Tesla, long the biggest disruptor to the auto industry, is increasingly acting like the traditional car companies it used to harass.
Elon Musk’s automaker last year resorted to some of the same tricks car companies have long used to hide their woes, signaling that the company that once struggled to meet demand is now Battling the balance between supply and demand is something chronic competitors know well.
“These are all very common problems, but the difference is Tesla was breaking all the rules,” says Evan Drury, an automotive analyst at Edmonds. “Now we see them falling into the same trap that all automakers fall into.”
Tesla cut prices
In late 2021, car rental giant Hertz said it had ordered 10,000 Tesla Model 3s for its fleet. The announcement was received enthusiastically by EV boosters, but auto industry insiders and traders wondered at the time whether it was an early sign of additional production at Tesla.
By the end of 2022, the electric carmaker was already offering unprecedented discounts of up to $7,500 on its Model 3 and Model Y vehicles in the United States, a sure sign that Tesla may be hitting the metal before the end of the year, according to experts. needs to be transferred.
While the rebates in the United States ended at the end of December, Tesla continued to rebate its vehicles in China, the world’s biggest auto market.
Tesla appears to be struggling with bloated inventory at a time when the rest of the auto industry is operating under leaner conditions. Holiday deals remain in short supply across the industry for the third consecutive year at the end of 2022, as industry insiders ponder whether the days of great holiday deals are long gone.
Tesla has hardly downgraded its vehicles in the past. Kasturi had spoken out against the practice in the past as well. And the year-end discounts came after months of price hikes, adding a worrying quality to the deals.
Experts believe that the exemption will continue
Meanwhile, Tesla’s share price is falling amid Musk and analyst concerns that the car company is essentially operating without a CEO.
Wedbush analyst Dan Ives wrote in a recent note, “This is a crossroads year for Tesla as it will set the stage for its next chapter of growth or continue its slide from the top of the perch with Musk.” ,
The real test of Tesla’s resolve will come in the first quarter, according to Drury. Experts and analysts will be watching to see whether the electric car company returns to its no-discount model or continues to pull from old industry rules.
Following Tesla’s fourth-quarter delivery results, Deutsche Bank analyst Emmanuel Rosner said he expected price cuts to continue.
“New pricing measures are likely to be implemented to align demand with supply,” Rosner wrote in a note. “We expect headlines around the slumping demand and associated price cuts to continue.”
Even if Tesla didn’t offer cash deals, it could encourage purchases by pulling other levers. According to Drury, a common incentive this time of year is free maintenance, which is comparable to Tesla’s offer of 10,000 miles of free Supercharging.
“This is a company that used to be different, but now it looks like they’re going to be the same as everybody else,” Drury says.