Tesla Cuts Prices in Bid to Boost Demand

Increasing competition and a slowing economy dampened sales growth in 2022

By
Nathan Reiff
Full Bio
Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
Learn about our editorial policies
Published January 13, 2023
Cockpit of Tesla Model S car
mbbirdy/Getty Images

Tesla Inc. (TSLA) is slashing prices of its cars in the U.S. and Europe in an effort to bolster sales after 2022 deliveries came up short of forecasts.

Key Takeaways

  • Tesla cut prices on some of its vehicles by up to $21,000 in the U.S. and parts of Europe.
  • The company has also recently cut prices twice in China.
  • Price reductions come as Tesla fights for market share amid intensifying competition in the EV space.
  • Tesla's global deliveries for 2022 grew by 40% but still fell short of Wall Street and internal forecasts.

The electric vehicle maker lowered the price of its Model Y in the U.S. by $13,000 and cut up to $21,000 off the price of its high-end Model S Plaid. Tesla is also dropping prices in the U.K., Germany, and France just weeks after reducing prices on its vehicles in China for the second time in three months.

Demand for Tesla's cars plummeted last year as competition ramped up in the electric vehicle market. In China, the largest EV market, domestic car makers have gained market share by offering lower-priced alternatives. Tesla sold roughly 56,000 cars in China in December, down more than a fifth from December 2021 and 44% from the previous month.

Tesla delivered 1.3 million cars in 2022, a 40% year-over-year increase but short of Wall Street and the company's expectation of about 50% for deliveries each year.

Besides mounting competition, Tesla faces a slowing economy, inflation, higher interest rates in the U.S., and supply chain concerns. Shares of the vehicle manufacturer shed about two-thirds of their value in 2022 amid CEO Elon Musk's highly-publicized purchase of Twitter, financed in part by the sale of some of his Tesla shares. The stock fell another 4% in morning trading Friday following news of the latest price cuts.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. Yahoo! "Tesla posts disappointing deliveries for 2022."

  2. Bloomberg. "Tesla Slashes Prices Up to 20% in Broad Bid to Boost Sales."

  3. CNN. "Tesla cuts prices in China for the second time in three months as demand slows."

  4. New York Times. "Tesla Sales in China Slump as Competition Intensifies."

  5. Tesla Inc. "Tesla Vehicle Production & Deliveries and Date for Financial Results & Webcast for Fourth Quarter 2022."

  6. Yahoo! Finance. "Tesla Inc. (TSLA)."

  7. Yahoo! Finance. "Tesla stock sinks on fresh Model 3 and Model Y price cuts."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description