Automotive clean energy company Tesla has made a reversal from its strategy, as it slashes the price of its vehicles globally by 20%.
Tesla made this move after missing Wall street delivery estimates for 2022, as it also seeks to challenge rival EV companies.
The company’s CEO Elon Musk disclosed that the price of its vehicle was high which could affect demand, which necessitated a price cut. Also, the chairman and managing member at Great Hill capital Thomas Hayes said “competition is coming and they are responding to price cuts”.
Tesla in its recent slash in the price of its vehicles reduced prices of its EV vehicles in the United States, Europe, the Middle East, Asia, and Africa.
In China, Tesla cut prices for its vehicles two times in three months as demand continued to drop. The automaker was forced to cut prices after posting an unimpressive fourth-quarter report for 2022.
Investors King understands that for its Model 3 and Model Y vehicles, it produced 419,088 vehicles and delivered 388,131, falling short of wall street expectations.
This spurred the automaker to reduce the price of its model 3 which is now pegged at CNY 229,900 ($33,415) down from CNY 265,900, while the model Y price is currently pegged at CNY 259,900 ($37,775) down from CNY 288,900.
In the U.S., Tesla also cut prices on its Model 3 sedan and model Y crossover, and also on its Model X Luxury crossover SUV and Model S Sedan.
In France, customers purchasing the model 3 for 44,990 Euros ($48,570) will now get a further reduction through a government subsidy of 5,000 Euros ($5,400) on an electric vehicle scheme with a threshold of 47,000 Euros ($50,8580).
Analyst at Wedbush, Dan Ives disclosed that Tesla’s recent move could boost global deliveries by 12 to 15 percent this year.
In his words, “this is a clear shot across the bow at European automakers and U.S Stalwarts (GM and Ford) that Tesla is not going to play nice in the sandbox with an EV price war now underway.
“Margins will get hit on this, but we like this strategic poker move by Musk and Tesla”.
