Tesla’s Big Emergency: Elon Musk’s EV company slashes prices for EVs, FSD, as sales tank

Over the weekend, Tesla, led by CEO Elon Musk, took a rather drastic step and reduced the prices of its entire portfolio of vehicles in key markets like China, Europe, and the US. This decision to slash prices comes at a time when Tesla’s sales have dwindled and they are left with holding a lot of inventory. The discounts are being seen as a desperate move to stimulate demand for their EVs, and move the inventory.

Over the weekend, Tesla also announced a massive price cut for its Full Self-Driving (FSD) software, dropping it by over 33 per cent to $8,000 in the US. The company’s commitment to developing fully autonomous vehicles has been central to its valuation.

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Tesla has also promised to launch a dedicated robotaxi on August 8th.

Customers purchasing new vehicles will receive a complimentary 30-day trial of the FSD software, although Tesla clarifies that the current features necessitate active driver supervision and do not render the vehicle fully autonomous.

In China, prices were slashed across Tesla’s model range, with the revamped Model 3 now priced at 231,900 yuan ($32,000), down from 245,900 yuan previously. Similarly, the Model Y received a discount, dropping to 249,900 yuan, approximately $34,500, from 263,900 yuan.

In the US, the entry-level Model Y now starts at $42,990, returning to its lowest price point. Tesla also reduced prices for higher-end versions of the Model Y by $2,000 and set the price of the Model X at its lowest level yet.

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These price adjustments came at the end of a tumultuous week for the Austin-based automaker, marked by CEO Elon Musk’s announcement of a global workforce reduction exceeding 10% and the departure of two top executives.

Despite these challenges, Tesla remains committed to innovation and growth in the electric vehicle market. The price cuts reflect the company’s efforts to adapt to market dynamics, address inventory concerns, and maintain competitiveness in key regions.

In China, prices were slashed across Tesla’s model range. The Model 3 now costs 231,900 yuan ($32,000) and is down from 245,900 yuan.

Similarly, the Model Y received a discount, dropping to 249,900 yuan, approximately $34,500, from 263,900 yuan.

These price cuts followed CEO Elon Musk’s announcement of a global workforce reduction exceeding 10 per cent and the departure of two top executives, marking a turbulent period for the company. Despite these setbacks, Tesla remains steadfast in its commitment to innovation and growth in the electric vehicle market.

In addition to the pricing adjustments, Tesla faced further challenges during the week. It announced plans to seek shareholder approval again for a $56 billion compensation package for Musk, which had been invalidated by a Delaware court earlier in the year. Moreover, the company issued a recall for nearly 3,900 Cybertruck pickups due to accelerator pedal issues that could potentially lead to unintended acceleration and pose a safety risk.

Despite these hurdles, Tesla continues to navigate the evolving landscape of the automotive industry, striving to adapt to market dynamics, address concerns, and maintain competitiveness in key regions.

Tesla is facing a lot of challenges. First, the company announced that it will be seeking shareholder approval again for a $56 billion compensation package for CEO Elon Musk. This decision came after the package was invalidated by a Delaware court earlier in the year.

Furthermore, last week, Tesla issued a recall for nearly 3,900 Cybertruck pickups due to issues with its accelerator pedal. The EV was experiencing unintended acceleration which could have been fatal for drivers, passengers and people on the road.

In addition to these internal matters, Elon Musk postponed a planned trip to India, where he was scheduled to meet with Prime Minister Narendra Modi. Musk cited “heavy obligations” at Tesla as the reason for the delay, indicating the company’s focus on addressing its current challenges.

The company’s stock has experienced a major decline of over 40 per cent this year. This is of major concern since sales have slumped in a market that is seeing increased competition, especially from China.

During the first quarter, Tesla reported its first year-over-year sales drop since the early days of the pandemic, delivering 386,810 vehicles, which fell short of analyst estimates.

In China, Tesla’s market share declined to around 6.7 per cent in the fourth quarter of 2023, down from 10.5 per cent in the first three months of the year, according to Bloomberg calculations based on data from China’s Passenger Car Association.

(With inputs from agencies)