Tesla cuts Model Y prices in US to boost sales as competition from China heats up

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Tesla has temporarily cut the prices of some of its Model Y cars in the U.S. through the end of February less than a month after the electric vehicle maker cut Model Y prices in Germany.

Tesla reduced prices for its Model Y rear-wheel drive and Model Y Long Range by $1,000 each to $42,990 and $47,990, respectively. The temporary price cuts run until Feb. 29 and represent discounts of 2.3% and 2%, from the previous models’ respective prices.

The EV-maker opted against cutting prices for its Model Y Performance variant and other models, according to its website.

The reduced prices are for deliveries ordered now through Feb. 29, Tesla said on its website, adding that prices will rise by $1,000 or more on March 1st.

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Tesla cut Model Y prices in Germany last month after most of the EV-maker’s car production at its Berlin-area factory was suspended due to a shortage of key components caused by shipping disruptions in the Red Sea.

The company previously said that it would pause production at the Berlin-area Gigafactory from Jan. 29 to Feb. 11.

In January, Tesla warned of “notably lower” sales growth in 2024 as it focused on production of its next-generation EV code-named “Redwood.”

The latest price cuts are expected to further weigh on Tesla’s margins which were already hurt due to a price war that started over a year ago. 

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Tesla is bracing for cooling demand amid rising competition with a growing number of cheap EVs, such as those made by China’s BYD, which surpassed Tesla as the world’s leading EV maker in the final quarter of 2023.

Major U.S. automakers have grappled with balancing consumers’ soft demand for EVs with the development of next-generation EVs. 

In the latest sign of slowing EV demand, rental car firm Hertz said in January that it was selling about 20,000 EVs, including Teslas, from its U.S. fleet and opted for gas-powered vehicles due to higher expenses related to collision and damage to EVs.

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Tesla shares are down over 22% in 2024 so far and are mostly flat over the past year, having fallen by nearly 0.6%.

Reuters contributed to this report.

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