Cheaper car should get Tesla out of difficult period

This article was last updated on April 24, 2024

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Cheaper car should get Tesla out of difficult period

Disappointing sales and turnover, layoffs and a recall due to a faltering accelerator pedal: things are not going well for electric car manufacturer Tesla. In the first quarter, Tesla still generated just over 21 billion dollars, but that is almost 2 billion less than the same period last year. CEO Elon Musk now wants to accelerate the production of a car in the lower price segment.

Tesla is suffering from a stagnant global economy and national governments that are phasing out benefits for buying electric cars. In addition, the company has faced stiff competition from Chinese brands, such as BYD, which are flooding the European market in particular.

It was previously announced that the number of cars sold fell to 387,000 vehicles, meaning that the company is no longer the largest provider of electric cars.

Dismissed

To turn the tide, layoffs have already been announced, including at the factory near Berlin. The price of various models has also been reduced several times.

According to Stijn de Groen, Automotive & Mobility analyst at KPMG, there is still room for lower prices: “The costs for developing batteries have fallen sharply. This saves tens of thousands of euros for an average electric vehicle.”

Not only Tesla feels the competition, De Groen emphasizes. The Chinese electric car brands in the higher segment are also being reduced in price. “These companies are suffering from declining demand in their own country.”

Mismatch between supply and demand

Now Tesla wants to produce cars in the cheaper price segment faster than planned. According to De Groen of KPMG, this is indeed an important opportunity. “There is now a significant mismatch between supply and demand. Currently, the price of more than 35 percent of all new cars on the European market is below 35,000 euros, but only 8 percent of them are electric.”

Tesla now mainly produces more luxurious electric vehicles, starting at around 50,000 euros. In the lower segment, the more traditional car manufacturers from Europe, Japan and America also hope to increase their market share.

Tesla’s stock price is currently suffering severely. On Wall Street, the stock price has fallen by 40 percent since January 1.