Tesla's Price Cuts Spark Backlash Among Owners

Tesla Inc. is a leading innovator in the electric vehicle industry. The company's stock has surged in recent months, making it one of the hottest stocks on the market. Tesla's products are highly sought after by consumers and the company is quickly gaining market share.
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This month's deep price cuts on vehicles across the U.S. have sparked a backlash from customers. Many of these customers paid thousands of dollars more for their vehicles just weeks earlier.
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Tesla CEO Elon Musk said on Wednesday that demand has surged following the company's price reductions. Tesla executives have said that the reductions were aimed at making the company's electric vehicles more affordable and qualifying some models for a federal tax credit.
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The operator of one Tesla-focused YouTube channel has organized a petition asking that customers who purchased cars before the lower prices took effect get free or discounted software downloads. The petition has received more than 6,000 signatures.
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Tesla did not respond to requests for comment about the customer reaction to the cuts.
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Tesla has cut prices on some of its vehicles by nearly 20%, a move that comes as other EV manufacturers are raising their prices. This is a significant discount for Tesla, and it shows that the company is committed to making its cars more affordable for consumers.
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It's rare to see such a strong customer reaction to a price cut in the auto industry, where car companies often discount models to boost sales. Tyson Jominy, vice president of data and analytics at research firm J.D. Power, said he's never seen an auto maker make such an immediate, deep cut across multiple models.
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Tesla shares continued to rise last week, building on their 2023 gains, after the company reported record fourth-quarter profit and an upbeat demand outlook.
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"Price is definitely a factor," Mr. Musk said during the company's earnings call Wednesday. "There are a lot of people who want to buy a Tesla car but can't afford it." Mr. Musk said the company increased the price of a Model Y by about $500 because of strong demand following the mid-January price cut.
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In late December, Vikas Khanna, a 48-year-old healthcare executive, paid around $65,000 for a Model Y SUV, which included a $7,500 discount offered by Tesla at the time. This price cut saved him about $5,000, taking into account fees and upgrades.
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"I just don't feel confident trusting Tesla as an organization anymore," said Mr. Khanna, who had bought two Teslas over the years before his recent purchase.
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Mr. Khanna said that he understands that companies have the ability to adjust pricing, but he sees a distinction between fluctuations in car prices and other goods, such as mobile phones.
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He said that you don't take out a loan for an iPhone.
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The latest setback for Tesla and its CEO Elon Musk comes in the form of a backlash from investors and analysts. They have been questioning the demand for Tesla vehicles as well as whether Musk's Twitter takeover has been a distraction. Despite this, Tesla's stock price has rebounded by about 44% this month. This is due to Musk's bullish forecast for demand and vehicle output.
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Some Tesla owners in China said they felt betrayed after the company announced price cuts this month. Around 100 owners gathered at a showroom in Changsha, a city in central China, and showed a collective letter requesting compensation such as free charging or loyalty points.
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Tesla has announced price cuts for its electric vehicles (EVs), which could put pressure on the profit margins of its competitors. The price reductions come as many other car makers are introducing new EVs into the market, and Tesla's lower prices could undercut some of its rivals' models. Analysts say that the price cuts could also pressure other car makers to reduce their prices in order to stay competitive.
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Tesla has more flexibility to adjust pricing than traditional car makers because it sells directly to customers. Adjusting the manufacturer’s suggested retail price overnight would be costly and cumbersome for traditional car makers, Mr. Jominy said.
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Car companies typically set pricing for a specific model year and adjust by offering discounts, cash-back offers or other incentives on a month-to-month basis. This allows them to keep prices consistent and avoid having to constantly adjust them based on market conditions.
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Some Tesla owners have been rankled by the decline in resale values. According to data from research site Edmunds, the list price of model-year 2020 or newer used Teslas was down 25% from the June peak as of January 17, which is about double the rate of the industrywide drop.
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Dennis Wang, who runs a YouTube channel for Tesla owners and buyers, has started a petition seeking compensation in the form of free services for Tesla owners who purchased their vehicles in 2022. The goal is to return value to Tesla drivers who felt slighted by the cuts, he said.
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"I think this is a great opportunity for Tesla to improve its image," said Mr. Wang, who has purchased several Tesla vehicles in the past decade but wouldn't personally benefit if his petition is successful.
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Kapil Sharma, an industrial consultant who lives outside of Atlanta, asked his Tesla service center about the possibility of a refund after the company slashed prices. He had taken delivery of a new Model Y, his first Tesla, two weeks earlier. Sharma was disappointed that he had not gotten the full value for his purchase, and he was hoping to get some relief from the company. However, the service center told him that Tesla does not offer refunds for price reductions.
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The company told him in a text message exchange reviewed by The Wall Street Journal that it does not have a return policy and does not price match or price adjust completed orders.