Price Cuts by Tesla
Electric vehicle maker Tesla price cuts in U.S.A and Europe. Earlier the price cut was announced in China on the Model 3 and Y of the Tesla. The probable reasons behind the price may include- qualifying for more federal EV tax credits and getting better sales in the USA and internationally. The competition in the EV segment is really intensified word wide.
Apart from the USA, Tesla has reduced prices in Germany, Austria, Netherlands, Switzerland, Norway, and the UK. In Europe, Tesla has reduced prices on Model 3 and Model Y vehicles.
In Germany, Tesla has reduced prices on the Model 3 and the Model Y from 1% to around 17%. The price is depending on the configuration. The best seller model of Tesla, the Model 3 price is now comparable to an entry-level electric car, the ID.3 from Volkswagen.
The price of the Model 3 in the Price Cuts by Tesla has been cut down between 6% and 14%. The cost of Model Y is dropped by about 19%. It again depends on the configuration.
The Model 3 is an entry-level sedan, while the Model Y is categorized as an SUV, however, some call it a crossover. Tesla also reduced prices of its rather expensive Model S sedan and falcon-wing SUV Model X vehicles in the U.S.A.
EV tax credit policy in USA
The discounts by Tesla may give an advantage in reaping the benefits of EV tax credits. However, customers who have just taken the delivery of Tesla at a much higher price may be annoyed with the company policy. This has already happened in China when customers who purchased Tesla before price cuts, staged protests and demanded discounts.
It is good to share that in the USA, EVs qualify for tax credits depending on the category, their efficiency & range, and the manufacturer’s suggested retail price.
The U.S.A government has postponed, until at least March 2023, setting rules regarding raw materials and battery components sourcing to qualify for a $7,500 clean vehicle tax credit. Simply, the automakers can source parts and critical minerals from around the world and still qualify for EV subsidies. However, under current interim rules, automakers need to complete the final electric car assembly in North America.
Road Ahead for Tesla
Tesla is adding its manufacturing capacity with a newer plant in Austin, Texas, and Gruenheide, Germany. However, competition, higher interest rates, and slower consumer spending are forcing them to go for price cuts or to offer something like free charging at Tesla Supercharging stations for some sizable miles.
Let us wait till January 25, 2023, when Tesla plans to report its 2022 fourth-quarter results along with its new outlook for the year ahead.