Tesla turns up heat on rival brands with global price cuts
Tesla has taken the price cut strategy to retain its dominance in the global electric car market, which is witnessing the rise of several automakers with their respective products. wall Street estimates that in 2022 alone, Tesla has slashed the pricing of its electric vehicles by as much as 20 per cent in a bid to retain its supremacy in the zero-emission car market. Interestingly, this move marks a 180-degree turnaround from the Ev maker's strategy over the last two years when the new vehicle orders exceeded supply.
The strategy of price reduction comes after the Tesla CEO Elon Musk warned that the automaker may reduce pricing of its cars comprising the profit margin. He hinted that the prospect of recession and higher interest rates meant that Tesla could lower prices to sustain growth at the expense of profit. He acknowledged in 2022 that prices of the Tesla cars had become embarrassingly high and could hurt demand. In fact Tesla stock took a hit last year marking its worst yearly performance ever since inception, owing to the slowing growth in China.
As part of the price reduction strategy, Tesla has reduced prices of its cars in the United States, China, Europe, Middle East and Africa. The price reductions have been announced through a series of cuts over the past few weeks. Reuters reports that this move comes as a clear shot at the smaller rivals and legacy automakers as well. The smaller brands have been bleeding cash and can't take a price cut measure like Tesla, while the legacy car brands too ar aggressively ramping up their EV production. As analysts claim, Tesla is facing surging competition and responding to that with price cuts.
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These price cuts and discounts announced by Tesla would further sulvage the brand, resulting in sales boost, specially in markets like US and France, where the buyers could take advantage of both the discounts and federal tax credits available for EV purchase.