Why are Tesla’s prices dropping dramatically?
This page is translated from the original post "Pourquoi les Tesla baissent radicalement leurs prix ?" in French.
- 14/01/2023 12:00
This week, the electric car brand Tesla surprised everyone by reducing the prices of the Model 3 and Y by up to €13,500 including bonuses, and explains its move.
After months of increases for the Tesla Model 3, with nearly €10,000 between the beginning and end of 2022, we didn’t expect the reverse to happen so quickly. At least not so rapidly. Yet the American manufacturer caught everyone off guard by lowering the price of the sedan, as well as those of the Model Y. And this applies in Europe just as in North America.
Another good news for new customers is that the bonus is available on the base Propulsion versions. But how can Tesla afford such a discount, which is nothing like winter sales?
Recap of the new Tesla Model Y and Model 3 prices, as of January 13, 2023:
| Version | Tesla Model 3 | Tesla Model Y |
| Propulsion | €44,990 (-€8,500)* | €46,990 (-€3,500)* |
| Long Range | €52,990 (-€9,500) | €53,990 (-€11,000) |
| Performance | €59,990 (-€6,500) | €63,990 (-€6,000) |
More Local Tesla Factories and Cost Reductions
The brand states that the price reduction is possible by “regionalizing our production and supply chain”. Because Elon Musk’s company is no longer relying solely on its factory in California or China, but now also on the Berlin Gigafactory (Germany) to supply Europe with the Model Y Performance, and the new Giga Texas which also handles the electric SUV, before moving on to the Cybertruck pickup. These sites enable “new economies of scale worldwide” for the company.
Used to delivery spikes at the end of each quarter, with models virtually dominating sales before dropping to a handful the following month, Tesla has also revised its approach. “We have also started transitioning to a more consistent distribution strategy to reduce logistical and delivery peaks,” the brand assures. This helps prevent bottlenecks, which can be costly in case of unforeseen transportation needs.
Other explanations include Tesla adding “stabilization of inflation for certain costs” as well as “cutting-edge engineering and scalable manufacturing processes” to reduce production costs. Think of massive automation or the giant press reducing the number of parts to assemble on the Model Y.
Also read: Skoda Enyaq iV 2023: price increase for the electric SUV
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