Slowing sales and a plummeting share price prompted Tesla on Friday to slash the prices of some versions of its electric vehicles, making some models eligible for a new federal tax credit. This may increase buyer interest.
The company has slashed the price of some versions of its top-selling Model Y SUV in the US by nearly 20%. The reduction will make more versions of Model Y eligible for the $7,500 electric vehicle tax credit, available through March. Tesla also slashed the base price of its cheapest model, the Model 3, by about 6%.
Far from delighting investors, the sharp price cut sent Tesla shares down nearly 3% in midday trading on Friday. Since the beginning of last year, the stock has plunged more than 65%. Many investors fear Tesla’s sales slowdown will continue, worrying about Elon Musk’s erratic behavior and the distractions caused by his $44 billion acquisition of Twitter. I’m holding
Guidehouse Research e-Mobility analyst Sam Abuelsamid said:
Citi industry analyst Itay Michaeli wrote in an investor note that Tesla appears to prioritize volume over price.
A message was left on Friday seeking comment from Tesla.
Meanwhile, Tesla faces the threat of increased competition from other automakers in the U.S. and around the world for years to come. Last year, his EV total sales in the US jumped nearly 65% from 2021. The automaker has sold 47 electric vehicle models. There were only four Teslas. S&P Global Mobility expects the number of EV models to surge to 159 by 2025.
And as overall EV sales rise, Tesla’s U.S. market share is declining. From 2018 to 2020, Tesla held about 80% of his EV market. By 2021, that figure will continue to decline, with him down to 71%, according to registration data collected by S&P.
Still, Tesla’s U.S. sales rose 40% last year. S&P expects continued growth as overall electric vehicle sales are steadily increasing.
Even with the US tax credit, EVs are still expensive compared to gasoline vehicles, mainly due to the higher cost of batteries. In addition, higher loan rates and higher raw material costs could increase buyer costs and limit EV sales for Tesla and its competitors.
With Tesla’s price cut on Friday, the Model Y Performance model, which previously sold for close to $70,000, is now just under $57,000. The starting price of Tesla’s lowest-priced car, the Model 3, has been lowered from $47,000 to just under $44,000.
Abuelsamid said the company’s decision to lower the base price of the Model 3, which was already eligible for a federal tax credit, is a clear sign that demand is weakening.
Tesla has added two huge factories in Austin, Texas and Berlin, but those factories are operating at only a fraction of their capacity.
https://www.cbsnews.com/news/tesla-cuts-vehicle-prices-in-bid-to-boost-flagging-demand/ Tesla cuts vehicle prices to boost sluggish demand