Demand For Tesla's EVs Is Ridiculous Thanks To Price Cuts

While there were concerns about the impact of Tesla cutting prices significantly, it's working as expected, and stores are booming.

By: Steven Loveday

Jan 18, 2023 at 8:46am ET

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As you likely know, Tesla made the largest price cuts it has ever made in the US recently. The automaker had already offered two rounds of incentives to end 2022, but then surprised many people by dropping prices much more significantly not long after the start of 2023.

Tesla was unable to hit its guidance of 50 percent delivery growth year over year from 2022 to 2023 (it ended at around 40 percent sales growth). It came close to producing 50 percent more cars, but not all were delivered to customers before 2022 came to an end.

Add that leftover inventory to the fact that Tesla is simply capable of making many more cars than it was in the recent past, and the US EV maker has plenty of product to sell. Thanks to Tesla's extremely high margins, it's able to reduce prices in a big way, and should still make plenty of money per unit.

At any rate, according to a recent article published by Electrek, Tesla is in the midst of “unprecedented demand” on our shores ever since the price cuts, which is to be expected. Reportedly, Tesla's stores are hitting sales records and inventory is going quickly.

Anonymous sources familiar with Tesla's sales told the publication that many Tesla stores hit new single-week sales records. In addition, Electrek writes that when it comes to custom ordering a new Tesla, there probably won't be any build slots left in North America very soon.

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Tesla dropped the prices of all vehicles in its lineup, and every reduction can be seen as significant. However, the biggest drop took the Model Y crossover from a starting price of $65,990 to just $52,990. Not only this, but the price decrease means it's now eligible for a $7,500 US federal tax credit. Yes, the most popular EV in the States can now be had at a discount of over $20,000.

Tesla may see reduced profits due to the large price reductions. However, making and selling many more cars will also help the bottom line thanks to economies of scale. As Tesla increases its manufacturing capacity across the globe and continues to improve and streamline production, costs should come down even more, especially if inflation stays at a minimum and the economy continues to improve.

Source: Electrek