In Europe and the US, Tesla has cut the prices of some of its most popular electric cars by thousands of pounds. This is to try to get more people to buy them.
The company has to deal with a challenging global economy and competition from other carmakers.
In the UK, the price cuts range from 10% to 13%, but on some US models, they go as high as 20%.
When they buy their first Model 3 or Model Y in the UK, new buyers will save £5,500 and £7,000, respectively.
But last year, more than 16,000 people bought these best-selling models, and some were upset that they had to pay more.
On a Facebook group for Tesla owners, one person wrote: “I just got the car back yesterday. What do I need to do? Go back to Tesla and give the car back. I can’t believe I lost £5,000 so soon after getting the car “.
When Tesla cut prices in China last week, customers there had the same reaction.
Owners who weren’t happy with Teslas held protests over the weekend outside distribution centers in Shanghai and other cities. They wanted to be paid back.
In China, Tesla’s prices have decreased twice in the last six months. They are now 13% to 24% less than in September.
To avoid similar complaints in the US and Europe, Tesla said that customers who had ordered their vehicle but had yet to receive it would be charged the new lower price.
Ginny Buckley from the electric vehicle marketplace Electrifying.com said the price cuts were still controversial and would “send shockwaves” through the industry because Tesla was changing from a premium to a more mainstream product.
Paul Hollick, in charge of the Association of Fleet Professionals, said that his members could buy electric cars more quickly if the prices went down. But, he said, the “messy marketing” was not good news.
The electric car company has grown quickly from a niche premium brand to a mass-market manufacturer in the past few years.
But there are problems to solve
Slowing global growth, higher interest rates, and more competition from well-known carmakers and Chinese brands are all things that could stop its growth.
When people wanted Tesla cars more than they could get, prices could stay at what Elon Musk called “embarrassing levels.”
But now that there are more electric car brands, it can’t afford to do that if it wants to keep growing.
Car Dealer Magazine’s editor-in-chief, James Baggot, said that the move would have a big effect on the prices of used Teslas, which had already dropped by more than a fifth in the past year.
The UK’s least expensive new Tesla Model 3 now costs £42,990. Model Y vehicles start at £44,990.
Important obstacles for EVs makers like Tesla
Rising gas prices and people’s worries about climate change have led to a steady rise in demand for electric cars.
Last year, almost 20% of all new cars sold in the UK were electric models.
But CEO Elon Musk said last year that the prices for new Teslas had become “embarrassingly high” and that this could hurt sales.
In 2022, Tesla’s deliveries rose 40% worldwide, which was less than what the market expected.
That was another blow to the company’s share price, which fell more than 65% for the year. It was the worst year for the company since it went public in 2010.
The big drop in the share price hurt Mr. Musk’s wealth, and he was no longer the richest person in the world.
Tesla said that it had “significant challenges” last year, such as a lack of semiconductors, rising energy costs, and problems with Covid that kept happening.
But the company said its focus on “original engineering and manufacturing processes” and a recent “normalization” of some of the cost increases had allowed it to pass on savings to customers.
Like other car companies, Tesla worries that customers will only buy so many cars because of rising interest rates and a slowing economy.
After the price cut was announced, Tesla shares fell again because investors worried lower prices would cut profits.
Even Tesla has had a hard year. Its share price has dropped by 65% since January 2022, which is a record low for the company. As a result, demand slowed down, and many people, including investors and analysts, thought that CEO Elon Musk should stop spending so much time and money on Twitter and instead focus on Tesla.
The WSJ said that some of the cuts make it possible for customers to get a tax credit under the Inflation Reduction Act, depending on how many add-ons they buy with their cars.
The credit gives buyers $7,500 when they spend less than $55,000 on an electric car.
In Europe, prices were also cut in the same way. In addition, prices for Teslas sold in China were also cut.
In a text message to Entrepreneur, Daniel Ives, an analyst at Wedbush Securities who keeps an eye on the company, said, “It’s no secret that demand is starting to show some cracks in this global slowdown.”
He said that the size of the cuts made him “pop his eyes open.”