Tesla slashes prices in the U.S. and Europe to jumpstart sales after disappointing year-end deliveries

Tesla is reducing prices on its electric vehicles in the United States and Europe, according to listings on the company's website. This is the second time Tesla has cut prices on its vehicles in the past month.

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The move to the U.S. may help Tesla qualify for more federal EV tax credits, and increase sales volume both here and abroad. Competition and interest rates have increased, so this could be a boost for the company.

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Tesla has cut prices on its Model 3 and Model Y vehicles in Austria, France, Germany, the Netherlands, Norway, Switzerland and the U.K.
According to Reuters, Tesla has slashed prices on the Model 3 and Model Y by up to 17% in Germany. This makes the cars more affordable for consumers and puts Tesla ahead of competitors like Volkswagen and its ID.4 electric vehicle.

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Tesla's Model 3 is comparable in price to Volkswagen's entry level electric car, the ID.3. Both cars offer great value for money, and both are excellent choices for anyone looking for an electric car.

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According to independent EV industry researcher Troy Teslike, the price of a new Tesla Model 3 in the U.S. has dropped by 6-14%, depending on configuration. The cost of the Model Y has also dropped by around 19%, again depending on configuration. Tesla's entry-level sedan is the Model 3. The Model Y is classified as a sport utility vehicle or crossover by some. The company has also lowered prices for its more expensive Model S sedan and falcon-wing SUV Model X vehicles in the United States.

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There are a few different factors that determine whether or not an electric vehicle qualifies for a tax credit in the United States. These include the form factor or category of the vehicle, its efficiency, range, and the manufacturer's suggested retail price.

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The U.S. government has delayed setting new rules about sourcing of raw materials and battery components to qualify automakers for a $7,500 clean vehicle tax credit until at least the end of March 2023. This delay will give automakers more time to comply with the new rules and ensure that they are able to receive the tax credit.
This means that Tesla and other EV makers can buy parts and critical minerals from suppliers around the world for now, and still qualify for some EV subsidies. Those seeking to qualify for federal subsidies do need to complete final vehicle assembly of their electric cars in North America under current, interim rules.

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Tesla's latest round of discounts may help the company take advantage of EV tax credits in both the short and long term. However, it could also upset customers who have already agreed to purchase new electric cars at higher prices.

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Earlier this month, Tesla angered customers in China by slashing prices on its Model 3 and Model Y cars there after many had agreed to take delivery at higher prices before Dec. 31. Some of the customers staged protests and demanded rebates, but so far, Tesla has not relented, according to a Reuters report. Tesla's decision to slash prices on its cars in China has angered customers who had already agreed to pay higher prices. Some customers have staged protests and demanded rebates, but Tesla has not yet relented, according to a Reuters report.

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In late December, Tesla offered discounts on its Model 3 and Model Y cars of up to $7,500 to customers who agreed to take delivery before the end of the fourth quarter. Tesla also offered some U.S. customers 10,000 miles’ worth of free charging at Tesla Supercharging stations if they took delivery before the end of the year.
In the fourth quarter of 2022, Tesla reported deliveries of 405,278 vehicles and production of 439,701 vehicles. Although the company offered discounts, it fell short of its annual goal and analysts' expectations. Tesla had been telling shareholders to expect 50% in annual vehicle delivery growth over a multiyear horizon, but it was unable to meet that goal in the fourth quarter.

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Tesla has four vehicle assembly plants in operation: two in the United States (Fremont, California and Austin, Texas), one in China (Shanghai), and one in Germany (Gruenheide).

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The company's production capacity is expected to increase significantly in 2023, but some analysts are concerned that demand may not keep pace.
Tesla is now facing more competition than in recent years, as well as higher interest rates and slower consumer spending, according to Bernstein analysts. In a note on Jan. 12, the analysts wrote that these factors could pose a challenge for the company going forward.

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Analysts have said that they believe many investors are underestimating the challenges Tesla is facing in terms of demand. However, the firm has had an “underperform” rating and price target of $150 on shares of Tesla after the company’s share price declined in recent months.

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Last year, CEO Elon Musk sold billions of dollars' worth of his Tesla shares to finance a leveraged buyout of Twitter for around $44 billion. Since he took over Twitter and appointed himself CEO in late October, Musk has been splitting time between the social media business and his electric car company.
Tesla plans to report its fourth-quarter results for 2022 on January 25, 2023. The company is expected to provide its outlook for the year ahead at that time.