Tesla has once again sparked the price war. Elon Musk’s company has lowered the prices of several of its models in numerous countries, from China to the United States or Germany. The discounts come in response to the drop in sales of the firm. “Tesla prices have to constantly change to adjust production and demand,” acknowledged its CEO in X.
Tesla discounts have been made almost worldwide, in several European countries, in Asia, the Middle East, Africa, and the United States. In the latter case, three of the manufacturer’s models, the Model Y, Model X, and the Model S, are now $2,000 cheaper, according to Reuters. In China, the Model 3 costs $1,930 less, with a price of $32,000. In Germany, the discount has been €2,000 for the same model, which is now €40,990, according to the agency.
The company’s CEO explained in X that their strategy is to constantly change prices: “Only a fool would believe that the manufacturer’s suggested retail price is the real price,” he explained in X. Musk details that not only does Tesla change prices, but salespeople do it too, so it is common for profit margins to be wide depending on the market conditions and negotiation abilities.
The discounts at Tesla come at a time when the electric vehicle company delivered fewer cars in the first quarter. Although the automotive company will not present its results for the start of the year until tomorrow, Tuesday the 23rd, they have already announced the sales figures. The 378,000 cars delivered in this period represent an 8.3% drop compared to the same period last year. Additionally, it also marks the first decrease in four years.
In the United States, there are federal incentives that can reach $7,500 per vehicle, as Tesla promotes on its website, aimed at encouraging the adoption of electric cars. This program could encourage buyers and give a boost to the company. So far, the popularization of plug-in vehicles has been slower than initially expected, leading the industry to rethink its strategies. Specifically, Tesla is going to lay off 10% of its global workforce.
Furthermore, the American manufacturer has to compete with the Chinese, making price wars recurrent in this market. In fact, Asian firms such as BYD or Denza have also lowered prices this year on several of their models. One of the reasons driving these discounts is an excess supply.
The Beijing-based automaker Li Auto has responded to Tesla’s ‘offensive’ with discounts and cash rebates on new models. The company announced price cuts of around 6-7% across its entire line on Monday.
Regarding Musk’s results, which will be known tomorrow, a 40% drop in the firm’s operating profits and its first revenue decline in four years are expected. The company has felt this situation in the stock market, as, so far this year, its shares have plummeted more than 40%.
