Tesla cuts prices to 20 percent in US and Europe, reversing strategy


Tesla has now also reduced the prices of its electric cars in the US home market and the main European markets by up to 20 percent. Earlier, the automaker already reduced its prices in China, the largest car market in the world.

The company led by billionaire Elon Musk hopes to fuel demand after several quarters of disappointing deliveries. Tesla lowered the price of its cheapest car, the Model Y, in the US by 20 percent. The price for a Model 3 was reduced by 14 percent.

Due to the price reductions, both models are now also eligible for the $ 7500 tax advantage for electric vehicles in the USA. In 2021, the U.S. and China together accounted for about 75 percent of Tesla sales.

Prices were also reduced in the important European markets, including Germany, the United Kingdom and France. In the Netherlands, Belgium, Austria and Switzerland, Tesla cars are also becoming cheaper. According to Autoweek, the Tesla Model 3 is about a price drop of 7, 000 euros, from 51, 990 to 44, 990 euros. The Tesla Model will soon cost 46,990 euros. This previously cost 49,990 euros.

The lower prices in Tesla’s main sales markets mark a reversal of the strategy, which the automaker had followed for much of 2021 and 2022. During that period, orders for new vehicles still exceeded supply and the company was able to charge high prices. However, Musk already acknowledged last year that prices had become ‘embarrassingly high ” and could hurt demand.

The price cuts may make Tesla models more affordable for more consumers. However, the price reductions are disadvantageous for those who have recently bought a Tesla, as the second-hand value is now lower. Earlier this month, hundreds of Chinese Tesla drivers already gathered in front of showrooms and distribution centers of the automaker out of dissatisfaction with the new price cuts in China.

By: Maurice Eisma

Maurice Esma, a co-founder of EconomicInform is a freelance journalist with the expertise in international finance and corporate rights. The author can be reached by email maurice.eisma@economicinform.com

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