After China... Tesla reduces the prices of its cars in the United States and Europe

Dubai, United Arab Emirates - Tesla reduced the prices of its electric cars in the United States and Europe by up to 20%, expanding its aggressive discounting strategy, after falling behind Wall Street estimates on delivery rates in 2022. This move, which led to a 4% decline in Tesla shares before the start of market trading, came after the company’s CEO, Elon Musk, warned that the possibility of a recession and high interest rates meant the possibility of lowering prices to maintain the growth rate at the expense of profit.

The company's shares have fallen 65% since the beginning of 2022. The price cuts in Tesla's main markets represent a shift from the strategy the automaker followed during most of 2021 and 2022, when orders for new cars exceeded supply rates.

Musk admitted last year that prices had become "confusingly high" and could hurt demand. Reuters calculations showed that the price cuts in the United States, announced late Thursday, on its largest global sellers, the Model 3 and Model Y, ranged between 6% and 20%.

The base version of the Model Y now costs $52,990, down from $65,990 before. This is before a federal tax credit of up to $7,500 that took effect on many electric car models at the beginning of this January.

Tesla also reduced the prices of its SUV, the Model X luxury crossover, and the Model S sedan in the United States. In Germany, the company reduced prices on the Model 3 and Model Y by approximately 1% and 17%, respectively, and also reduced prices in Austria, Switzerland and France.

For those who buy the Model Y in America, the new Tesla price combined with US subsidies amounts to a 31% discount. Tesla sought a tax credit on eligible vehicles.

Before the price cut, the five-seat version of the Model Y was not eligible for this credit. In France, customers who buy the Model 3 for 44,990 euros ($48,773) will receive an additional price cut, represented by a government subsidy of 5,000 euros.

The minimum price of electric vehicles eligible for subsidy is 47,000 euros. Gary Black, a Tesla investor who has remained optimistic about the company and its prospects despite the recent sharp decline in its stock prices, said in a tweet: “This should lead to increased Tesla sales for 2023, the right move.”

In China, where Tesla reduced prices last week by between 6% and 13.5%, while owners of cars they had purchased before the reduction protested, demanding compensation.