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Home » Tesla Increases Competition with Worldwide Price Reductions

Tesla Increases Competition with Worldwide Price Reductions

13 January 2023, Friday
Tesla has drastically reduced the price of its vehicles around the world by up to 20%. The recent drop in share prices on U.S. stock markets has caused similar losses for their competitors. 
The price cuts, which began in Asia last week, have given some Tesla models eligibility for U.S. credits and a French subsidy. However, current Tesla owners have expressed their disappointment at missing out on the discounts.

Tesla Inc (TSLA.O) has drastically reduced the cost of its electric vehicles around the world by up to 20%, continuing its aggressive discounting policy following its failure to meet Wall Street delivery expectations for 2022. The company's decision to cut prices is sure to cause a stir among its competitors.

The shift in strategy by automaker Tesla signals a reversal from the past two years of new vehicle orders outstripping supply. Following Elon Musk's caution that a recession and heightened interest rates could affect growth despite the impact on profit, the company has decided to lower prices to keep growth intact.

Musk conceded in 2020 that prices had risen to an "exorbitant level" and this could affect the demand. Shares dropped 2.6% on Friday, after the equity had its worst year since its launch, largely due to delivery struggles and increased rivalry.

Tesla dramatically reduced prices across many regions, including the United States, Europe, the Middle East and Africa, following a series of previous reductions in Asia. Analysts considered this move to be a direct attack at smaller competitors that are straining financially and at the traditional car manufacturers that have been making substantial investments in electric vehicle technology.

Electric vehicle (EV) companies are offering price cuts in order to keep up with the growing competition in the market. Thomas Hayes, chairman and managing member at Great Hill Capital, noted that these discounts may make EV cars accessible to those who previously were not able to afford the purchase. Specifically, the United States and France are both offering federal tax credits to those who buy certain EVs, which could assist in bringing the cost down even further.

The U.S. price of Tesla's top-sellers, the Model 3 sedan and Model Y crossover SUV, have been slashed from 6% to 20%, with the basic Model Y now costing $52,990 rather than the previous $65,990, according to Reuters calculations.

In the US, Tesla has reduced prices for its Model X luxury crossover SUV and Model S sedan, in addition to cutting costs for its Model 3 electric vehicle by more than 6%. These reductions come ahead of a $7,500 federal tax credit that has come into effect on January 1st for many electric vehicles, offering discounts of over 30% to consumers.
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