Tesla lowered the prices of its cars in Europe and the US by 20% to boost demand

The ad is focused on the Model 3 and Model Y. According to The Wall Street Journal, the discount now allows buyers of the Tesla Model Y, made in the United States, to benefit from a tax incentive by bringing the vehicle below the $55,000 limit.

The $7,500 tax credit for electric vehicles made in the United States, part of President Joe Biden’s climate plan, has been harshly criticized as protectionist by European governments and manufacturers.

Shares of the company run by the South African tycoon plummeted for more than a year and fell as much as 4.5% in early trading on Friday, before regaining some of the lost ground.

Cut prices to increase demand

“It’s no secret that Tesla demand is starting to see some cracks in this global slowdown by 2023”said Wedbush Securities analyst Dan Ives.

However, Ives said the price cut was the “right move” and a clear signal to European and US automakers such as GM and Ford that Tesla is “not going to play fair.”

The company has already lowered prices twice in China in recent months, although at the same time in recent days it has faced protests at different dealerships in the Asian giant for charging improper prices. In North America, late last year, it also reported a price cut.

In 2022, the group delivered a record 1.31 million electric vehicles, a year-on-year jump of 40%.

But that was still lower than Musk’s long-term goal of increasing deliveries by an average of 50% a year.

Investors are concerned that sales will slow due to the economic downturn, as well as rising interest rates that are making credit more expensive.

Observers also point to the arrival of multiple competitors in the EV market, with major automakers now offering a lineup of models, even in the luxury segment long dominated by Tesla.