May 19, 2024

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Tesla spends the weekend cutting car prices and FSD programs

Tesla spends the weekend cutting car prices and FSD programs

(Bloomberg) — Tesla Inc. spent the weekend cutting prices for its models across China, Europe and the United States amid declining sales and a glut of inventory.

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Late Saturday, the Elon Musk-led company also cut the price of driver-assistance software it calls FSD, or Full Self-Driving, by a third to $8,000 in the United States. It was $12,000.

The promise of a fully self-driving vehicle has long been a key factor in Tesla's lofty valuation. In recent weeks, Tesla has rolled out new versions of its FSD software, and Musk has pledged to unveil a custom robotaxi on August 8.

Tesla's website says customers will get a 30-day trial of full self-driving capability when they purchase a new car. “Currently enabled features require active driver supervision and do not make the vehicle autonomous,” the site says.

Earlier in the weekend, Tesla cut prices in China and the United States, its two main markets, as well as in Europe, after disappointing first-quarter sales contributed to swollen inventory.

In China, Tesla has cut prices across its range, with the price of the revamped Model 3 falling to 231,900 yuan ($32,000) from 245,900 yuan previously. The Model Y has been discounted to 249,900 yuan — or about $34,500 — from 263,900 yuan.

In the US, the cheapest version of the Model Y is now priced at $42,990, bringing the SUV's starting price back to an all-time low. Tesla also discounted the other two more expensive versions of the Model Y by $2,000, and cut the price of the Model

The cuts cap a wild week for the Austin-based automaker. It started when Musk announced in a memo addressed to more than 140,000 employees in the company that he would reduce the number of employees by more than 10% globally. Two senior executives also left.

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Read more: Top Tesla executives depart amid global job cuts

Tesla said in its proxy statement on Wednesday that it would ask shareholders to vote again on a $56 billion compensation package for Musk, which was invalidated by a Delaware court in January.

On Friday, the company recalled nearly 3,900 Cybertruck pickup trucks to repair or replace accelerator pedals that can dislodge and cause the vehicle to unintentionally accelerate, increasing the risk of an accident.

Musk also postponed a planned trip to India, where he was expected to meet Prime Minister Narendra Modi, saying he had to deal with “heavy liabilities” at Tesla.

Read more: Musk postpones India visit due to heavy Tesla commitments

Tesla reported first-quarter earnings on April 23. Its shares have fallen more than 40% this year on concern about declining sales, intensifying competition in China and Musk's risky plan to move toward autonomy.

The automaker reported its first year-over-year sales decline since the early days of the pandemic, delivering 386,810 vehicles in the first quarter, well below analysts' estimates.

In China, Tesla's market share shrank to about 6.7% in the last quarter of 2023, from 10.5% in the first three months of the year, according to Bloomberg calculations based on data from the China Passenger Car Association.

Bloomberg reported late last month that the automaker recently scaled back production schedules at its Shanghai plant. Shipments from its Shanghai factory — which makes electric vehicles for China and for export to other parts of Asia, Europe and Canada — fell in the first two months compared with a year earlier, even as overall passenger vehicle sales in China increased.

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