The slowdown bug seems to have bitten even Tesla, which recently cut prices of most electric vehicles (EVs) by around 20 per cent in the US as well as Europe.
Elon Musk’s firm may have anticipated a recession and wants to rev up demand for its cars so that it can make up for the possible imminent downturn.
Tesla faces intense competition
Moreover, the EV giant is facing intense competition in the global auto market, lately. Also, Tesla has been hit by surging interest rates in the US, which, in turn, has raised the cost of financing vehicles.
The EV maker has realised that US auto giants like General Motors (GM) and Ford are speeding up their electric line-up, and according to an expert, “Tesla is ripping off the band-aid and going on the offensive.”
The Tesla stock has been falling in the last few months, and has plummeted about 70 per cent since November 2021.
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| The Model 3 is the second-most popular Tesla car in Europe -- Photo: Tesla website. |
Price cuts on Model 3, Model Y
Price cuts on Tesla’s highest-selling cars globally — the Model 3 sedan and Model Y crossover SUV — were between 6 and 20 per cent in the US market. With this, the lowest-variant Model Y now costs $53,000,a big fall from $66,000 earlier.
Another reason for Tesla price cuts
Another reason that is being perceived for the price cuts could be that Tesla — with some of its low-priced cars — is targeting to qualify for Federal tax credits worth $7,500, which have been available since January 1 this year. This credit can be claimed for electric cars priced below $55,000.
Fed tax credits could take the discount up to a whopping 30 per cent for Tesla cars.
Tesla has witnessed unprecedented growth in the last decade, and even a few months ago, it was the clear leader in the EV pack, globally.
Elon Musk’s Twitter problem
But now, Tesla chief executive Musk is facing a different problem — he is grappling with Twitter, the micro-blogging platform he bought for $44 billion recently.
Twitter is seeing job cuts and Musk has vowed to bring Tesla on the path of profit. In fact, he had sold Tesla shares worth billions of dollars for the Twitter buy.
Also, Musk’s political opinion about the ongoing Russia-Ukraine war did not go down well with many of Tesla’s fans and customers.
US vehicle sales fall
It was not only Tesla’s numbers but vehicle sales in the US fell about 9 per cent to less than 14 million vehicles, comprising cars and trucks.
This is mainly owing to the shortage of computer chips, making this sales figure the slowest since 2011.
Also, the litany of Federal Reserve’s rate hikes has made borrowing more expensive. So, customers are shying away from taking loans to buy cars.
Tesla’s competitors are also revving up
GM is all set to begin manufacturing electric versions of the Chevrolet Silverado pick-up as well as the Chevrolet Blazer and Equinox SUVs.
Tesla also faced problems in its largest market China after local EV brand BYD became the top electric vehicle seller in that country. So, Elon Musk’s firm had to slash the prices there also.
E-Vroooom’s views
The slowdown bug may have forced Tesla to cut prices of EVs by around 20 per cent in the US as well as Europe but it would take quite an effort for competitors to try and dislodge Musk’s firm anytime in the near future.
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