Tesla Cuts Prices Across Major Markets

Shares in Tesla sagged to a 52-week low in US trading on Monday after the company announced price cuts in a number of major markets over the weekend, including the US, China and Germany.

The move comes after Tesla reported earlier this month that global vehicle deiveries in the first quarter fell for the first time since early 2020, when production was disrupted by the Covid-19 pandemic.

Over the weekend chief executive Elon Musk postponed a trip to India, citing obligations at Tesla. Musk was expected to meet with prime minister Narendra Modi and to announce plans to expand in the South Asian country after its government conditionally lowered import taxes for electric vehicles.

The firm cut the price of its Model Y, Model S and Model X vehicles by about $2,000 (£1,621) in the US and reduced the price of its Full Self-Driving software to $8,000 from $12,000 over the weekend.

Price cuts

In China the firm cut the starting price of the revamped Model 3 by 14,000 yuan ($1,930, £1,570) to 231,900 yuan, while in Germany the price of the Model 3 rear-wheel-drive was reduced to 40,990 euros ($43,671, £35,373).

Prices were also reduced in other countries across Europe, the Middle East and Africa, Tesla told Reuters.

“Tesla prices must change frequently in order to match production with demand,” Tesla chief executive Elon Musk wrote on X on Sunday.

Shares in the firm dropped by as much as 4 percent on Monday to their lowest level since January 2023.

The stock is down 43 percent so far this year, partially trimming gains from a huge surge that began in 2020, amidst concerns over delivery slowdowns, larger inventories and a recall of all of the nearly 4,000 Cybertrucks that Tesla has delivered to date over a safety issue affecting accelerator pedals.

China competition

Tesla’s sales slip comes amidst intensifying competition, particularly from Chinese firms including BYD, Nio and Li Auto, with BYD temporarily taking Tesla’s top spot as the world’s biggest electric vehicle maker in the fourth quarter.

Li Auto cut its prices over the weekend by $2,000 to $4,000, roughly matching Tesla’s cuts.

Tesla began a price war in China early last year in an effort to maintain market share at the expense of profit margins.

The company last week announced its biggest-ever round of layoffs, affecting more than 10 percent of staff worldwide, even as the company tries to revive a record-breaking $56bn pay package for Musk that a judge voided in January, ruling that directors had acted as “supine servants” to the chief executive.

The company is due to report its first-quarter financial results in a call with investors on Tuesday after the close of trading.