Tesla has reduced the prices of the majority of its electric vehicles in the United States and Europe by as much as 20% in an effort to increase demand. The report says that the automaker is up against more and more tough competition in the global market for electric cars.
It also has to deal with rising interest rates in the United States, which have made it more expensive to finance vehicle purchases, according to reports.
Dan Ives, an analyst, says that Tesla is aware that they aren’t the only ones in town. Detroit-based companies are also making the leap into electric vehicles, and the price cuts mean that Tesla will try to take the offensive.
Tesla stock dropped sharply in early trading on Friday following the announcement of the price cuts, but it ended the day less than 1% lower. Since November 2021, the value of the shares has decreased by approximately 70%.
Depending on the available features, the reductions would enable some of Tesla’s lower-priced models to be eligible for $7,500 in federal tax credits that became available on January 1 under the Inflation Reduction Act. The credit can be used on electric vehicles that cost less than $55,000.
The problem of declining sales is not unique to Tesla. The shortage of computer chips prevented manufacturers from producing as many vehicles as consumers desired, leading to an 8% decline in US auto sales to less than 14 million vehicles, the lowest level since 2011.
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