Tesla has implemented significant price reductions on its Model Y cars in Europe, following a similar move in China, signalling the company’s proactive response to uncertainties in the electric vehicle (EV) market. The price adjustments, coupled with reduced targets from brokerages UBS and Wells Fargo, contributed to a nearly 3% drop in Tesla’s shares, reflecting a challenging start for the stock in 2024.
In Germany, Tesla reduced prices for the Model Y Long Range and Model Y Performance by EUR 5,000, bringing them to EUR 49,990 and EUR 55,990, respectively. These adjustments represent discounts of 9% and 8.1% compared to previous prices. Additionally, prices for Model Y rear-wheel drive models were cut by 4.2%. The price cuts extended to other European countries, including a reduction of up to 6.7% in France, up to 10.8% in Denmark, up to 7.7% in the Netherlands, and between 5.6% and 7.1% in Norway.
While Tesla did not specify the reason for the price reductions, the move aligns with the broader trend of slowing EV demand, attributed to reduced state subsidies and higher borrowing costs. The EV market in Germany, a key battleground for Tesla, witnessed a 9% decline in new registrations for the company in 2023, compared to an 11.4% increase in EV sales across the country. Volkswagen claimed the top spot as the largest seller of EVs in Germany, capturing a 13.5% market share, surpassing Tesla’s 12.1%.
The challenging market conditions prompted Wells Fargo and UBS to lower their price targets on Tesla’s stock by over 8% and nearly 11%, respectively. The stock had already experienced an 11.5% decline in January.
Tesla’s decision to cut prices comes on the heels of the company’s announcement last week that it would suspend most car production at its factory near Berlin due to a shortage of components resulting from disruptions in transport routes due to Red Sea vessel attacks.
Adding to the headwinds, Germany’s EV subsidy program, originally slated to run until the end of 2024, concluded prematurely last month. This move is expected to impact German automakers, making it challenging for them to compete on pricing with Chinese and U.S. counterparts.