Tesla drops Model Y price 9% in an effort to boost demand amidst factory idling

Tesla recently started another round of price cuts for its bestselling vehicles - the Model Y and Model 3 - contributing to the factors that made it lose $94 billion in stock valuation over the course of just two weeks since the start of the year.

In its largest EV market - China - the Model Y price cut was more modest than that of the Model 3 Highland facelift, but it was still taken as as sign of softening demand and increasing competition from the likes of BYD, which is now the world's biggest EV manufacturer.

Owners of the Model Y in Europe that bought Tesla's bestselling vehicle at its price peak just a year and change ago, and even those who got it last year, may be miffed to learn that Tesla initiated another price cut there.

The Model Y price in its largest European market - Germany - were just reduced by up to 9% for the Model Y Long Range version, falling from the equivalent of $59,828 to the current $54,340 tag listed on its configurator there. The same 5,000 EUR price cut happened to the top Model Y Performance trim which now costs a tad shy of 56,000 EUR, a price cut of over 8%. The cheapest Model Y RWD saw a more modest price decline of 4.2%, to the equivalent of $46,779.

The German government phased out its direct EV subsidies that helped the Model Y become the bestselling electric vehicle there last year. They were supposed to run until the end of 2024, and Tesla initially said it will fully compensate those who order by the end of 2023 to pad up the Q4 sales numbers. Less than 3 weeks into the new year, however, and it is now initiating an outright Model Y price cut to offset the loss of government subsidies, a move that may start a price war among EV makers in Europe, as well as lower the used Model Y prices across the continent.

Tesla recently warned that it will have to idle its newest Gigafactory near Berlin that makes the Model Y for about two weeks, in the January 29 - February 11 period. At the time, it said that this is necessary because of supply chain issues stemming from the geopolitical challenges that have rerouted cargo ships away from the Red Sea corridor. It remains to be seen if the latest round of Model Y price cuts will boost demand to the previous Giga Berlin output numbers after the factory is back into operation.

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