Tesla Inc. TSLA is reportedly attempting to address grievances from European leasing companies following repeated retail price cuts and slow service.
What Happened: The automaker has been offering unofficial discounts on new car purchases and working to resolve service and repair complaints, Reuters reported on Monday. This comes after fleet managers and leasing firms reported that Tesla had previously ignored these issues.
Retail price cuts were intended to boost sales amid declining global demand for electric vehicles and rising competition from Chinese EV makers like BYD and Nio. However, these cuts negatively impacted the residual values of Tesla’s fleet customers in Europe, where fleet purchases make up nearly half of auto sales.
Richard Knubben, director general of Leaseurope, said, “Tesla is now actively telling our members: We can give you discounts and compensate you.”
However, he expressed skepticism about whether these discounts would be sufficient.
Tesla is yet to respond to the queries sent by Benzinga.
Tim Albertsen, CEO of Ayvens, noted that while Tesla’s service has improved, the falling resale values have been damaging. Bart Beckers, Deputy CEO of Arval, a unit of BNP Paribas, mentioned that Tesla’s price cuts were detrimental, leading Arval to consider other EV manufacturers.
Fleet customers are crucial, especially in Europe, where leasing and rental-car company purchases accounted for 44% of Tesla’s sales last year in the U.K. and 15 EU countries. Tesla’s first-quarter fleet sales in these regions fell 2.3%, while the market rose 3.5%.
Despite these challenges, some fleet customers remain satisfied. Fiona Howarth, CEO of Octopus Electric Vehicles, praised Tesla’s pioneering role in the EV market. However, Lorna McAtear, fleet manager at National Grid, highlighted ongoing issues with Tesla’s service and repair costs, noting that the company is considering dropping Tesla from its fleet.
Why It Matters: The issues Tesla is facing with European fleet customers come on the heels of similar challenges in other markets. For instance, the resale market for Tesla’s Cybertruck has been volatile. Initially, used Cybertrucks were listed at a premium, but the market has since seen a significant downturn. Resale values plummeted, causing resellers to struggle to turn a profit.
Price Action: Tesla stock closed at $177.55 on Friday, according to Benzinga Pro.
Photo via Shutterstock
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