Tesla has caused an uproar among new owners after it suddenly announced a big price cut for its cars in the United States. Many complained that they could have saved up to $13,000, while the value of used cars also plummeted.
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Web designer Marianne Simmons, a former Tesla fan, bought her second electric car from the brand in September 2022: a white, high-performance Model Y that sold for more than $77,000. Then, Tesla announced a big price cut on Thursday, local time in the United States. Simmons discovered she could have bought the same model for $13,000 less.
I feel like I was ripped off,” said Simmons, now 32. From the beginning, I spent $13,306 more. Tesla’s price cut is so big that it’s going to affect a lot of people who are just buying cars.”
This is the current reality that Tesla owners need to face. In order to increase sales in the face of weak demand, Tesla CEO Elon Musk has decided to drastically reduce prices in the United States. For existing customers, the resale value of the cars they own will be hit hard as the price of new models drops dramatically.
It’s a blow to any existing Tesla owner,” said Ivan Drury, director of insights at Edmunds.com, a market research site. Anyone who has recently purchased a new Tesla will feel the impact immediately and wish they had just leased a Tesla.”
Drury said the new car price cuts will immediately hit used car transactions hard and could further depress values. Car buyers typically prefer to buy a new car, so the price of used cars could drop even more, he said.
It’s a long-standing problem in the auto industry: Consumers buy a new car only to see a discount advertised days later when it could have saved them thousands of dollars. But this time things are different because dealer discounts tend to be limited-time discount sales, while Tesla’s discounts are much higher.
Used Tesla prices fell 15 percent last December, while the average price of a new car hit a record of nearly $50,000, according to research firm Cox Automotive.
Tesla’s price cuts were the largest among new car sellers, with its higher-priced models suffering the most. The data show that the base price of the Model Y fell 20 percent to a starting price of $53,000, and the price of the high-performance version of the Model Y purchased by Simmons fell 19 percent. The larger Model S Plaid version saw a 14 percent price drop.
Austin Flack, a Los Angeles-based TV producer, said he priced his 2018 Model 3 with the fully automated driving beta software at about $51,000 last December, but had to drop the price to $36,000 as Tesla removed incentives at the end of the year. Flack said he would likely have to drop the price again to $30,000.
Jack Bradham, a cloud services developer in Charlotte, N.C., said he was annoyed by the dramatic devaluation of the black, long-range Model Y he bought last December.
Bradham, 46, ordered the car late last year and said he was told he would have to wait until January to pick it up. Then, on Dec. 10, Bradham got a call from Tesla’s sales department saying he could pick up the car around Christmas. At the time, Bradham was excited about Tesla’s early delivery and immediately agreed to buy the $69,000 electric car.
Now, Bradham regrets that he should have waited any longer. Because if he had picked up the car in January, he would have been able to take advantage of the latest price cut, with the same model now $12,000 cheaper. Bradham said he knows that sometimes people miss promotions, but what disturbs him is the magnitude of Tesla’s price cuts and the lack of communication with customers. He decried that “I can’t reach anyone, I’ve called them, I’ve tweeted them, and I haven’t gotten a response.”
Andrew Checketts of Santa Barbara, California, said he bought a seven-seat Model Y in early December last year when Tesla sent him a text message claiming a $3,750 discount. But if he had waited another month, he could have bought the car for less money.
Cheektz said via email, “I plan to install solar panels soon, but I really don’t want to spend any more money on a Tesla product and didn’t even want to look at their car again this morning.” For now, Cheektz prefers to drive the Prius.
Tesla’s pricing has ebbed and flowed over the last year. The company raised prices by 3 to 5 percent in March when a shortage of semiconductors led to production cuts across the auto industry and automakers and dealers were making a killing on all models.
Tesla then cut its price by $7,500 in the U.S. last December, leading analysts to believe that demand for its electric cars is slowing, exacerbating the company’s plummeting share price trend. Tesla shares have fallen a cumulative 69 percent in all of 2022.
Late last year, Tesla also cut the price of its new cars in the U.S. and China, and in an audio chat on Twitter on Dec. 22, Musk again hinted that he would lower prices further to weather economic headwinds. He stated at the time, “Do you want to increase production? In this case, you have to lower the price.”
Bradham, a cloud services developer, said he hoped Tesla would give owners who recently bought its vehicles more soothing relief, such as free charging. Simmons said the company should offer the fully automated driving feature for free.
Tesla owners, however, have little recourse. It’s important to me that I won’t buy another Tesla car,” Simmons said. I was a big Tesla fan, but I’ll probably go with a Lucid or Rivian electric car in the future.”
