles outstripped supply. Musk acknowledged last year that prices had become “embarrassingly high” and could hurt demand.
The US price cuts, announced late Thursday US time on the Model 3 sedan and Model Y crossover SUV, ranged between 6% and 20% compared to prices before discount, according to Reuters calculations.
That’s before a federal tax credit of up to $7,500 that went into effect for many electric vehicle models in early January.
Following is a table of price reductions by model in Germany and the United States:
Tesla also cut prices for 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 about 1% and almost 17% depending on the configuration. It also reduced prices in Austria, Switzerland and France.
For a long-term US buyer of the Model Y, Tesla’s new price plus the US subsidy that took effect this month amounts to a 31% discount. In addition, the move Tesla expanded the vehicles in its line eligible for the tax credit of the Biden administration.
Before the price cut, the five-seat version of the Model Y was ineligible for that credit, a name Musk had called a “mess up.” After the price cut, the long-term version of the Model Y qualifies for the federal credit of $7,500.
“This should really boost 2023 (Tesla) volumes,” said Gary Black, a Tesla investor who has remained bullish on the company and its prospects through the recent sharp decline in the share price. , in a tweet. “It’s the right move.”
Still, some users on online Tesla fan forums complained that the price cut disadvantaged customers who recently purchased their vehicle, leaving them with a lower-value item in the auto market. used.
“I’m not very happy with these big price changes. Just 10,000 euros off like that – sure makes you feel like you’ve paid too much,” wrote one user on the ‘Tesla Drivers and Friends’ forum on Friday.
In China, where Tesla cut prices last week by 6-13.5%, owners protested at delivery centers across the country, pressing Tesla for compensation.
Before the price reduction, Tesla’s inventory in the United States, as followed by the models that its website shows are immediately available, was trending higher. Prices on used Tesla models have also been falling, increasing pressure on it to adjust the sticker prices of new cars.
For 2021, the United States and China together would account for about 75% of Tesla’s sales, although the automaker has been increasing sales in Europe, where its Berlin factory production is increasing.
NEW SALES LEADERSHIP
The change is the first major move by Tesla since it appointed its chief executive for China and Asia, Tom Zhu, to oversee US production and sales.
Tesla cut prices in China and other Asian markets last week. Along with previous price cuts announced in October and recent incentives, the Chinese price for a Model 3 or Model Y has fallen 13% to 24% since September after the recent move, Reuters calculations showed.
Tesla also reduced prices in South Korea, Japan, Australia and Singapore.
Analysts had said the drop in Chinese prices would boost demand and increase pressure on its rivals there, including BYD ( 002594.SZ ), to follow suit in what could become a war of -prices in the largest single market for electric vehicles.
That pressure may be building in Europe as well.
Tesla’s Model 3 was the best-selling electric vehicle in Germany last month, followed by the Model Y, which beat Volkswagen’s ( VOWG_p.DE ) all-electric ID.4. 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 estimates for fourth quarter deliveries. Full-year growth in shipments was 40% – also lower than Musk’s own forecast of 50%.
Reporting by Zhang Yan in Shanghai, Hyunjoo Jin in Seoul, Victoria Waldersee in Berlin; Writing by Kevin Krolicki in Singapore; Editing by Lincoln Feast, Kenneth Maxwell, Mark Potter and Alexander Smith
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