What’s Behind Tesla’s Drastic Price Cuts?

Image of the Tesla logo in the center of a bullseye target.

Image: Maura Losch/Axios

More and more competitors are threatening Tesla global EV dominance and putting it in an unfamiliar position – one of defense.

Why it matters: This pressure, coupled with less favorable economic conditions, has prompted the company to do so drastically reduce prices in an effort to create new demand for his cars.

  • “Tesla has always been an automotive anomaly… the outsider like a new, shiny, bright object,” Edmunds executive director of insights Jessica Caldwell told Axios.
  • “The move they just took to protect market share and their own growth is such a traditional move for automakers,” Caldwell said.

Catch up fast: Last week, Tesla cut the prices of its Model 3 and Model Y vehicles — among other things best selling cars in the world.

  • The cuts ranged from 1% to 20% in the company’s key markets – the USA, China and Germany.
  • In China in particular, Tesla’s price cut was the right thing to do second in less than three months.
  • Japan and South Korea also saw cuts of around 10%.

In the USA, Tesla has one of these highest brand loyalty under the luxury car names and continues to dominate new electric vehicle registrations.

  • However, its market share has declined from 79% of new electric vehicles in 2020 to 65% in September last year, according to reports S&P Global Mobility.
  • “Tesla’s EV-only strategy gives it a retention advantage – as few EV owners have returned to (internal combustion engines). But when new EVs come out, loyalty is put to the test.” report closes.
  • The most serious threats come from electric vehicles costing under $50,000 “where Tesla isn’t really competing yet.”

Be smart: With the cuts in the US, more Tesla models will be added Eligible for newly revised tax incentives of $7,500 which started on January 1st under the Inflation Reduction Act.

  • The credit applies to EVs under $55,000, meaning models like the high-end Model 3 Performance are now $53,990 (down 14% from $62,990) and the long-range all-wheel-drive Model Y is $52,990 US Dollars (down 20% from US$65,990). could be more attractive.

Worthless: Tesla had raised prices in the past two years higher inflation increased the cost of its inputs. CEO Elon Musk said last year the company’s prices had become “embarrassing” and that he hoped to lower them.

  • “I think inflation will come down towards the end of the year,” he said. “I’m hopeful — and that’s not a promise — but I’m hopeful that at some point we can drop the prices a little bit.”

Something to see: customer loyalty.

  • People who bought their vehicles before the cuts complained tens of thousands of dollars in savings they rarely missed.
  • Angry customers in China have been Demand discounts and protest the company in showrooms and distribution centers.
  • A company action favourability has fallen 15 percentage points since the beginning of last year.

our thought bubble, via Axio’s transportation correspondent Joann Muller: Tesla only has two big arrows up its sleeve — the Model 3 and the Model Y. And that may not be enough to attract buyers, whose heads will be turned by a far greater number of other manufacturer’s options.

go deeper: The plunge in Tesla stock is widening the gap in the outlook


Hey, I am Sakib Hossain Sojib, an entrepreneur known as an SEO Specialist, Digital Marketer, Blogger, and Content Creator. I have a team of researchers who guide and review products for our audience to help them by providing valuable information to help our audience makes the best decisions for their needs. I love to take care of my cars. So, I like and enjoy car maintenance and automotive research. The provided content is based on my learning, research, and understanding of the topic and its concept. Our extensive experience in the industry allows us to offer unique insights and perspectives on the latest trends and products. We aim to educate and empower our readers by providing them with the knowledge they need to make informed decisions about their needs.

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