Tesla cuts vehicle prices in the US after reductions in Asia

World's biggest electric vehicle manufacturer is trying to boost worldwide demand

Tesla cars at a dealership in Austin, Texas. AFP
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Tesla, the world's biggest electric vehicle manufacturer, has extended price cuts on its car models globally, after reductions in China that led to owners protesting in car showrooms.

Prices on the Model 3 and Model Y in the US were between 6 per cent and 20 per cent lower after the discount, according to a Reuters calculation.

Buyers of many electric car models in the US have been able to take advantage of a $7,500 federal tax credit since the start of January.

Cuts in Germany on the Model 3 sedan and the Model Y crossover ― its global top-seller ― range between 1 per cent and almost 17 per cent depending on the configuration.

Tesla last week cut prices in China for the second time in less than three months amid weaker demand in the world's second largest economy and biggest car and electric-vehicle market globally.

It also cut prices in Japan, South Korea and Australia.

The China move came after the government ended a more than decade-long subsidy for electric vehicle purchases.

Hundreds of Tesla owners gathered at showrooms and distribution centres across China in protest against the price cuts, arguing that they had now overpaid for their vehicles.

People protest against price cuts at a Tesla showroom in Chengdu, China, last week. Reuters

Tesla's electric vehicle prices in China are now between 13 per cent and 24 per cent below their September levels.

China accounted for about a third of Tesla's global sales in 2021 and its Shanghai factory, which employs about 20,000 workers, is its most productive plant.

Last month, Tesla chief executive Elon Musk said "radical interest-rate changes" had changed the industry-wide outlook and that Tesla could lower pricing to sustain volume growth, which would result in lower profit.

The company set another record for annual deliveries as it shipped 1.31 million cars in 2022, up more than 40 per cent year on year.

However, Tesla's deliveries missed Wall Street estimates and even the company's own growth projection of 50 per cent, despite opening two new factories last year.

The “great 2022" was achieved despite “significant Covid and supply chain-related challenges throughout the year”, Tesla said.

Tesla has in recent days made a change very close to the top of its hierarchy, with China chief Tom Zhu promoted to take charge of the US assembly plants as well as sales operations in North America and Europe, according to an internal posting of reporting lines reviewed by Reuters.

This makes him the highest-profile executive at Tesla after Mr Musk, overseeing deliveries in all its major markets.

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Updated: January 13, 2023, 8:13 AM
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