San Francisco, California – Tesla has announced temporary price cuts for some of its Model Y cars in the U.S. in an effort to boost sales. The price reductions come less than a month after the electric vehicle maker cut Model Y prices in Germany.
The company reduced prices for its Model Y rear-wheel drive and Model Y Long Range by $1,000 each to $42,990 and $47,990, respectively. The temporary price cuts run until Feb. 29 and represent discounts of 2.3% and 2%, from the previous models’ respective prices. However, Tesla opted against cutting prices for its Model Y Performance variant and other models.
The reduced prices are for deliveries ordered now through Feb. 29, but Tesla has also already announced that prices will rise by $1,000 or more on March 1st. These latest price cuts are expected to further weigh on Tesla’s margins, which were already hurt due to a price war that started over a year ago.
In addition to the price cuts, Tesla warned of “notably lower” sales growth in 2024 as it focused on production of its next-generation EV, code-named “Redwood.” The company paused production at its Berlin-area Gigafactory from Jan. 29 to Feb. 11 due to a shortage of key components caused by shipping disruptions in the Red Sea.
Tesla is facing cooling demand in the EV market amid competition with a growing number of cheap EVs, such as those made by China’s BYD, which surpassed Tesla as the world’s leading EV maker in the final quarter of 2023. Major U.S. automakers have also grappled with balancing soft EV demand against the development of next-generation EVs.
In addition, rental car firm Hertz announced in January that it was selling about 20,000 EVs, including Teslas, from its U.S. fleet and opting for gas-powered vehicles due to higher expenses related to collision and damage to EVs.
As a result of these challenges, Tesla shares are down over 22% in 2024 so far and are mostly flat over the past year, having fallen by nearly 0.6%. With these ongoing issues, the company is navigating a difficult market landscape as it seeks to maintain its position as a leader in the electric vehicle industry.