Tesla cuts prices globally by up to 20%. Tesla’s “bold offensive move” secured growth and put competitors in deep trouble.
Tesla Inc (TSLA.O) has cut prices globally on its electric vehicles by up to 20%. The company intensifying its discounting strategy and competing with competitors after not meeting Wall Street delivery expectations for 2022.
Last year, Elon Musk conceded that the cost of Tesla stock had become “uncomfortably high” and could potentially decrease demand. However, on Friday, the shares dropped by 0.9%, with a maximum decrease of 6.4%. This was partly due to its worst year since the company’s foundation, linked to the slowing growth in China and also Musk’s attention to Twitter.
In Germany, Tesla cuts the prices of the Model Y and Model 3 by around 1-17%. The Model Y, which is the best-selling model, is now priced at 44,890 euros ($48,499), a drop of 9,100 euros. This price change also applies to Austria, Switzerland, and France. Customers in France who buy the Model 3 for 44,990 euros are now eligible for a 5,000 euro government subsidy under an Electric Vehicle (EV) scheme with a 47,000 euro threshold.Furthermore, this move also makes more vehicles eligible for the Biden administration’s tax credit.
Tesla’s Model Y could be $18,000 less expensive than Ford’s Mustang Mach E. Tesla’s “offensive move” would cause a 3 percentage point decrease in its vehicle gross profit margins in 2023, but would also cause difficulty for competitors.
Last week, Tesla reduced prices in China and other Asian markets; this was seen by analysts as a move that would encourage more customers and exert more pressure on competitors, such as BYD (002594.SZ), to do the same. This could lead to a price battle in the biggest market for electric vehicles.
Read blog: The richest man surpassing Elon Musk!
