Tesla implements significant price reductions for its Model Y cars across Europe

Responding to uncertainties surrounding electric-vehicle (EV) demand, Tesla has implemented significant price reductions for its Model Y cars across Europe, including Germany, according to a Reuters report. This strategic move follows Tesla’s recent price cuts in China and aims to bolster the company’s competitiveness in the European market amid shifting dynamics.

The adjustments, along with revised price targets from UBS and Wells Fargo, led to a nearly 3 percent decline in Tesla’s shares, contributing to a challenging start for the stock in 2024.

In Germany, the price adjustments specifically target the Model Y Long Range and Model Y Performance, with reductions of 5,000 euros, bringing their prices to 49,990 euros and 55,990 euros, respectively. These reflect discounts of 9 percent and 8.1 percent compared to their previous prices. Additionally, Tesla reduced the prices of Model Y rear-wheel drive models by 4.2 percent. Similar adjustments were made in other European countries, including France, Denmark, the Netherlands, and Norway, with price reductions ranging from 4.2 percent to 10.8 percent.

While the specific rationale behind these moves was not explicitly provided, it aligns with the broader trend of slowing EV demand, influenced by reduced state subsidies and higher borrowing costs.

Tesla faced challenges in the German EV market in 2023, experiencing a 9 percent decline in new registrations, totaling 63,685 vehicles. This contrasted with an 11.4 percent increase in EV sales in Germany overall. Volkswagen surpassed Tesla as the largest seller of EVs in Germany during this period, claiming a 13.5 percent market share compared to Tesla’s 12.1 percent. These dynamics in the German market likely influenced Tesla’s decision to adjust its pricing strategy to regain market share.

Wells Fargo and UBS responded to Tesla’s market challenges by reducing their price targets on Tesla’s stock by more than 8 percent and nearly 11 percent, respectively. These adjustments reflect the stock’s decline of about 11.5 percent in January alone. Tesla’s recent decision to halt most car production at its Berlin factory from January 29 to February 11 due to component shortages also contributed to the stock’s challenges, with Tesla attributing the component issues to changes in transport routes following Red Sea vessel attacks.