Tesla prices slashed globally by up to 20 per cent to boost sales

Tesla has been going against the grain and dropping prices of its EVs across the globe after failing to meet sales forecasts in 2023.

Although the electric car start-up from the US dominated EV sales in Australia and set another quarterly record in the final quarter of 2022, stock prices fell when growth didn’t live up to the 50 per cent that Musk promised.

Increasing competition from new start up EV brands – especially in China, but also with GM and Ford cranking up pressure in the US – are challenging influencing Tesla’s market stance, too.

Official sales figures from the Chinese Passenger Car Association saw December Tesla deliveries in China down 44 per cent on November 2022, and 21 per cent lower than the same month in 2021.

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To bolster sales globally, Tesla’s new strategy isn’t to play nice, but instead pushing through significant price cuts, the largest up to 20 per cent, or US$13,000 in its home market for the five-seat Model Y.

Price cuts in China were as high as 13.4 per cent on 3 Standard Range and Y Long Range.

The main cuts come to volume-selling models, the Model 3 sedan and Model Y medium SUV – with prices also recently dropped in Australia too – as Tesla also battles with tumult of Semi and Cybertruck model production with increasing regulatory attention, and fast-flooding EV marketplace.

According to an Automotive News Europe report, Wedbush analyst Dan Ives says the global price cuts have the potential to boost Tesla sales by between 12-15 per cent globally over the next 12 months.

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The radical rethink comes as Tesla share values skimmed just above $100 in the fourth quarter of 2022 – partially down to lower-than-expected Tesla deliveries, but Musk's purchasing of Twitter didn't inspire confidence in shareholders.

After promoting Tesla China boss, Tom Zhu, the share prices have already improved, hovering around US$120 at time of writing, but still far adrift of their historical US$390 high.

The dangers, however, come in the form of potential slashed profit margins for Tesla that could harm share returns over the next 12 months. Though Tesla says that cost inflation has begun to stabilise on the manufacturing end, which bodes well for the sustained price cuts.

In Australia, Tesla’s latest round of drops were fairly minor, staying under five per cent and returning the single motor versions of Model 3 ($63,500) and Model Y ($68,900) to where they were earlier in the year, rather than wholesale slashing.