Tesla, the world’s most valuable automaker, has announced its latest round of price cuts for electric vehicles in Europe, Israel, and Singapore, as part of its global discount drive that began in China earlier this year.
The move comes in the wake of disappointing delivery data for the first quarter, despite offering discounts in several markets worldwide.
The company is cutting prices of its Model 3 and Model Y vehicles in several European markets, including Germany and France, by between 4.5% and 9.8%, marking its second price reduction this year after a 1-17% cut in January.
In Singapore, prices were reduced by 4.3% to 5%, while in Israel, the base rear-wheel drive Model 3 saw a 25% price cut.
While Tesla has said the price cuts are due to a scaling up and improvement in its production capacity, industry experts have raised concerns about the company’s profit margins.
The automaker has been pursuing a strategy of bringing prices down to drive demand, but this has come at the expense of its profitability.
Tesla’s CEO Elon Musk has defended the price cuts, saying they have been successful in generating orders, but analysts suggest that the discounts may not be sustainable in the long run.
The company has also missed its delivery target of 50% growth in 2022, settling for a 40% increase due to logistical issues and slowing demand.
Furthermore, Tesla has also announced its fifth vehicle price reduction in the US market this year, ahead of the introduction of tougher standards that will limit EV tax credits.
The price cuts are seen as an attempt to boost demand before the tax credits are phased out.
Tesla reports its first-quarter results next week, and investors will be watching closely to see if the price cuts have had the desired effect on sales figures.
However, some analysts warn that the discounts may be unsustainable and could impact the company’s profitability in the long run.