Tesla is cutting prices in the US and Europe to boost sales

Electric car maker Tesla is cutting prices again in the United States and across Europe, according to listings on the company’s website Thursday evening.

Tesla did not respond to a request for comment this week on what led to the price cuts.

However, the move in the U.S. could help Tesla get more federal EV tax credits and boost sales here and abroad after competition and interest rates rise.

In Europe, Tesla has reduced the prices of its Model 3 and Model Y cars in Austria, France, Germany, the Netherlands, Norway, Switzerland and the United Kingdom.

In Germany, Tesla has cut Model 3 and Model Y prices by between 1% and about 17%, depending on configuration, Reuters reports. Tesla’s Model 3 was the best-selling electric car in Germany in December 2022, followed by the Model Y. The company was left behind. Volkswagen and its popular electric car ID.4 in Germany.

At a discounted price, Tesla’s Model 3 is comparable to Volkswagen’s entry-level electric car, the ID.3.

According to independent EV industry researcher TroyTeslike, the price of the new Tesla Model 3 in the U.S. is down between 6% and 14%, depending on configuration, while the price of the Model Y is down about 19%, depending on configuration. .

The Model 3 is Tesla’s entry-level sedan. The Model Y is classified by some as a sports car and by others as a crossover. The company has also cut prices in the US for the more expensive Model S sedan and the Model X falcon-wing SUV.

In general, electric vehicles qualify for US tax credits based on their form factor or category, their efficiency and range (meaning the number of miles they can travel on a fully charged battery), as well as the manufacturer’s suggested retail price. .

The US government has delayed until at least the end of March 2023 the establishment of new rules for the purchase of raw materials and battery components in order for automakers to receive a clean transportation tax credit of $7,500.

That means Tesla and other EV makers can buy parts and critical minerals from suppliers around the world for now and still qualify for some EV subsidies. Those seeking federal subsidies must complete final vehicle assembly of electric vehicles in North America under current interim regulations.

Recent discounts by Tesla could position the company to benefit from EV tax credits both in the near term and in the longer term. But it also risks upsetting customers who agreed to take delivery of new electric cars from Tesla at higher prices until the end of 2022.

Earlier this month, Tesla slashed the prices of its Model 3 and Model Y cars in China, angering customers as many agreed to take delivery at higher prices before December 31. Some of the customers have protested and demanded discounts, but so far, according to the Reuters news agency, Tesla has not given up.

In late December, Tesla discounted its Model 3 and Model Y by about $7,500 to entice customers to take delivery by the end of the fourth quarter. Tesla also offered some US customers 10,000 miles worth of free charging (at Tesla Supercharge stations) if they agreed to take delivery by the end of the year.

Despite the discounts, in the fourth quarter of 2022, Tesla reported that it delivered 405,278 vehicles and produced 439,701 vehicles. The company told shareholders to expect a 50% increase in annual vehicle shipment growth over the multi-year horizon, but in the fourth quarter it fell short of that annual target and analysts’ expectations.

Tesla now operates its first car assembly plant in the United States in Fremont, California, a newer one in Austin, Texas, its first overseas plant in Shanghai, and a newer one in Gruenheide, Germany.

The company’s production capacity in 2023 with those factories should be significantly higher than in previous years, but bearish analysts expressed concern about a possible “demand gap.”

Tesla now faces more competition, higher interest rates and slower consumer spending than in recent years, Bernstein analysts wrote in a Jan. 12 note.

They said: “We believe that many investors are underestimating the extent of the demand challenges facing Tesla.” However, the company has an “underperform” rating and a $150 price target on Tesla’s stock after the company’s share price has fallen in recent months.

CEO Elon Musk sold billions of dollars worth of Tesla stock last year, in part to finance his $44 billion leveraged buyout of Twitter. Since taking over Twitter in late October and installing himself as CEO, Musk has split time and shared some resources between the social media business and the electric car company.

Tesla plans to report its fourth quarter 2022 results on January 25, 2023, after which it should share its new outlook for next year.

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