Tesla has reduced the price of some of its most popular electric vehicles by thousands of pounds in Europe and the United States in an effort to increase customer demand.
The company is facing a challenging global economic outlook as well as growing competition from other automakers.
Price reductions range from 10% to 13% in the UK, but can reach 20% on some US models.
New UK customers will save £5,500 on the base Model 3 and £7,000 on the base Model Y.
However, over 16,000 customers purchased those best-selling models last year, and some were upset since they had spent more.
One Tesla owner remarked on a Tesla Facebook group: “I just got the car yesterday. How should I proceed? Return the vehicle to Tesla? I can’t believe I lost £5k within a few hours of picking up the automobile “.
Customers in China, where Tesla announced price decreases last week, responded similarly.
Disgruntled Tesla owners demonstrated outside Tesla distribution centers in Shanghai and other cities over the weekend, demanding compensation.
Tesla has dropped prices in China twice in the last six months, and they are now 13% to 24% lower than in September.
To avoid similar concerns in the United States and Europe, Tesla announced that customers who had ordered but had not yet received their vehicle would be paid the new reduced price.
Electrifying.com’s Ginny Buckley said the price drops were still contentious and would “send shockwaves” across the industry because Tesla was transitioning from a premium to a more mainstream product.
The price decreases were hailed by Paul Hollick, chair of the Association of Fleet Professionals, who said they would make electric vehicles more accessible to his members. However, he stated 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 said.
‘Significant challenges’
Electric vehicle demand has been steadily increasing, spurred by growing gasoline costs and customer worries about climate change.
Last year, electric vehicles accounted for nearly one-fifth of new automobile sales in the United Kingdom.
However, Tesla CEO Elon Musk admitted last year that new car pricing had become “embarrassingly exorbitant,” which could impact demand.
Global Tesla deliveries increased by 40% in 2022, however this was less than the market expected.
This gave a further blow to the company’s share price, which plunged more than 65% for the year as a whole, making it the company’s worst year since coming public in 2010.
Mr Musk’s fortune was affected by the significant drop in the share price, knocking him off the top rank as the world’s richest person.
Tesla reported “major problems” last year, including a scarcity of semi-conductors, rising energy costs, and persistent Covid-related disruptions.
However, the firm said its focus on “original engineering and manufacturing processes” and a recent “normalisation” of some of the cost inflation, had allowed it to pass on savings to customers.
Like other carmakers, Tesla is grappling with the likelihood of slowing demand for vehicles as customers deal with rising borrowing costs and concerns about an economic slowdown.
Tesla shares fell again after the price cut announcement, as investors feared lower prices would eat into profits.
However, Wedbush analyst Dan Ives said the move was a “shot across the bow” for Tesla’s rivals. suggesting that Tesla was “not going to play nice in the sandbox with an EV price war now underway”.
