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To Increase Demand, Tesla Reduces Prices By Unto A fifth

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To Increase Demand, Tesla Reduces Prices By Unto A fifth
14 Jan 2023
4 min read

News Synopsis

In an effort to increase customer demand, Tesla has slashed the price of some of its most popular electric cars by thousands of pounds in both Europe and the US.

The company is up against greater competition from competing carmakers and a challenging future for the global economy.

In the UK, price reductions range from 10% to 13%, but on some US Car models, they might reach 20%.

On a base Model 3 and the lowest priced Model Y, new UK buyers will save £5,500 and £7,000, respectively.

Nevertheless, more than 16,000 consumers purchased Tesla's top-selling models the previous year, and some of them complained that they had overpaid.

On a Facebook page for Tesla owners, one user wrote: "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".

Customers in China, where Tesla announced price cuts last week, reacted similarly.

Disgruntled owners staged protests over the weekend outside Tesla distribution centers in Shanghai and other cities, demanding compensation.

Tesla's pricing in China has dropped twice in the past six months and is currently 13% to 24% below September levels.

Tesla announced that it would charge customers who had purchased but had not yet received their vehicle the new lower price in an attempt to avoid similar objections in the US and Europe.

The price reductions, according to Ginny Buckley of the electric vehicle marketplace Electrifying.com, are still debatable and are certain to "send shockwaves" across the industry as a result of Tesla's shift from a premium to a more mainstream product.

The Association of Fleet Professionals' Paul Hollick, chair, praised the price cuts, saying they will make electric vehicles more accessible to his members. He claimed that the "disorderly marketing" was not good news.

"A move of this kind does unavoidably create ill-feeling. The company would do well to introduce some kind of redress," he added.

The manufacturer of electric vehicles has been expanding quickly recently as it transitions from being a niche premium brand to a mass market producer.

But there are difficulties.

Growing competition from more established automakers and Chinese brands, slower global growth, higher financing rates, and other factors all pose threats to its progress.

Elon Musk himself has referred to Tesla car prices as being at "embarrassing levels" when demand far exceeded supply.

But if it wants to keep expanding, it can no longer afford to do so in a world where more electric car makers will be vying for a smaller pool of potential buyers.

TWN In-Focus