Elon Musk’s Tesla slashes prices again, facing mounting competition from Chinese and European carmakers.
Tesla slashed prices for its top-selling models in key markets around the globe, major news outlets reported over the weekend. Specifically, prices for the Model S, Model Y, and Model 3 were cut by roughly $2,000 in Europe, China, the Middle East, and Africa.
The electric vehicle maker faces fierce competition from Chinese EV companies. Last year, China became the world’s largest EV carmaker, rolling out hundreds of thousands of cheap models and exporting them to Western markets.
Formerly the world’s largest EV company, Tesla engaged in a fierce price war against Chinese competitors. So far, however, the strategy only played in favor of China’s EV companies.
Tesla reported much lower-than-expected sales for the last quarter, dropping 8.5% from the previous three-month period. The company will report quarterly earnings, including revenues and profits, on Tuesday after markets close.
The company’s CEO Elon Musk postponed a trip to India, saying he wants to focus on entering the Southeast Asian market in the near future.
To justify the recent price cut, Musk posted on X that "Tesla prices must change frequently in order to match production with demand."
In the post, Musk was likely referring to the recent decline in EV demand across several markets. A recent report showed that demand for hybrid vehicles still trumps that of electric cars despite legislative efforts to revert the trend.
Slow decline
Tesla took its decision to cut prices further after a terrible start of the year. Issues of competition from China arose already last year, but Tesla has so far been unable to counter it.
The company released its latest competitive model in 2019 when it still retained almost 80% of the global EV market. Since then, Chinese companies caught up with Tesla which, on the other hand, failed to release new competitive cars.
The latest vehicle released by Tesla was the Cybertruck, considered a complete disaster by Elon Musk himself.
Last month, reports came out showing Tesla scrapped plans for a new cheap EV model. Musk and other Tesla executives had teased this long-awaited new car for years. In another post on X, Musk said the company will be focusing on self-driving taxis in the future.
Following the reports, Tesla laid off 10% of its global working force, amounting to roughly 14,000 workers.
Tesla’s stock dropped over 40% year-to-date even though the S&P 500 index grew by 4.7%.
It’s unclear whether this weekend’s price cut will help Tesla’s prospects. Especially in the face of growing competition from China, Europe, and other American carmakers.
