Tesla cuts prices in the United States and Europe to boost sales

Tesla cuts prices in the United States and Europe to boost sales

Tesla cuts prices in the United States and Europe to boost sales

Electric vehicle maker Tesla is cutting prices again in the United States and across Europe, according to announcements posted on the company’s website late Thursday in the United States.

You’re here did not respond to a request for comment on what motivated him to cut prices this week.

However, the U.S. move could help Tesla qualify for more federal electric vehicle tax credits and boost sales volume here and abroad, after competition and rates increase. of interest.

In Europe, Tesla has cut prices for its Model 3 and Model Y vehicles in Austria, France, Germany, the Netherlands, Norway, Switzerland and the UK

Reuters reported that in Germany, Tesla has reduced Model 3 and Model Y prices by 1% to around 17%, depending on configuration. Tesla’s Model 3 was the best-selling electric vehicle in Germany in December 2022, followed by the Model Y. The company beat volkswagen and its popular ID.4 electric vehicle in Germany.

Tesla’s Model 3 at its reduced price is comparable to Volkswagen’s entry-level electric car, the ID.3.

According to independent electric vehicle industry researcher TroyTeslike, the price of a new Tesla Model 3 in the United States has fallen by 6% to 14%, depending on configuration, and the cost of the Model Y has dropped by around 19%, also depending on the configuration. .

The Model 3 is Tesla’s entry-level sedan. The Model Y is classified by some as a sport utility vehicle and others as a crossover. The company also lowered the prices of its more expensive vehicles, the Model S sedan and the hawk-winged Model X SUV in the United States.

Generally, electric vehicles are eligible for tax credits in the United States, depending on the form factor or category they fall into, their efficiency and range (i.e. say how many miles they can travel on a fully charged battery) as well as the manufacturers’ suggested retail price. .

The U.S. government has delayed establishing new rules on the sourcing of raw materials and battery components to allow automakers to qualify for a $7,500 clean vehicle tax credit until at least end of March 2023.

This means that Tesla – and other electric vehicle makers – can for now buy critical parts and minerals from suppliers around the world, while benefiting from certain subsidies for electric vehicles. Those seeking to qualify for federal grants must complete final assembly of their electric cars in North America under current interim rules.

Tesla’s latest round of rebates could allow the company to reap the benefits of electric vehicle tax credits in the short and long term. But it also risks upsetting customers who have just agreed to take delivery of new electric cars from Tesla before the end of 2022 at higher prices.

Earlier this month Tesla angered customers in China by slashing the prices of its Model 3 and Model Y cars there after many agreed to take delivery at higher prices by December 31. Some of the customers have staged protests and demanded discounts, but so far Tesla has not backed down, according to a Reuters report.

In late December, Tesla discounted its Model 3 and Model Y cars by about $7,500 to entice customers to take delivery before the end of the fourth quarter. Tesla also offered select US customers 10,000 free charging miles (at Tesla Supercharge stations) if they agreed to take delivery before the end of the year.

Despite the discounts, in the fourth quarter of 2022, Tesla reported deliveries of 405,278 vehicles and production of 439,701 vehicles. The company had told shareholders to expect annual vehicle shipment growth of 50% over a multi-year horizon, but fell short of that annual target and analysts’ expectations in the fourth quarter.

Tesla now operates its first U.S. vehicle assembly plant in Fremont, California, a newer one in Austin, Texas, its first overseas plant in Shanghai, and a newer one in Gruenheide, Germany.

The company’s production capacity is expected to be much higher in 2023 than in previous years with these factories, but bearish analysts have expressed concerns about a possible “demand cliff”.

Tesla now faces more competition, higher interest rates and slower consumer spending than in recent years, Bernstein analysts wrote in a Jan. 12 note.

They said, “We believe many investors underestimate the magnitude of the demand challenges Tesla faces.” However, the company had an “underperforming” rating and a $150 price target on Tesla stock after the company’s stock price declined in recent months.

CEO Elon Musk sold billions of dollars of his Tesla shares last year, in part to fund a leveraged buyout of Twitter for about $44 billion. Since taking over Twitter and taking over as CEO in late October, Musk has split his time and some resources between the social media industry and his electric car company.

Tesla plans to release its fourth quarter 2022 results on January 25, 2023 and is expected to share its new outlook for the year ahead then.

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