Tesla Inc (NASDAQ:TSLA) is chopping prices for its electric vehicles (EV) in the United States and Europe by as much as 20%, extending a strategy of aggressive discounting after missing estimates for 2022 deliveries, Reuters has reported.
The move came after CEO Elon Musk warned that the prospect of recession and higher interest rates meant it could lower vehicle pricing to sustain volume growth at the expense of profit.
The lower pricing across Tesla's major markets marks a reversal from the strategy the automaker had pursued through much of 2021 and 2022, when orders for new vehicles exceeded supply. Musk acknowledged last year that prices had become "embarrassingly high" and could hurt demand.
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The US price cuts, announced late on Thursday for the Model 3 sedan and Model Y crossover SUV, ranged between 6% and 20% compared with prices before the discount, according to Reuters' calculations, before an up to $7,500 federal tax credit that took effect for many EV models at the start of January. Tesla also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States.
In Germany, it cut prices on the Model 3 and the Model Y - its global top-sellers - by between about 1% and almost 17% depending on the configuration. It also cut prices in Austria, Switzerland and France.
Tesla cut prices in China last week by 6.0%-13.5% which led owners to protest at delivery centres across the country, pressing the company for compensation.
Before the price cut, Tesla's inventory in the US, as tracked by the models its website shows as immediately available, had been trending higher. Prices on used Tesla models had also been declining, increasing the pressure on it to adjust new-car prices, Reuters said.
In 2021, the US and China combined accounted for about 75% of Tesla sales, although the automaker has recently been growing sales in Europe, where its Berlin factory has been ramping up production.
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