Tesla (TSLA) continues discounts in several markets as inventory piles up

Tesla is continuing its discounts on its electric vehicles in several markets as inventory has piled up, which is abnormal for the automaker this early in the year.

While Tesla has a policy not to offer discounts on its vehicles, it has often broken that policy at the end of quarters in order to deliver as many vehicles as possible.

It reduces the number of vehicles in inventory, which looks good on the balance sheet for the quarterly results.

That’s exactly what happened last quarter when Tesla offered more significant discounts than ever in several markets, leading several analysts to believe Tesla was having some demand issues. Normally, the discounts end with the end of the quarter, but this time, Tesla has continued to offer discounts in the new year.

We already reported on Tesla slashing prices in China, but we have now learned that the automaker is also offering reduced prices in several other markets, including Australia, Singapore, South Korea, and Japan.

In Singapore, Tesla is offering a discount of $5,000 for people who trade in an existing internal combustion vehicle and another $5,000 credit to help cover the cost of the certificate to operate a car in Singapore.

That’s for existing inventory vehicles.

Tesla is also offering a free Wall Connector to new buyers.

The discount and price reductions are coming as Tesla happens to have some inventory build-ups, which is unusual for the automaker at the start of a new quarter. Tesla’s inventory is typically low in most markets early in a quarter, especially overseas where markets are waiting for new shipments.

But Tesla has had around a 50,000-vehicle discrepancy between vehicles produced and vehicles delivered over the last two quarters. This has resulted in some markets, especially outside the United States, having Tesla vehicle inventory early in the new year.

Electrek’s Take

Top comment by Steph Soltesz

Liked by 57 people

Market Bears Pricing model is now clearly indicating that the markets are no longer bearing the high prices. Its time to drop the profit margin per vehicle and compensate with volume.

View all comments

We were already seeing some signs of demand issues for Tesla at the end of last quarter. Now, this pretty much confirms it.

Tesla has significantly increased its production capacity over the last year, and it looks like demand doesn’t quite match yet at the current prices.

Personally, I am not overly concerned for the automaker as I believe it will adapt and pull on some demand triggers to balance things out.

Obviously, the situation will affect its gross margin, but the automaker has some room to play there. However, it’s going to be essential to see if these demand issues continue throughout the year because it could become a problem over time.

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