‘Cheated and robbed’
Tesla is slashing its prices hoping to pick up more customers as sales of its electric vehicles stagnate, but some customers are feeling ripped off after taking ownership of their new cars only to have prices slashed by thousands weeks later.
Early in December, Tesla began offering steep discounts on EVs to spur flagging sales. The company began offing incentives of between $3,750 and $7,500 on models for customers who took possession by Dec. 31.
The move was seen as a sign that buyers were losing enthusiasm for high-end electric vehicles.
“This is a sign of demand cracks and not a good sign for Tesla heading into the December year-end,” Wedbush analyst Dan Ives told the Associated Press. “EV competition is increasing across the board, and Tesla is seeing some demand headwinds.”
But the quick fix in December does not seem to have turned the trick for the top EV maker because this month Tesla actually slashed prices by as much as 20 percent, the Associated Press reported.
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The price slashes will make both Tesla’s Model 3 as well as its Model Y eligible for new $7,500 per vehicle tax credits offered in the Inflation Reduction Act.
Tesla lowered the Model Y price to just over $56,000 from its high of $70,000, which it says still qualifies it for the tax credit. The Model 3, once priced at $47,000, is now as low as $44,000, the AP added.
The company has also slowed manufacturing. Its massive factories in Austin, Texas, and Berlin, Germany, are both operating at a fraction of its output capabilities. This is all having an effect on the car maker’s stock prices, too. According to Barron’s, Tesla is down nearly 54 percent from prices over a year ago. And Yahoo Finance noted that the company’s stock is at a “two-year low.”
Some investors worry that Elon Musk’s distractions as the new chief of Twitter is causing him to lose focus on Tesla. The AP added that Tesla shares have tumbled by more than 60 percent since Musk took over Twitter.
But whatever is going on with the business side at Tesla, some of its newest customers are feeling burned by the massive cuts in prices.
One customer, for instance, said he felt deflated when Teslas slashed prices only weeks after he bought a new car at the higher price. Oahu, Hawaii, resident Aaron Brewer was thrilled early in December to take possession of a new Tesla 3 when the company offered that $3,750 discount. But only weeks later, Tesla slashed the price of that same model by double his discount.
Brewer told the media that it was “really painful for that euphoric feeling of being so happy with the car to be taken away and replaced with a sense of being taken advantage of” to the tune of “several thousand dollars,” Business Insider reported.
A California customer was equally deflated.
Deborah Martin, from Los Alamitos, California, ordered a Tesla Y early in January to take advantage of the government’s new tax credit. But only a few weeks after beginning her journey to purchase, she found out that the company slashed the price of her model, leaving her feeling a bit ripped off.
In fact, Martin felt like she was pressured to take possession of the car before the price cut by salesmen who knew the price cut was coming but didn’t tell her.
“I was told by the dealership that if I didn’t take delivery by January 12, the car would be given to the next person on the list,” she said, Insider noted.
Martin said she paid $76,44, but the day after she took possession of her car, Tesla cut the price of her same model to $65,630. The price cut prompted Martin to say, “So within 24 hours, not including tax, I lost $10,810.”
Another buyer paid $69,000 for a Tesla Model Y and took delivery in Oct., but this month, that same model is now priced at $52,990.
“It feels like you have been cheated and robbed,” the buyer said. “It feels like we are helpless. It doesn’t seem fair to a hardworking family with two kids to rob them of their six months’ savings.”
There seem to be a lot of downsides with EVs. And let’s not even talk about cold weather problems with it. But if prices are tumbling because there are fewer customers that could put current owners in a pickle. While price cuts for any product is going to impact those who had only recently paid full price, and considering that any new car is worth but a fraction of the sticker price the second you drive it off the lot, these people feel particularly stunned since they are essentially losing thousands at once.
The economic headwinds that Tesla is facing should also serve as a warning to an industry that has been foolishly imagining that all cars will be electric soon. The steep slowing of Tesla sales may be signaling that the number of people willing to buy an EV is dwindling and that the EV market may not be as robust as many assumed.