As the largest electric car manufacturer in the world, Tesla has reduced prices by a record £8,000 to reverse a slowdown.
Elon Musk is the company’s leader. The announcement came just weeks after it reduced the price of its cars in China. This move prompted protests from buyers who had not been able to take advantage of the discounts.
Due to the UK cuts, Tesla’s cars now have a price that is comparable to other brands like Skoda or Kia.
Some buyers were upset by the changes, which resulted in immediate losses in vehicle value.
Tesla customers who received their deliveries have posted to social media that they are considering asking for a refund. Customers who are still waiting for deliveries will see the savings, but those who have already received their cars won’t be affected.
On the Facebook page of Tesla Owners Club UK, one member wrote: “I just picked the car up yesterday. What should I do next? Take the car to Tesla. After picking up the car, I realized that I had lost £5k.
Tesla’s Model 3’s long-range model fell by £6,500 to £50,990, while its entry-level variant fell by £5,500 to £42,990.
The largest cut in price has been for the Model Y Performance, which fell by £8,000 to £59,990, while the cheapest Model Y fell £7,000 to £44,990.
The price dropped suddenly without notice and the company did not say how long it would be fixed.
This is a major reversal of Tesla’s strategy in the last two years when new orders outstripped supplies. Tesla was able to charge customers more for the most recent models.
However, competition from Chinese competitors and new entrants as well as rising costs and interest rates have caused it to produce more cars than it can sell.
Thomas Hayes is the chairman of Great Hill Capital in the USA. He stated that “Competition will be coming and they are responding by cutting prices.”
Musk acknowledged last year that the prices were “embarrassingly” high and could affect demand. After the worst year for the company’s stock, shares were down more than 5% on Friday. The company faces stiff competition and slowing deliveries.
Bernstein analyst Toni Sacconaghi warned that Tesla would face challenges securing customers because the cars are too expensive.
He stated that Tesla would need to reduce its growth targets and run its factories below their capacity. Or, sustain and possibly increase the recent price cuts worldwide, which will pressure margins.
“We expect there to be demand problems until Tesla can introduce a lower-priced offering in volume. This may not happen before 2025.
Musk is trying to regain support from shareholders, as he has reduced his stake in Tesla to finance the $44bn acquisition of Twitter.
Other shareholders were furious at the move, saying he spends too much time on social media platforms and not the car company that made him the richest man in the world for most of 2022.
Tesla maintained that a decrease in production costs would mean it could reduce prices.
Tesla spokesperson said that “Our focus upon continuous product improvement through original Engineering and Manufacturing Processes has further optimised our ability to make the best product at an industry-leading price.”
“As we come to an end to a year of disruptions in supply chains, we have seen a normalization of some cost inflation. This gives us the confidence to pass these on to our customers.”
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