March 4, 2024

Elon Musk speaking at a ceremony for Tesla China-made Model Y program in Shanghai

Photo: REUTERS/Aly Song (Reuters)

Tesla cut the price of its Model Y by $1,000 this month to a starting price of $35,490, saying prices will go back up in March. Tesla CEO Elon Musk posted on X the $1,000 cut is an “incentive” because “most people don’t love to buy cars in the middle of winter.”

“This is the essential quandary of manufacturing: factories need continuous production for efficiency, but consumer demand is seasonal,” Musk said in his post.

Tesla’s stock was down 1.3% in midday trading on Monday, and is down 23% so far this year — making it the worst-performing stock in the S&P 500.

The electric vehicle maker recently cut prices for its Model Y Long Range and Model Y Performance in Germany by over $5,000, and also cut prices on its Model 3 and Model Y in China.

The Texas-based automaker has previously cut prices for its EVs in the US, including last March, when it slashed prices for its most expensive models by between $5,000 and $10,000. In January 2023, Tesla cut prices for its models across markets by up to 20%.

The price cuts point to increasing competition in the global EV market where Tesla once held a lead. In 2023, German automaker Volkswagen beat Tesla in EV sales in its homeland, according to Germany’s Motor Transport Authority. Last month, Walter Mertl, chief financial officer for Munich-based automaker BMW, told Reuters EVs were generating the most sales growth for the company.

Tesla is facing the same challenge in China, where China’s BYD beat Tesla as the world’s largest seller of EVs in 2022, counting full electric and plug-in vehicles. But Tesla still makes more money than its competitors on each car.

Earlier this year, Tesla announced it was pausing car production at its factory in Berlin from Jan. 29 to Feb. 11 due to shipping disruptions caused by Houthi attacks in the Red Sea.

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