Home » Business » Surprising move: Tesla has sharply reduced the prices of new cars

Surprising move: Tesla has sharply reduced the prices of new cars

Automaker Tesla has cut the prices of its electric vehicles in Europe and the US, the company’s website said Automotive News Europe.

In Germany, Tesla cut the prices of the Model 3 and Model Y, the world’s best-sellers, by between 1% and almost 17%, depending on the configuration. Elon Musk’s company also cut prices in Austria, Switzerland and France.

U.S. price cuts for the Model 3 sedan and Model Y crossover ranged between 6 percent and 20 percent from pre-discount prices, according to Reuters calculations. That’s before accounting for a federal tax credit of up to $7,500 that went into effect for many electric vehicles in early January.

Tesla also cut prices in the US for its Model X luxury crossover and Model S.nce sedan.

For U.S. long-haul Model Y buyers, Tesla’s new price, combined with the U.S. subsidy that went into effect this month, amounts to a 31 percent discount. In addition, Tesla has expanded its lineup of cars eligible for tax credits from the Biden administration.

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Before the price cut, the five-seat version of the Model Y was ineligible for that credit, which Tesla CEO Elon Musk called “wrong.” After the price cut, the long-haul version of the Model Y will be eligible for a $7,500 federal credit.

Taken together with price cuts announced last week in China and other Asian markets, the move marked a reversal in Tesla’s biggest markets from the strategy the company pursued for most of 2022, when demand was strong and average selling prices for its electric vehicles were rising.

“This should really boost (Tesla’s) volumes for 2023,” Gary Black, a Tesla investor who is bullish on the company and its prospects after the recent sharp drop in stock prices, said in a tweet.

Tesla Model Y is the best-selling new car in Europe in September

Tesla Model Y is the best-selling new car in Europe in September

Electric car sales reached 160,869 units or 15.6% of the market

Before the price cut, Tesla’s inventory in the United States, tracked by the models shown on its website as immediately available, was increasing. However, prices for Tesla’s used models have been falling, increasing pressure on the company to adjust prices for new cars.

Tesla factory in Fremont, California


Source: iStock Images

Tesla factory in Fremont, California

The change is Tesla’s first major move since it appointed its top executive for China and Asia, Tom Zhu, to oversee U.S. production and sales in the U.S. and Europe.

Tesla cut prices in China and other Asian markets last week. Combined with previous price cuts announced in October and recent incentives, the price in China of a Model 3 or Model Y is down between 13 percent and 24 percent from September, Reuters calculations show.

Tesla also cut prices in South Korea, Japan, Australia and Singapore.

Analysts believe the price cuts in China will boost demand and deepen pressure on its rivals there, including BYD, in what could turn into a price war in the largest single market for electric vehicles. This pressure may be growing in Europe as well.

BYD has dethroned Tesla and is now #1 in the world in electric car sales

A Chinese company has dethroned Tesla and is now #1 in the world in terms of sales of electric cars

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The Model 3 was the best-selling electric car in Germany last month, followed by the Model Y, ahead of Volkswagen’s all-electric ID4. VW recently raised the price of the ID3 all-electric compact hatchback, putting it on par with the Model 3.

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