March 29, 2023
International Technology

Tesla Cuts Prices of Electric Cars to Boost Demand Amid Economic Challenges

Tesla Cuts Prices of Electric Cars to Boost Demand Amid Economic Challenges

Tesla has reduced the prices of some of its electric cars by thousands of pounds in Europe and the US in an effort to increase customer demand. The company is facing a difficult global economic climate and increased competition from other car manufacturers. The price cuts range from 10-13% in the UK and as high as 20% on some US models. This means that new UK buyers will save £5,500 on an entry-level Model 3 and £7,000 on the cheapest Model Y. However, more than 16,000 customers bought those best-selling models last year, and some are angry that they had paid more.

One customer posted on a Facebook group for Tesla owners, “I just picked up the car yesterday. What should I do? Go to Tesla and give back the car? I can’t believe after a few hours from picking up the car, I lost £5k.”

Tesla had a similar response from customers in China, where it announced price cuts last week. Over the weekend, disgruntled owners demonstrated outside Tesla distribution centres in Shanghai and other cities, calling for compensation. Tesla has reduced prices twice in China in the last six months, and they are now 13-24% below September levels.

To avoid similar objections in the US and Europe, Tesla said customers who had ordered but not yet received their vehicle would be charged the new lower price. Ginny Buckley, from the electric vehicle marketplace, Electrifying.com, said the price cuts were still controversial and bound to “send shockwaves” through the industry because Tesla was making a shift from a premium to a more mainstream product.

Paul Hollick, Chair of the Association of Fleet Professionals, welcomed the price cuts, saying it would make electric vehicles more affordable to his members. However, the “disorderly marketing” was not good news, he said. “A move of this kind does unavoidably create ill-feeling. The company would do well to introduce some redress,” he said.

Tesla has been growing rapidly in recent years, moving from being a niche premium brand to a mass-market manufacturer. However, slowing global growth, higher interest rates, and increasing competition from more established car manufacturers and from Chinese brands all threaten its expansion. When demand for Tesla cars far exceeded supply, it could maintain prices at what Elon Musk himself described as “embarrassing levels.” But in a world where more electric car brands will be competing for a diminishing pool of potential buyers, it can no longer afford to do so – if it wants to keep on growing.

James Baggot, editor-in-chief of Car Dealer Magazine, said the move would have a big impact on used Tesla prices, which he said had already fallen by more than a fifth last year. The lowest-priced new Tesla Model 3 in the UK is now priced at £42,990. Model Y vehicles start at £44,990.

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