To increase customer demand, Tesla has reduced the price of some of its most popular electric vehicles by thousands of pounds in Europe and the United States.
The company faces a challenging global economic environment and rising competition from other automobile manufacturers.
In the United Kingdom, the price reductions range between 10% and 13%, although they can reach as high as 20% on select American models.
New UK purchasers will save £5,500 on the Model 3 base model and £7,000 on the Model Y base model.
Last year, however, over 16,000 consumers purchased these best-selling models, and some were upset that they had spent more.
One Tesla owner remarked on a Facebook group: “I just acquired the vehicle yesterday. What am I to do? Go to Tesla and return the vehicle? I cannot believe I lost £5,000 within a few hours of picking up the car “.
Tesla received a similar response from Chinese customers after announcing price decreases last week.
On the weekend, dissatisfied Tesla owners gathered outside distribution centers in Shanghai and other cities to demand compensation.
Tesla has dropped pricing in China twice in the past six months, and they are now 13% to 24% lower than they were in September.
Ill-feeling
To prevent similar concerns in the United States and Europe, Tesla announced that customers who had ordered their vehicle but had not yet received it would be charged the new, lower price.
Ginny Buckley from the electric vehicle marketplace Electrifying.com stated that the price drops were still controversial and would “send shockwaves” throughout the industry because Tesla was shifting from a premium to a mass product.
Paul Hollick, chairman of the Association of Fleet Professionals, praised the price reductions, stating that they will make electric vehicles more accessible for his members. However, he stated that the “chaotic marketing” was not good news.
“A move of this nature inevitably generates negative feelings. The corporation would do well to implement some form of compensation “he remarked.
In recent years, electric car manufacturing has expanded fast from a niche premium brand to a mass-market manufacturer.
However, there are obstacles.
Slowing global growth, increased loan rates, and rising competition from more established automakers and Chinese brands all pose threats to its progress.
When demand for Tesla automobiles greatly exceeded supply, Elon Musk was able to maintain pricing at “embarrassing levels.”
But in a world where more electric car makers will compete for a shrinking buyer pool, it can no longer afford to do so if it wishes to continue expanding.
James Baggot, editor-in-chief of Car Dealer Magazine, stated that the decision will have a significant influence on used Tesla values, which had already decreased by more than a fifth in the previous year.
The cheapest new Tesla Model 3 in the United Kingdom now costs £42,990. Model Y automobiles start at £44,990.
Significant obstacles
The increasing demand for electric vehicles has been fueled by growing gasoline prices and customer worries about climate change.
In the United Kingdom, electric vehicles accounted for nearly one-fifth of new vehicle sales in 2017.
Elon Musk, though, conceded last year that the costs for new Teslas had become “embarrassingly high” and may hurt demand.
In 2022, global Tesla deliveries increased by 40%, which was below market estimates.
That was a further blow to the company’s share price, which plunged more than 65 percent over the course of the whole year — its worst year since coming public in 2010.
The huge decline in share price diminished Mr. Musk’s fortune, displacing him as the world’s richest individual.
Last year, Tesla faced “major hurdles,” including a lack of semiconductors, rising energy costs, and continuous Covid-related outages, according to the company.
Nonetheless, the company stated that its emphasis on “original engineering and production techniques” and a recent “normalization” of some of the cost inflation had enabled it to pass on savings to customers.
Tesla, like other automakers, faces the possibility of a decline in vehicle demand as consumers contend with increased financing rates and fears of an economic recession.
After the news of the price decrease, Tesla’s stock plummeted again, as investors expected that reduced pricing would eat into earnings.
However, Wedbush analyst Dan Ives described the action as a “shot across the bow” to Tesla’s competitors. implying that Tesla “will not play well in the sandbox now that an EV price war has begun.”
