The global EV sales decline saw Tesla make more cars than it could deliver in the first quarter of 2024, thus amassing its biggest-ever stockpile of vehicles. This marked the first time Tesla’s deliveries went down since 2020, and now the manufacturer is scrambling to cut prices to get rid of its excess Model Y inventory.
Some more expensive model variants are getting discounts of up to $7,500 to incentivize buyers to not configure a brand new car and go for one from inventory instead. Bloomberg notes that a brand new Tesla Model Y Rear-Wheel Drive from inventory can be had for up to $4,600 less compared to ordering one to be manufactured. The discount increases to over $5,000 or more for the Model Y Long Range and Performance.
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Tesla's competitors are starting to catch up
Tesla had no problem selling all the vehicles it produced until now because it made the best and most compelling EVs but now other automakers also have excellent electric models on sale and buyers aren't choosing Tesla en masse anymore.
Scrolling through the Tesla inventory, the cheapest new Model Y Rear-Wheel Drive that we saw cost $41,390, down $3,600 from its original $44,990 sticker price. Factor in the$7,500 federal tax credit and the price drops to $33,890.
Factoring in the $5,000 discount for the Model Y Long Range, the cheapest one costs $44,990, which drops to $37,490 after the federal tax credit. The Model Y Performance seems to have even larger discounts, and the cheapest one we saw cost $48,140, or $5,350 less than the full $53,490 list price. It goes down to $40,640 with the federal tax credit.
After building 433,371 EVs in Q1 2024 (mostly Model 3s and Ys), Tesla only managed to deliver 386,810. That left the manufacturer with 46,561 unsold cars (mostly Model Ys), and these are the vehicles that it wants to sell quickly so that it can keep its factories up and running and building cars at its projected rate.
Tesla became known for its sudden big discounts after dramatically lowering prices for some models last year. This not only made people who bought a Tesla pre-discount uneasy, but it also instantly lowered their vehicle’s residual value. Price fluctuations like this don’t help build buyer confidence, and now prospective EV buyers have more choice than ever when it comes to buying an EV from one of Tesla’s competitors.
In 2024, the manufacturer expects lower sales growth, with demand for its very popular Model 3 and Y starting to wane as more and more talented rival EVs hit the market Tesla is undeniably focusing on its next big project, the $25,000 model that could be revealed by the end of 2024 and reach production in 2025. This baby Tesla will reportedly be built in a completely different way than how cars have been built for the last century, all in the name of production efficiency and saving on production costs and resources.
