Tesla has implemented price cuts in several major markets, including China and Germany, following similar moves in the United States. The price adjustments come as Tesla faces declining sales and heightened competition in the electric vehicle (EV) market, particularly from Chinese EV manufacturers.
The decision to reduce prices follows Tesla’s recent report of a drop in global vehicle deliveries for the first quarter, marking the first decline in nearly four years. Elon Musk, Tesla’s CEO, emphasized the need for frequent price changes to align production with demand.
The EV market leader initiated an EV price war over a year ago by aggressively reducing prices, even at the expense of profit margins. In China, Tesla reduced the starting price of the revamped Model 3 by 14,000 yuan ($1,930) to 231,900 yuan ($32,000), as shown on its official website. Similarly, in Germany, the price of the Model 3 rear-wheel-drive was lowered to 40,990 euros ($43,670.75) from 42,990 euros.
Tesla also implemented price cuts in several other countries across Europe, the Middle East, and Africa, according to a company spokesperson. In the United States, prices of the Model Y, Model X, and Model S vehicles were reduced by $2,000, and the price of the Full Self-Driving driver assistant software was slashed to $8,000 from $12,000.
Other cars change prices constantly and often by wide margins via dealer markups and manufacturer/dealer incentives. Only a fool thinks the “MSRP” is the real price.
Tesla prices must change frequently in order to match production with demand.
— Elon Musk (@elonmusk) April 21, 2024
Despite these price adjustments, Tesla has been slow to update its aging models, and high interest rates have dampened consumer demand for expensive items. Meanwhile, competitors in China are launching more affordable models, capitalizing on the country’s position as the world’s largest auto market.
Over the weekend, Elon Musk postponed a planned trip to India, where he was scheduled to meet Prime Minister Narendra Modi and announce Tesla’s entry into the South Asian market. The trip was also expected to include details about Tesla’s plans for the region.
Earlier this month, Musk announced that Tesla would lay off more than 10% of its global workforce as the company prepares for a potential decline in annual deliveries. Additionally, Tesla recently scrapped plans to develop an affordable EV in favor of focusing on robotaxis, a move that sparked controversy and speculation among investors.
