Tesla Inc.’s TSLA U.S. price cut announced on Friday has become a polarizing decision, with stakeholders, including investors, analysts, backers and customers, taking opposing sides regarding its impact.
What Happened: Customers who recently bought a Tesla vehicle are livid at having given the short shrift. To understand their grievances better, one only needs to look at the percentage price reductions announced by the company.
See Also: Everything You Need To Know About Tesla Stock
The prices of various Tesla models are cut by anywhere between 6.4% and 19.7%. The biggest cut was for the Model Y dual-motor all-wheel drive, long-range version in order to bring it below the ceiling prescribed by the Internal Revenue Service to become eligible for the $7,500 federal electric vehicle subsidy.
Anecdotal evidence from recent Tesla buyers reflected a sense of being duped. Car enthusiast Marianne Simmons who took deliveries of a Model Y Performance in September by $72,440 on a pre-tax basis whined about missing out on the benefits of price cuts, reported Bloomberg.
“I feel like I got duped. I feel like I got taken advantage of as a consumer,” she reportedly said.
Tagging CEO Musk, she tweeted, “Now you have the price as $59,630 for the same exact car? There has to be some sort of consumer protection law about it.”
Another customer going by the Twitter name Bryan said Tesla and Musk wiped out $10,000 value off his four-week-old Tesla overnight. “I convinced a friend to cancel his preorder last night,” he said.
“18 more to go before I feel we are square.”
A Tesla influencer going by the Twitter handle @NYplaid, meanwhile, had a way out of the predicament. The simple fix proposed was to offer recent purchasers of new Teslas directly from the company in 2022 free supercharging for life.
Anyone who recently bought Tesla will feel an immediate impact and wish they leased it, said Ivan Drury, Edmunds.com director of insights, stated the Bloomberg report. “For any existing owner it’s a kick to the teeth,” he reportedly said. Drury sees new-vehicle price cuts to hit used car prices immediately, sending prices down further.
A Reuters report said in late December, the average used car price for Tesla was at $55,754 in November, down 17% from a July peak of $67,297. The drop was steeper than the 4% drop for the overall used car market.
Why It’s Important: The price cuts were in line with Musk’s recent assertion that volumes are more important than margins. Tesla has been facing a demand problem due to consumer preference for cheaper EV models of rivals and the general slowdown in uptake amid the soft economic environment.
Musk’s preoccupation with Twitter has already alienated even hardcore Tesla fans. It remains to be seen if the anomaly in the price cuts would further dent the once-enviable mindshare the EV maker held among customers.
Price Action: Tesla closed Friday's session down 0.94%, at $122.40, according to Benzinga Pro data.
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