Tesla spends weekend cutting prices of cars

New strategy: Musk gets in a Tesla car as he leaves a hotel in Beijing. The company’s disappointing first-quarter sales contributed to swelling inventory. — Reuters

NEW YORK: Tesla Inc spent the weekend cutting prices of its models across China, Europe and the United States amid slumping sales and a glut of inventory.

Late last Saturday, the company led by Elon Musk also slashed the price of the driver assistance software that it calls FSD, or Full Self-Driving, by a third to US$8,000 in the United States. It had been US$12,000.

The promise of a fully autonomous vehicle has long been key to Tesla’s lofty valuation. In recent weeks, Tesla has rolled out new versions of the FSD software, and Musk has vowed to unveil a dedicated robotaxi on Aug 8.

Tesla’s website says that customers will receive a 30-day trial of FSD capability with a new vehicle purchase. The website says that “the currently enabled features require active driver supervision and do not make the vehicle autonomous.”

Earlier on the weekend, Tesla cut prices in China and the United States, its two key markets, as well as in Europe, after disappointing first-quarter sales contributed to swelling inventory.

In China, Tesla lowered prices across its range, with the revamped Model 3 falling to 231,900 yuan (US$32,000) from 245,900 yuan previously. The Model Y was discounted to 249,900 yuan – or about US$34,500 – from 263,900 yuan.

In the United States, the cheapest version of the Model Y is now US$42,990, returning the sport utility vehicle’s starting price to the lowest it’s been.

Tesla also discounted the two other more expensive versions of the Model Y by US$2,000, and dropped the price of the Model X to its lowest yet.

The cuts cap a wild week for the Austin-based automaker. It started when Musk announced in a memo to the company’s more than 140,000 employees that he was reducing headcount by more than 10% globally. Two top executives also left.

Last Wednesday, Tesla said in its proxy statement that it will ask shareholders to vote again on a US$56bil compensation package for Musk that was voided by a Delaware court in January.

And last Friday, the company recalled almost 3,900 Cybertruck pickups to fix or replace accellerator pedals that can dislodge and cause the vehicle to unintentionally accelerate, increasing risk of a crash.

Musk also postponed a planned trip to India, where he was expected to meet with Prime Minister Narendra Modi, saying he had to deal with “heavy obligations” at Tesla.

Tesla reports first-quarter earnings on April 23. Its stock is down more than 40% this year on concern about slumping sales, intensifying competition in China and Musk’s risky plan to go “balls to the wall” on autonomy.

The automaker reported its first year-over-year sales drop since the early days of the pandemic, delivering 386,810 vehicles in the first quarter, well short of analyst estimates.

In China, Tesla’s market share shrank to around 6.7% in the fourth quarter of 2023, from 10.5% in the first three months of the year, according to Bloomberg calculations based on China’s Passenger Car Association data.The automaker recently pared back production schedules at its Shanghai factory, Bloomberg reported late last month.

Shipments from its Shanghai plant – which makes EVs for China and for export to other parts of Asia, Europe and Canada – declined in the first two months from a year earlier, even as overall passenger-vehicle sales in China increased. — Bloomberg

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