In an attempt to counteract a shaky start to the year (the stock is down 40% since January), Tesla announced a series of measures aimed at stimulating sales and strengthening its market position. The company, based in Austin, has reduced the prices of its electric cars in both the United States and China, in response to concerns regarding declining sales (-8,5% compared to 2023 with 386.810 vehicles delivered in the first quarter) and increasing competition in the automotive sector. The objective is to empty the warehouses and stimulate the market again declining demand. The cuts came shortly before the publication of the quarterly accounts, due to Tuesday 23th April.
Tesla: 2 thousand euro cut on three models
In the first quarter, global vehicle deliveries recorded a decrease for the first time in almost four years, highlighting the difficulties of the automotive sector. Tesla has therefore reduced prices of its vehicles in several global markets. In Europe, the price of the Model 3 has been lowered by 2.000 euros, now reaching 40.990 euros. In China there are reductions of up to 14.000 yuan (about 1.930 dollars) for the Model 3 which now costs 231.900 yuan (about 30.000 dollars). Same reductions also for Model Y, Model S and Model X. The Model Y now starts at 249.900 yuan, while the regular Model S is now at 684.900 yuan and the Model S Plaid at 814.900 yuan. As for the Model We are thus trying to recover the market in a strategic country. According to Bloomberg, the market share of Tesla in China fell below 7%, compared to a value higher than 10% recorded in the first part of 2023. Cuts of 2 thousand dollars also occurred in models sold in United States. The minimum price for the Tesla Model Y has dropped to $42.990, the lowest level on record. Historic low also for the Model
This move by Tesla seems to put a definitive end to the company's idea of developing and marketing the Model 2, a low-cost, mass-market electric car with an estimated price of around $25.000.
The price of the driving assistant is also down
But that is not all. In addition to car price cuts, Tesla has also reduced the cost of its driver assistance software, Full Self-Driving (FSD), by 33%, taking it from $12.000 to $8.000 in the United States. The FSD, it was highlighted on the company's website, does not yet make vehicles autonomous and requires active supervision of drivers. However, this system has been the focus of analysts' attention and has affected the company's ratings. Meanwhile, the launch of the "robotaxi" in August seems confirmed, which should fully demonstrate the potential of this feature.
Also cuts to staff
2024 is a year of uncertainty for Tesla. In addition to the decision to reduce prices and review its strategy, the company has taken other significant measures. Recently, the electric car company led by Elon Musk announced that will fire more than 10% of its global workforce, or approximately 14 thousand employees. Musk himself communicated this in an internal email sent to employees. We "made the difficult decision to reduce our workforce by more than 10 percent globally – Musk said in an internal memo for the occasion – I hate nothing more than this but it must be done".
But, despite mass layoffs due to financial difficulties, Tesla is trying to also reactivate a $56 billion payment for CEO Musk, a compensation package that was previously rejected by a Delaware court due to concerns about the transparency of the decision-making process.
It remains to be seen whether these measures will be sufficient to reverse the negative trend and restore investor confidence. With first-quarter financial statements arriving on April 23, industry eyes will be on Tesla to gauge the effectiveness of its strategies.
