Tesla Inc (TSLA.O) has initiated a temporary reduction in prices for some of its Model Y vehicles in the United States, effective until February 29, just weeks following a similar price adjustment for Model Y cars in Germany.
The American electric vehicle manufacturer has decreased the prices for its Model Y rear-wheel drive and Model Y Long Range by $1,000 each, now priced at $42,990 and $47,990 respectively.
This marks a discount of 2.3% and 2% from their previous prices.
Notably, prices for the Model Y Performance variant and other models have remained unchanged, as per information provided on the company’s website.
Tesla announced that the reduced prices for the new Model Y rear-wheel drive and Long Range models will apply to deliveries made until the end of February.
Moreover, the company stated that prices would revert to their original levels or higher by March 1.
The decision to lower Model Y prices in Germany last month came amidst disruptions in car production at Tesla’s Berlin factory due to component shortages following shipping disruptions caused by incidents in the Red Sea.
Additionally, Tesla had previously cautioned about expecting “notably lower” sales growth for the year as it concentrates on producing its forthcoming electric vehicle, codenamed “Redwood.”
These latest price adjustments are anticipated to further impact Tesla’s margins, which have already been affected by a prolonged price war.
This move comes at a time when Tesla anticipates a slowdown in demand and faces increasing competition from a growing array of affordable electric vehicles, including those manufactured by China’s BYD (002594.SZ), which surpassed Tesla as the leading EV producer globally in the last quarter of 2023.
In another indication of the cooling demand for electric vehicles, rental company Hertz Global Holdings (HTZ.O) announced in January its intention to divest around 20,000 electric vehicles, including Teslas, from its U.S. fleet and transition to gasoline-powered vehicles due to higher expenses related to collisions and damages for EVs.
Tesla’s shares have declined by 22.1% since the beginning of the year.