Demand for Tesla EVs hit record levels after price cuts, says Elon Musk

Tesla lowers prices in Australia: Model 3 sedan and Model Y SUV trimmed

Unprecedented price cuts have caused demand for Tesla’s electric cars to outpace the production rate by two to one, CEO Elon Musk told investors and the media today.

US electric car specialist Tesla claims it is getting customer orders for its vehicles twice as fast as it can build them – after cutting prices by up to 20 percent worldwide earlier this month.

As previously reported, Tesla has been conducting unprecedented price cuts across its model lineup in recent weeks as industry analysts say demand is slowing in some countries and a growing number of cheaper competitors are picking up the pace.

The price cuts — as much as 20 percent, or $21,000 in the US — appear to have worked as demand for Tesla cars has hit record levels, according to CEO Elon Musk.

“So far in January, we’ve seen the strongest year-to-date orders than ever in our history. We are currently seeing orders at almost double the production rate,” Mr Musk told investors and the media on Thursday morning Australian time.

“It’s hard to say if this will continue at twice the production rate, but our orders are high and we’ve actually raised the price of the Model Y a bit [by $US500 earlier this week] in response to that.

“We believe overall demand will be good despite a likely contraction in the auto market.”

Mr Musk acknowledged the impact of the price cuts on stimulating demand for Tesla cars – after 18 months of steady price increases in the US and abroad, including Australia.

“The price is really important. There are a large number of people who want to buy a Tesla car but can’t afford one, so these price changes really make a difference to the average consumer,” Mr Musk told investors and the media.

“Well-off people with lots of money sometimes forget the importance of affordability.”

Mr Musk has disclosed the number of orders before the price cuts — or estimated how much the price cuts increased demand.

website Auto News China reported that price cuts in China — about 13 percent less than in the US — sparked a month-long surge in orders in some regions of the country by as much as 500 percent.

Tesla executives said the company expects it could ship up to 2 million electric cars in 2023 — up from 1.31 million in 2022 — provided production slows or demand slacks.

“Our internal production potential is actually almost two million vehicles. But we said 1.8 [million] because there just always seems to be some Force majeure [unexpected global events beyond Tesla’s control] something that’s happening somewhere,” Mr Musk told investors.

“We don’t control things like earthquakes, tsunamis, wars, pandemics, etc. (But) without a major supply chain disruption or a massive problem, we actually have the potential to make two million cars this year.”

“We’re not committed to that [target]. I’m just saying, that’s the potential. I think the demand will be there [target] too,” Mr Musk said.

Despite price cuts that have reduced profit per vehicle sold, Tesla executives told investors and the media the company still expects to earn more than 20 percent on each sale.

According to the news agency Reuters – as reported by drive YESTERDAY – Tesla made between $11,442 and $15,653 ($16,240 to AU$22,250) for each vehicle sold last year, more than double that of Volkswagen, four times Toyota and five times Ford.

Reuters reports that only Chinese electric car brand BYD is making more profit per vehicle, at up to US$14,921 (AU$21,180).

Mr Musk continues to face criticism for his takeover of the social media platform Twitterwhich diverted his attention from the electric car company.

Industry analysts claim that there is a growing lack of confidence in Tesla’s leadership among investors, which has coincided with a decline in Tesla’s stock price and enterprise value.

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Alex Misoyannis

Alex Misoyannis has been writing about cars since 2017 when he launched his own website Redline. He worked for Drive in 2018 before joining CarAdvice in 2019 and becoming a regular journalist on the news team in 2020. Cars have played a central role in Alex’s life, from leafing through car magazines at a young age to growing up surrounded by performance vehicles in a car-loving family.

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