Tesla Inc has globally reduced prices of its electric vehicles (EVs) by up to 20%, as part of its aggressive discounting strategy. This move comes after the automaker failed to meet Wall Street’s delivery targets for 2022 and CEO Elon Musk warned that a possible recession and rising interest rates could impact growth, leading to a reduction in prices even if it means lower profit. The price cuts are a departure from the company’s previous strategy, where demand outstripped supply over the past two years. The recent price reductions are in line with Musk’s statement last year that the high prices of EVs had become “embarrassingly high” and could affect demand. The cuts were made in the US, Europe, the Middle East and Africa, following earlier cuts in Asia, which analysts view as a challenge to both smaller cash-strapped rivals and legacy automakers stepping up EV production.
The discounts could make EVs more accessible to those who were previously unable to afford them. US and French buyers can also benefit from federal tax credits for certain EV purchases. The price cuts on the Model 3 sedan and Model Y crossover SUV, Tesla’s top-sellers, were between 6% and 20%, with the basic Model Y now priced at $52,990, down from $65,990, before a $7,500 US federal tax credit that became effective on January 1st. The Model X luxury crossover SUV and Model S sedan also saw price reductions in the US.