American electric vehicle manufacturer Tesla has dropped the price of the Model Y by 20% in the US, as reported by Bloomberg this Friday. The company, in turn, has applied significant discounts in its main European markets for the aforementioned Model Y and Model 3, cars that can now be purchased in Spain from 48,200 and 46,200 euros, respectively, according to the Tesla website. Thus, the Model 3 becomes cheaper in Spain by almost 7,000 euros and the Model Y by almost 4,000 euros.
With this reduction, both models are also within the price range covered by the Government’s Moves III Plan to help purchase electric vehicles. These aids, which are of a maximum of 7,000 euros if the client scraps an old car, can only be requested for vehicles of up to 45,000 euros before VAT.
In case of not scrapping any car, the aid remains at 4,500 euros. “Regardless of the help you request, you will additionally have a discount of €1,000 (excluding VAT) from Tesla,” says the manufacturer on its website. Thus, a Model 3 can stay below 40,000 euros by adding the Moves III and the extra discount from the American manufacturer.
With this aggressive price cut, Tesla is positioning its vehicles at far more competitive prices than premium competitors like BMW and Mercedes-Benz. In the case of the first, the price of its electric cars is between 56,400 and 140,000 euros. It only has one vehicle at a price similar to those mentioned by Tesla, the BMW i3, which costs 40,700 euros, according to the information offered by the German manufacturer on its website.
As for Mercedes, none of its electric models falls below 50,000 euros. Its cheapest electric model is the Mercedes-Benz EQA, which can be purchased from 55,479 euros. “There will be a significant impact on Tesla’s short-term gross margin” from this reduction in its prices, warned Chris McNally, an analyst at Evercore ISI, consulted by Bloomberg.
After learning of this price cut in the US and Europe, the manufacturer began Friday’s session on Wall Street with losses, falling as much as 3%, although it finally eased to 0.94%.
Tesla hasn’t met its sales targets
The company led by Elon Musk has decided to take this step after several quarters in which it has not met its sales expectations. In the fourth quarter of 2022, Tesla delivered about 26,000 fewer vehicles than Wall Street anticipated, with a total of 405,278 cars sold worldwide. Despite this, the company reinforced its world leadership as the main electrical manufacturer after registering 1.31 million units, far from the little more than half a million delivered by the Volkswagen group, one of its main competitors.
In one of its main markets, China, the company has also lowered its prices to try to recover its sales. Tesla cut its prices there twice in the past three months. There, the Model 3 can be obtained for 229,900 yuan (31,892 euros), when until recently its price was around 265,900 yuan (36,887 euros). According to Reuters calculations, Tesla has cut its prices in China between 13% and 24% since September. In that market, Tesla registered its lowest level of sales in the last five months in December.
