Tesla global price cuts to spur demand

Tesla global price cuts to spur demand amidst economic slowdown

Tesla Inc., the leading electric vehicle (EV) maker, has taken steps to make price cuts for its EVs in the US, Europe, and Asia, as it seeks to boost demand for its products amidst an economic slowdown. The price cuts are expected to increase sales volumes and profitability as the company competes with other car manufacturers. Tesla’s price cuts are part of its discount drive to increase sales volumes in key markets such as China, Japan, South Korea, the US, Germany, and France.

Tesla’s China price cuts and the impact on sales

In January, Tesla reduced prices for all versions of its Model 3 and Model Y cars in China by between 6% and 13.5%, according to Reuters calculations. The price cuts were intended to stimulate demand as the company faced a demand slowdown due to growing recession fears. In February, the carmaker raised prices of the performance and long-range versions of its Model Y mid-size sport utility vehicles (SUV) in China. The increase was the second such rise, and starting prices for the two versions of Model Y increased by 2,000 yuan each to 311,900 yuan ($44,983.20) and 361,900 yuan. The long-range Model Y is 13% less expensive than it was before the price decreases, while the performance model is still 9% less expensive. From a five-month low in December, Tesla’s sales of electric vehicles built in China increased by 18% in January. Sales climbed by 12.6% in February.

Tesla’s US price reductions and the impact on sales

The company’s US price cuts on its global top-sellers, the Model 3 sedan, and Model Y crossover SUV, ranged between 6% and 20%, according to Reuters calculations. Tesla’s efforts to reduce the prices of its EVs in the US led to an increase in sales volumes, making it one of the most popular EV brands in the country. Tesla raised the price of the Model Y at least three times after the initial price cuts. However, Model Y is about 16% cheaper than it was in early January for US customers. The company also cut prices for its Model X luxury crossover SUV by 9% and the Model S sedan by 4% in the US.

Tesla’s price cuts in other countries and the impact on sales

In Japan, Tesla cut the prices of its Model 3 and Model Y cars by about 10% each for the first time since 2021. The price for the Model 3 rear-wheel drive version is now 5.369 million yen ($39,501.18), down from 5.964 million yen. Tesla’s price cuts in South Korea ranged from about 6 million won to 10 million won ($7,702.74) for different models. On the company’s website, the base Model 3 rear-wheel drive was offered for 64.34 million won ($50,637). Depending on the configuration, Tesla decreased the price of the Model 3 and the Model Y in Germany by anywhere between 1% and approximately 17%. Customers in France who are purchasing the Model 3 for 44,990 euros ($47,860.36) will now receive a further price reduction of 5,000 euros in the form of a government rebate. The maximum limit for the EV program is 47,000 euros.

Tesla’s price cuts in key markets such as China, Japan, South Korea, the US, Germany, and France are expected to boost sales volumes and profitability in the long run.