In a bid to counteract dwindling sales, Tesla has slashed prices of some of its most sought-after models. The price reductions began in the US, impacting the Model Y, Model X, and Model S, and were swiftly extended to China and Germany.
In the US, the Model Y’s starting price has been reduced to $42,990, a saving of $2,000. The Model S and Model X have also seen price reductions, now starting at $72,990 and $77,990, respectively.
China’s Model 3 has experienced a significant price drop of 14,000 yuan ($1,930), bringing its starting price to 231,900 yuan ($32,000). Germany has also seen price cuts, with the Model 3 now starting at €40,990, a reduction of €2,000.
Tesla’s price adjustments come amid fierce competition from Chinese electric vehicle manufacturers, who are rapidly gaining ground in markets once dominated by Tesla. Additionally, Elon Musk’s focus on driverless Robotaxis may have hindered the progress of the more affordable Model 2, which could have better positioned Tesla to compete with its Chinese rivals.
Tesla’s price reductions have continued in other regions, including Europe, the Middle East, and Africa. The company has also reduced the subscription cost of its Supercharger network in the UK to attract more users.
These price changes coincide with Tesla’s announcement of a 10% global workforce reduction in an effort to cut costs and streamline operations. As a result, Tesla’s stock price has fallen below $150, a significant decline from its peak in December last year.
Elon Musk has a history of implementing price cuts to stimulate competition and reduce inventory. Notably, he initiated a price war in China last year by slashing Tesla prices by nearly 50%. Now, Li Auto Inc. has responded to Tesla’s Model 3 price drop by reducing the price of its L7 five-seat SUV, even extending the new price to recent customers and offering cash rebates to existing owners.
Tesla is exploring various strategies to increase revenue following disappointing delivery figures at the beginning of the year. In the US, the company halved the cost of its Full Self-Driving subscription to attract new users and generate additional revenue.
Tesla’s actions have raised concerns among investors, who will likely question Elon Musk about the company’s strategy and financial performance during the upcoming Q1 earnings announcement.
