Tesla to Cut Inventory Price of Model Y Up to $7000

Tesla, the electric vehicle (EV) giant, is implementing significant price reductions on its unsold Model Y SUVs in the United States. The move comes as Tesla aims to clear a backlog of inventory that has reached unprecedented levels.

The discounts are substantial, with many long-range and performance Model Ys now available for $5,000 less than their original price. Rear-wheel drive versions are experiencing even more substantial cuts, with prices reduced by over $7,000. These price reductions are expected to entice buyers and speed up the clearance of the inventory.

The decision to lower prices comes as Tesla continues to produce more vehicles than it sells. In the first quarter alone, Tesla manufactured 433,371 vehicles but only managed to ship 386,810. This has resulted in a significant inventory glut of over 40,000 vehicles. While some of these vehicles were likely in transit, Tesla has not disclosed the exact number. Bloomberg News has reported that Tesla has produced more cars than it shipped in seven out of the last eight quarters.

This excess inventory issue has been a concern for Tesla since January when the company warned that sales growth in 2024 could be notably lower compared to previous years. This trend has raised concerns among industry players, ranging from established automakers like Ford to emerging competitors like Lucid.

In an effort to address the inventory backlog and boost sales, Tesla recently engaged in a typical end-of-quarter push to deliver as many cars as possible. Lead designer Franz von Holzhausen once again played a crucial role in ensuring timely deliveries. However, Tesla also pursued other strategies to stimulate sales. On April 1st, the company announced a $1,000 price hike for its most popular vehicle, the Model Y. Furthermore, Tesla CEO Elon Musk mandated demonstrations of the company’s advanced driver assistance system for all potential buyers. This software package, priced at $12,000, can significantly contribute to the profitability of Tesla vehicles.

Musk has acknowledged that Tesla has had to exert more effort to generate demand for its vehicles in recent times. He has attributed this challenge to high interest rates, even as the company aggressively reduced prices on the Model Y and Model 3 throughout 2023.

Tesla’s decision to reduce Model Y prices serves as a strategic move to address a mounting inventory backlog. With significant discounts, Tesla aims to attract buyers and expedite the clearance of unsold units. This approach follows a pattern of Tesla producing more vehicles than it sells, a trend that has persisted over several quarters. The company’s efforts to boost sales include a recent end-of-quarter push for deliveries and the implementation of a price hike for the Model Y. As Tesla navigates the challenges of inventory management and demand generation, it remains a prominent player in the EV market.

April 06, 2024