After China, Tesla Now Announces Price Cuts On Its Electric Vehicles In US

Electric vehicle maker Tesla cut the prices of its top-selling vehicles for the US market on Friday, news agency Reuters said. The automaker's website showed the price cuts on the Model 3 and Model Y, ranging between 6 per cent and 20 per cent on the prices that were held before the discount.

This comes after the company announced another round of price cuts in China earlier this month. The starting price for the China-made Model Y sports utility vehicle (SUV) has been slashed to 259,900 yuan ($37,875) from 288,900 yuan, according to the company's Chinese website. That's a record low for China and 43 per cent cheaper than the $65,900 starting price listed on Tesla's US website.

The Model 3 goes to 229,900 yuan from 265,900 yuan, about 30 per cent cheaper than in the US.

Along with previous price cuts announced in October and recent incentives, the China price for a Model 3 or Model Y was down 13 per cent to 24 per cent from September after the recent move, Reuters calculations showed.

Tesla has also cut prices in South Korea, Japan, Australia and Singapore. Tesla's main market is the United States, and its second-largest market is China.

The price cuts were first announced last year in order to boost sales amid tough competition from other companies like Warren Buffett-backed BYD and Xpeng as well as international players like Porsche and Mercedes all vying for sales.

But this is not particularly solving the problem for Tesla.

A report by Bloomberg on January 5 stated that the EV deliveries for the company slowed in December as production was suspended for equipment upgrades. The demand for its vehicles has also declined. Earlier this week, the company announced that global deliveries were lower than expected for a third-straight quarter. In 2022, it delivered just 1.3 million vehicles during the year, falling short of Wall Street expectations.

The share price of the company has slumped close to 65 per cent in the last year. The management of the company is a bigger problem.

The fall has been much steeper after Elon Musk's $44 billion takeover of the microblogging platform, Twitter, last year. Several media reports have stated that investors now believe his focus has shifted from Tesla to Twitter.

On January 7, in another report, Bloomberg said the board of Tesla is facing "mounting pressure" from the investors to prove that they are prepared to run the company in case of the "potential loss of Elon Musk".

Karen Robertsdottir, a shareholder from Iceland, has submitted a resolution for Tesla investors to vote in May on whether the board should prepare and maintain a key-person risk report. It is also hard for the media to contact the EV maker as it disbanded its communications team in 2019.

(With agency inputs)