Tesla offering discounts of over $1,700 on some US Model 3 cars: Website
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US prices for Model 3 start at US$40,240 and Model Y at US$47,490.
PHOTO: REUTERS
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SAN FRANCISCO - Tesla is offering discounts of more than US$1,300 (S$1,750) on some Model 3 cars in its United States inventory following even heavier discounts in Europe, according to a Reuters’ review of its website, even as the electric carmaker has raised US prices on most newly ordered cars in May.
Facing economic headwinds and mounting competition, Tesla in 2023, has aggressively cut vehicle prices in several regions and is resorting to the traditional carmakers’ tactic of offering incentives to clear inventory, said analysts.
On Tuesday, chief executive Elon Musk told shareholders Tesla will try advertising for the first time,
Mr Musk warned that Tesla was not immune to the global economy, predicting it will be difficult for the next 12 months.
Tesla slightly raised prices of some new models twice in May in the US, although prices remain much lower than they were before the price cuts began in 2023.
Tesla now offers discounts of more than US$1,300 on some Model 3 cars, up from the US$250 discounts earlier in May on some Model Y and Model 3 vehicles, according to the website.
As at Friday, the US$250 discount was no longer offered on Model Y.
US prices for Model 3 start at US$40,240 and Model Y at US$47,490.
“Tesla is beginning to rely on incentives in the same manner traditional automakers have when their dealer inventories begin to spend too much time on the lot,” said Edmunds.com director of insight Ivan Drury, adding the incentives “signal that Tesla has begun to slightly oversupply the market”.
Tesla plans to launch a revamped version of its Model 3 sedan in 2023 to refresh its ageing product line-up.
The price cuts to drive up sales volume reflect pressure Tesla faces from competition and an ageing product line-up, rival Ford Motor Co CEO Jim Farley said in April.
Heavy discounts in Europe
Tesla’s US discounts follow deep discounts in Europe in May as production from factories in China and Berlin outpaced demand.
Tesla offers discounts of up to €3,490 (S$5,100) for a China-made Model 3 and €3,660 for a Berlin-made Model Y, according to Tesla Info’s list of global inventory.
Other markets such as France, Germany, United Kingdom and Italy offer similar discounts.
“The problem is that the cars that are exported end up in inventory in Europe, which is close to an all-time high. Now Europe has an inventory problem but not China,” he said.
Tesla did not respond to Reuters’ request for comment, but Mr Musk at the shareholder meeting said the company’s approach is straightforward.
“We see what the demand is and then we adjust pricing to meet the demand,” he said.
In the first quarter, Tesla had 15 days worth of global inventory, leaner than the industry norm but its highest in nearly three years. The industry average for inventory in just the US is 35 days.
Tesla also produced more cars than it sold, which analysts said pressured the company which lacks dealers to absorb excess inventory.
When demand slows, inventory “starts to become a drain on cash very quickly”, said Mr Tyson Jominy, an executive with consultancy J.D. Power. REUTERS
