After China.. "Tesla" Reduces Prices of Its Cars in the United States and Europe

Dubai, United Arab Emirates - Tesla has reduced the prices of its electric vehicles in the United States and Europe by up to 20%, expanding its aggressive discount strategy after falling short of Wall Street's delivery estimates in 2022. This move, which led to a 4% drop in Tesla's shares before market trading began, came after the company's CEO Elon Musk warned that the possibility of a recession and rising interest rates means the potential for price cuts to maintain growth at the expense of profit.

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

Musk acknowledged last year that prices had become "confusingly high" and could harm demand. Reuters calculations showed that the price cuts in the United States, announced late Thursday, on its best-selling models globally, 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 previously. This is before a federal tax credit of up to $7,500 that took effect on many electric vehicle models at the beginning of January.

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

For those purchasing the Model Y in America, Tesla's new price, along with American support, results in a discount of 31%. Tesla has sought to obtain a tax credit for eligible vehicles.

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

The minimum price for electric vehicles eligible for support is 47,000 euros. Gary Black, an investor in Tesla, who has remained optimistic about the company and its prospects despite the recent sharp decline in its stock prices, tweeted: "This is expected to boost Tesla's sales for 2023; it's the right move."

In China, where Tesla reduced prices last week by between 6% and 13.5%, car owners who purchased their vehicles before the reduction protested, demanding compensation.