It’s EV price reduction déjà vu — at least for Tesla vehicles.
The automaker, which lowered prices last week in the United States, has made another reduction, this time in markets throughout Europe and Israel. The reductions, which were as high at 9.8%, were made across the company’s vehicle portfolio, including the Model 3, Model Y performance and its more expensive Model S and Model X variants.
Tesla has cut prices of its EVs sold in China, Europe and North America multiple times since last fall, at times as much as 20%.
The company said in a statement published by Reuters that the price cuts are of its mission to accelerate the transition to renewable energy.
“Our masterplan has set a clear pathway to achieve that mission: the transformation of cost-intensive small-series products to cheaper mass-series vehicles,” according to the statement.
Lowering prices may boost sales, but could also cut into its automotive margins. Tesla, which has enjoyed one of the higher automotive margins in the sector, does have a bit of cushion.
The price cuts have persisted as Tesla pushes to scale its operations and produce 1.8 million vehicles in 2023. CEO Elon Musk said during the company’s Q4 and full-year earnings call in January that the company has “the potential to do 2 million cars this year.”
Last week, Tesla reduced the price of its higher-end and aging Model S and Model X vehicles by $5,000 each. It also lowered prices of its Model 3 and Model Y vehicles. Tesla has cut prices in the U.S. as requirements to qualify for the $7,500 federal tax credit tighten. Tesla has said that based on new IRS guidance, the $7,500 credit will be reduced for the Model 3 rear-wheel drive on April 18 to $3,750.
Tesla kicked off its price reduction strategy in October when the company announced price cuts in China up to 9% on the Model 3 and Model Y. Already this year, the price of the base Model Y is 20% lower than it was at the end of 2022.
Tesla has lowered the sticker price on its vehicles in the U.S. and China numerous times since then. Any speculation that the cuts would stop in 2023 ended in January when Tesla drastically slashed prices by as much as 20%.
Tesla said earlier this month that it delivered 422,875 electric vehicles in the first quarter of 2023, just beating Wall Street estimates of around 420,000 units. The company produced 440,808 vehicles in the same period. In the fourth quarter of 2022, Tesla delivered 405,278 and produced 439,701 units. Those Q4 deliveries were also record results, but they missed Wall Street expectations.