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Tuesday, June 25, 2024

Tesla Spends Weekend Cutting Prices of Cars and FSD Software

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

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Late Saturday, the company led by Elon Musk also slashed the price of the driver assistance software that it calls FSD, or Full Self-Driving, by a third to $8,000 in the US. It had been $12,000.

The promise of a fully autonomous vehicle has long been key to Tesla’s lofty valuation. In recent weeks, Tesla has rolled out new versions of the FSD software, and Musk has vowed to unveil a dedicated robotaxi on Aug. 8.

Tesla’s website says that customers will receive a 30 day trial of Full Self-Driving Capability with a new vehicle purchase. The website says that “the currently enabled features require active driver supervision and do not make the vehicle autonomous.”

Earlier on the weekend, Tesla cut prices in China and the US, its two key markets, as well as in Europe, after disappointing first-quarter sales contributed to swelling inventory.

In China, Tesla lowered prices across its range, with the revamped Model 3 falling to 231,900 yuan ($32,000) from 245,900 yuan previously. The Model Y was 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 $42,990, returning the sport utility vehicle’s starting price to the lowest it’s been. Tesla also discounted the two other more expensive versions of the Model Y by $2,000, and dropped the price of the Model X to its lowest yet.

The cuts cap a wild week for the Austin-based automaker. It started when Musk announced in a memo to the company’s more than 140,000 employees that he was reducing headcount by more than 10% globally. Two top executives also left.

Read More: Tesla Senior Executives Leave in Midst of Global Job Cuts

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

And on Friday, the company recalled almost 3,900 Cybertruck pickups to fix or replace accelerator pedals that can dislodge and cause the vehicle to unintentionally accelerate, increasing risk of a crash.

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

Read More: Musk Postpones India Visit, Citing Heavy Tesla Obligations

Tesla reports first-quarter earnings on April 23. Its stock is down more than 40% this year on concern about slumping sales, intensifying competition in China and Musk’s risky plan to go “balls to the wall” on autonomy.

The automaker reported its first year-over-year sales drop since the early days of the pandemic, delivering 386,810 vehicles in the first quarter, well short of analyst estimates.

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

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

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©2024 Bloomberg L.P.

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