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In an effort to increase demand, Tesla has reduced costs on most of its electric vehicles by up to 20% in the United States and Europe, as per ANI, citing a New York Times story.
In the global market for electric vehicles, the carmaker is experiencing rising competition. It must also deal with rising interest rates in the United States, which has raised the cost of financing automobile purchases.
“I think Tesla recognizes that they are not the only game in town, and the Detroit companies are plunging into the deep end with EVs,” Wedbush analyst Dan Ives said. “I believe Tesla will pull the Band-Aid off and go on the offensive as a result of the price drops.”
Tesla shares dipped dramatically in early trading Friday on the price cuts, but closed the day less than 1% down, according to the American daily. Since November 2021, the share price has dropped by nearly 70%.
the price decreases would allow certain of Tesla’s lower-priced models, depending on extra features, to qualify for $7,500 federal tax credits made available beginning January 1 under the Inflation Reduction Act. The credit is available for electric vehicles costing less than $55,000.
The company has had remarkable expansion over the previous decade, but it now faces a number of challenges, including accusations that its CEO, Elon Musk, is too focused with Twitter, the social media network he purchased last year for $44 billion.