Tesla addresses inventory surge and sales slowdown by reducing prices in US and China

ABU DHABI: Tesla has recently dropped prices in markets like the US and China, driven by many factors. Firstly, the EV maker is dealing with a huge decline in sales, making it necessary to adjust prices to increase demand. Secondly, there is heightened competition in the electric vehicle (EV) market, particularly from Chinese electric vehicle manufacturers, necessitating the response of Tesla to maintain its market share.

In China, the Model 3 now costs CNY 231,900 (AED 117,546), down from CNY 245,900 (AED 124,643), and the Model Y is priced at CNY 249,900 (AED 126,670), reduced from CNY 263,900 (AED 147,400). 

In the US, the base Model Y now starts at $42,990 (AED 157,897), the lowest it's been. Tesla also cut prices by $2,000 for higher-tier Model Y versions and offered the cheapest Model X yet Subsequently, it also dropped its Full Self-Driving Driver Assistant software price in the US from $12,000 to $8,000. 

The delay of Tesla in updating its aging vehicles coincides with the low interest of the customers in major purchases. Meanwhile, competitors in China are coming up with more budget-friendly models, intensifying the competition.

This year the stock of the company has declined over 40%, because of heightened competition in China, concerns over declining sales, and ambitious autonomy plans of Musk. Since the pandemic's onset Tesla reported a drop in its first year-over-year sales, delivering around 386,810 vehicles in Q1. In China, the market share of Tesla declined to approximately 6.7% in Q4 2023.

Tesla has cut over 10% of its workforce globally as it expects the first yearly decline in deliveries. Musk also refuted the claims made by Reuters on scrapping affordable EV plans. 

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