Tesla’s decision to cut prices in the US by up to 20 percent at the start of the year had a number of consequences for both the new and used EV markets.
For one, the value of used Teslas has started to drop, and some analysts and execs from rival companies expressed concern that the price cuts could be dangerous for residual values. In addition, other automakers – most notably Ford – started to follow suit and announced price drops, albeit timidly.
But another consequence for Tesla – and likely the main one CEO Elon Musk aimed for when okaying the price cuts – is increased demand for the brand’s products.
During the recent Q4 and full year 2022 earnings call, Musk said Tesla was seeing so much demand for its vehicles in January that it started slightly raising the prices of some of its vehicles, most notably the Tesla Model Y Long Range (by $500).
“Thus far in January, we’ve seen the strongest orders year-to-date than ever in our history. We currently are seeing orders at almost twice the rate of production… And we’ve actually raised the Model Y price a little bit in response to that.”
Gallery: Tesla Model Y
Teslarati looked at the delivery estimate for the Model Y Long Range on Tesla’s website and discovered that it has been changed to March-May 2023. Prior to this, the delivery estimate for the same model was listed as February-March 2023.
The change suggests that Elon Musk’s statement was accurate and Tesla is indeed seeing increased demand for the Model Y Long Range in the US. The extended delivery estimate for the Model Y Long Range also suggests that demand for the Model Y LR is outpacing Tesla’s production capacity in the United States.
This is no small feat, as Tesla currently produces the Model Y at two plants in the US: the Fremont Factory and Gigafactory Texas. In the Q4 and FY 2022 shareholder deck document, Tesla mentioned a capacity of 550,000 Model 3 and Model Y vehicles per year in Fremont, while the Austin factory was listed with an annual capacity of over 250,000 Model Ys.
There’s no doubt that the aggressive price cuts applied in early January boosted Tesla’s demand so far this quarter. Elon Musk sees that as proof that lower vehicle prices really matter to consumers.
“So basically, price really matters. I think there’s just a vast number of people that want to buy a Tesla car but can’t afford it. So, these price changes really make a difference for the average consumer,” he said during the recent earnings call.
Source: Tesla via Teslarati
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