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The price of Tesla's electric vehicles has been slashed in Europe and the US due to a new strategy of aggressive discounting, according to Automotive News Europe. It came after CEO Elon Musk warned on Friday that the prospect of a recession and higher interest rates meant that he might reduce car prices.
This would enable him to maintain sales growth at Tesla, which sent Tesla shares down 3.8 percent in Frankfurt on Friday to the detriment of profit. As a result of the lower prices Tesla is now offering in most of its major markets, the company is reversing the strategy it pursued for much of 2021 and 2022 when demand for vehicle orders outpaced the supply of vehicles.
Last year, Musk admitted that there had been an embarrassing increase in prices that could negatively impact demand for the product. With the change, Tesla makes its first major move since Tom Zhu was named the automaker's new CEO in China and Asia.
He oversees U.S. production and sales in North America and Europe.
PRICE CUTS
Nevertheless, some users on online Tesla enthusiast forums have complained that the price cuts have left them with a smaller market price value than they would have otherwise.
This leaves them with less bargaining power when they decide to sell their vehicle. There are some recently released vehicles that are priced lower by 10,000 euros compared to the previous model. According to a statement released on Friday by the American automaker, its cars will be available at a lower price as a result of normalized inflation rates.
There is a significant price difference between the Model 3 and Model Y in Germany, depending on the configuration, ranging between 1 and 17 percent. Among the electric vehicles that sold the fastest in Germany last month were the Model 3 and Model Y.
Moreover, there was also a price cut in the UK, France, Italy, Austria, and Switzerland as well. Many support such moves by Tesla.