On Friday morning, the news broke: Tesla lowered the starting price of its Model Y by as much as NOK 120,000, to NOK 399,990.
Such a large price cut on a car model is unusual to say the least. It becomes extra special when the Model Y was by a large margin Norway’s best-selling car last year. Here, then, it is not an attempt to give new life to a car model that is on the way down, as we sometimes see when prices are reduced.
Model Y is in a class of cars with many competitors. Among them are cars like VW ID.4/ID.5, Ford Mustang Mach-E, Hyundai Ioniq 5, Kia EV6 and Skoda Enyaq to name a few.
Call it dramatic
The big question now will be how the competitors will react to the Tesla cut. If they sit still and maintain current prices, they probably risk losing a lot of sales to the Model Y.
Robert Næss is investment director at Nordea. To Bergensavisen (behind a paywall), he calls the price cut dramatic:
– And that can have consequences for competitors. There is a big risk that other car manufacturers will have to lower prices in order to compete against Tesla. Those in the same segment don’t really have much choice, says Robert Næss.
Broom was first with the news about the price cut, read more here:
RESPOND? What do the other brands do when Tesla cuts prices so much? That’s a question many are asking themselves now. Illustration photo.
Taken to bed
So far, there have been no reactions to the new Model Y prices from other car importers. But there was probably hectic activity among many importers and dealers on Friday morning, when this became known:
Atle Falch Tuverud is editor-in-chief of the industry website BilNytt.no. He says this to Broom:
– It has been expected that Tesla would present price bombs in 2023 due to, among other things, new and more efficient production methods. The timing and size of the price drop, however, comes as a surprise to many car importers. We at BilNytt.no have been in contact with several importers and car dealers who confirm that they were caught off guard by Tesla’s big price cut.
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Influence newer used cars
The timing could definitely also have been better for many:
SURPRISED: Editor-in-chief Atle Falch Tuverud in BilNytt.no says that many in the industry were taken aback by Tesla’s big price cut.
– Several players have just been in negotiations about price increases of between 5 and 10 per cent, and communicated this to their dealers – then the price bomb comes from Tesla.
– The feedback from the industry is that this will affect the market. It can even affect the prices on Finn.no for newer electric cars. Norwegian car importers are very active now. It will be exciting to see if anyone answers, says the BilNytt.no boss.
The order reserve has “melted”
– What about those who bought Model Y at the old and higher price?
– Tesla has probably not made itself popular with new customers by lowering the price so drastically, exactly 14 days after the last major delivery. That is, right after the deadline for canceling the purchase ran out, says Falch Tuverud and adds:
– Where other car brands have had long waiting lists, Tesla has largely emptied the order reserve every quarter, and has continuously found new customers in an impressive manner in Norway. Globally, Tesla’s order reserve has “melted”, which was also one of the reasons for the decline in the share price. It is part of the story that the aggressive price reduction comes after Tesla missed Wall Street estimates for deliveries in the fourth quarter.
Not long ago Tesla crisis – now they are making billions
CUT COSTS: Tesla has worked hard to streamline the way they produce cars. It is explained as a contributing factor to why they can now cut prices so much. Photo: NTB
Old fun
After a record high number of cars handed over in the last two years, many expect a sharp slowdown this year. December last year was an all time high. Now things are moving towards quieter times at Norwegian car dealers:
– The record volumes we saw in December – with a new monthly record – were largely old fun. There were deliveries of old order reserves, and no new contracts at the end of the year, although some also ran and bought before electric car VAT and weight tax.
– The Norwegian car industry has reported to BilNytt.no that many new car customers largely hid under a woolen blanket in the corner sofa from mid-October. Electricity prices and shrink inflation also caught up with new car customers after three golden years. Having said that, we still believe in a relatively good new car year in 2023 as well, but the first quarter will be lean. says Falch Tuverud.
Price cuts and discounts
Earlier this week, Broom published a survey from Sparebank 1 Østlandet where it appears that the number of people planning to buy a new car has halved from last year to this year. It is a clear indicator that tighter times will affect car sales financially.
With this as a backdrop, it is clear that the situation for many of Tesla’s competitors is getting even tougher now. Therefore, there are probably also good opportunities for us to see price reductions and discounts to a completely different extent in the future than we have done in recent years.
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