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Tesla's Aggressive Pricing Strategy Hits European Auto Stocks

  • Tesla's price cuts in Germany follow similar moves in China and aim to stimulate demand while competing with local and international EV manufacturers.
  • This pricing strategy has affected the stock prices of European automakers like Volkswagen, Stellantis, and BMW, which saw declines due to Tesla's aggressive pricing.
  • In the backdrop of increasing competition, particularly from BYD in China, Tesla is seeking to regain its market share and leadership in the EV industry.
Tesla

New year, same strategy to move metal.

Tesla is reportedly slashing prices across Europe, following similar moves the company made in China and also continuing the strategy the company used successful throughout 2023 to stoke demand at the cost of margins. 

Multiple sources, citing Tesla's website, reported on Wednesday morning that Tesla has reduced prices for two variants of its Model Y in Germany by 5,000 euros ($5,439). The Performance version of the Model Y is now available to German buyers at EUR55,990, and the Long Range version is priced at EUR49,990.

Additionally, Tesla has decreased the price of the basic Model Y model by EUR1,900, bringing it to EUR42,990.

As the Wall Street Journal noted Wednesday, this sent the price of other European automaker stocks like Volkswagen, Stellantis and BMW falling by between 1% and 2%. Daiwa Capital Markets analyst Kelvin Lau said in a note that the price cuts are hurting sentiment in the industry and that lackluster sales in China to start 2024 helped fuel the sell off. 

Although Tesla did not specify a reason for the recent price reductions, the company faced challenges in Germany in 2023, Yahoo Finance/Reuters reported.

For example, new registrations of Tesla vehicles fell by 9%, totaling 63,685, in contrast to an 11.4% rise in overall electric vehicle sales in Germany, as reported by the German federal motor authority KBA.

Consequently, Tesla was surpassed by Volkswagen as the leading electric vehicle seller in Germany, with Volkswagen capturing 13.5% of the market share compared to Tesla's 12.1%.

And as we noted earlier this month, competition globally and in China is ramping up as well: BYD has surpassed Tesla in full electric vehicle deliveries for the first time ever in Q1 2024. 

The company said it produced more than 3 million new energy vehicles for the year and it marks the second year that BYD has beat out Tesla in total production. BYD produced 1.6 million battery only vehicles, just slightly behind Tesla, and 1.4 million hybrids. 

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We wrote back in September that BYD and Tesla were the two companies neck and neck leading the EV industry. We noted then that for the first half of 2023, BYD alone sold almost 1.2 million plug-in electric vehicles (incl. plug-in hybrids), roughly double the combined total of BMW, Volkswagen and Mercedes.

By Zerohedge.com

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  • George Doolittle on January 18 2024 said:
    I don't think anyone really cares about what German demand for Das Auto is. Just like China now so too all of Europe rely on massive exports(mercantilist) to sustain their industrial base rather than pushing an internal demand model as the United States has done going on decades now. This has meant the USA is the only free market to sell goods into going on forever now but especially so since Russia Ukraine War. I don't really know what else besides cars the World produces the USA *"MIGHT"* have a demand for excepting resources out of Canada and to a lesser extent Mexico...where most of these "made in China cars" now actually originate from. Aptera looking good as a consequence and presumably Tesla should it decide to start entering the battery electric vehicle market for everything inside the USA. That would definitely shake up the US economy big time if that happened.

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