Tesla has announced a significant reduction in the prices of its Model Y cars in Germany, marking a strategic move following its recent displacement as the leading electric vehicle (EV) seller to Volkswagen (VOWG_p.DE) in 2023. This decision comes on the heels of a similar price adjustment for Model 3 and Model Y in China just a week ago.
The adjustments include a 9% reduction for the Model Y Long Range and an 8.1% discount for the Model Y Performance, bringing their prices to 49,990 euros ($54,340) and 55,990 euros, respectively. Additionally, Tesla has cut the price of the Model Y rear-wheel drive models by 4.2%, or 1,900 euros, resulting in a new price tag of 42,990 euros, according to information available on its official website.
Volkswagen secured its position as the largest seller of EVs in Germany for the year 2023, capturing a 13.5% market share, while Tesla trailed with a 12.1% share, as reported by the German federal motor authority KBA.
This latest price adjustment coincides with Tesla's recent announcement of a temporary suspension of most car production at its Berlin factory from Jan. 29 to Feb. 11. The company attributes this decision to a shortage of components due to disruptions in transport routes, linked to recent attacks on vessels in the Red Sea.
The move also comes amidst a broader trend of EV manufacturers engaging in a competitive pricing strategy in China, the world's largest car market, a phenomenon referred to by Mercedes-Benz CEO Ola Kaellenius as “Darwinistic” last year.
Adding to the challenges faced by German automakers, the country's electric vehicle subsidy program, originally slated to run until the end of 2024, concluded prematurely last month. This development was expected to impact German car manufacturers, who were already grappling with the task of aligning their prices with those offered by Chinese and U.S. competitors.