Tesla cuts prices in 'intensifying' EV war

Tesla cuts prices in ‘intensifying’ EV war

Tesla has slashed the price of its line-up around the world amid what The Guardian called an “intensifying war” for electric vehicles (EVs).

The company announced reduced price tags for the best-selling Model Y, and the older Model X and Model S in the US market on Friday. This was followed by a “swathe of price cuts” over the weekend in Europe, the Middle East, Asia and Africa.

Chief executive Elon Musk addressed the changes on X yesterday, saying: “Tesla prices must change frequently in order to match production with demand.”

Tesla first “ignited an EV price war” more than a year ago “by aggressively cutting prices at the expense of profit margins”, said Reuters. EV manufacturers in the West are struggling to contend with cheaper Chinese rivals, while high interest rates have “sapped consumer appetite for big-ticket items”.

The price cuts came at the end of a “chaotic week” for Tesla, said The Guardian, including a global recall of their Cybertruck after multiple reports of near-misses caused by a loose accelerator pedal. The company said it was not aware of any collisions, injuries, or deaths related to the issue but would replace or repair the pedal assembly for free.

Last week, Musk confirmed that Tesla plans to reduce its global workforce by 10%, after its first year-over-year quarterly sales decline in almost four years.

Wall Street investors are “anxiously awaiting” the anticipated 2025 release of Tesla’s “lower priced” EV known as Model 2, said US financial news magazine Barron’s. Generating demand “has been a struggle for the electric vehicle giant lately”, but the Model 2’s reputed $25,000 (£20,250) starting price would “dramatically expand the company’s addressable market”.

Other media reports claiming Musk may be planning to scrap the Model 2 altogether have “created more uncertainty over the company’s direction”, said The Guardian. The uncertainty is compounded by investors’ concerns that the billionaire is “stretched too thin” following his acquisition of X, formerly Twitter, in 2022.

Tesla is scheduled to announce its first quarter earnings tomorrow.