- Tesla announced a price increase of about 2,000 euros (approximately $2,178) for the Model Y in several European countries following a similar move in the US.
- This adjustment follows previous price reductions in China and Europe, with Tesla lowering prices for Model Y variants in Germany by up to 9% and 8.1%.
- The price hikes aim to mitigate profit margin declines resulting from a price war, as Tesla grapples with slowing sales growth and declining stock prices in 2024.
According to Reuters, Tesla stated on Saturday that after raising prices in the US, the Model Y’s price in several European countries would also increase by about 2,000 euros (approximately $2,178) or the equivalent in local currency.
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Tesla announced price reductions in China and Europe in January
In January 2024, Tesla announced price reductions in China and Europe, including lowering the prices of the Model Y Long Range and Performance versions in Germany by 5,000 euros to 49,990 (approximately $54,439)euros and 55,990 euros (approximately $60,973), respectively, representing discounts of 9% and 8.1% compared to previous prices. Tesla’s website data showed a 4.2% decrease in the price of the Model Y rear-wheel-drive variant. In France, the company reduced the price of the Model Y by 6.7%, and in Denmark, the reduction was as high as 10.8%.
Due to the impact of the price war on profit margins in the first quarter, on March 1, the automaker announced that the prices of all Model Y vehicles in the US would increase by $1,000 on April 1, raising the prices of the Model Y rear-wheel-drive and Long Range models in the US to $43,990 and $48,990, respectively.
The production efficiency needs to be improved
Tesla CEO Elon Musk responded to a post about price increases in February, stating, “This is the basic dilemma of manufacturing: factories need to continue production to improve efficiency, but consumer demand is seasonal.”
In 2024, Tesla faces challenges. In January, Tesla warned that sales growth would “significantly slow” this year due to the company’s focus on producing the next-generation electric vehicle codenamed “Redwood”.
The latest price increases may alleviate the decline in profit margins caused by Tesla’s price war. Since the beginning of 2024, Tesla’s stock price has fallen by over 30% due to slowing sales growth and declining profit margins.
