Sunday, May 28, 2023

Elon Musk’s downgrade of Teslas is causing them to lose value faster than their rivals

At the beginning of the year, Elon Musk made a decision about Tesla: to lower the price of its models in Europe, the US and China. Although at first it seemed that he would do more damage to his rivals, now he seems to have turned into a billionaire.

In January, Elon Musk defended this view, saying that “the people want Tesla to be extremely high. The performance limit is the ability to provide Tesla.”

As reported by the Financial Times, the value of Tesla cars plummeted on the used market after the price cut announcement. An example of this is the reductions in Britain, one of Tesla’s main markets.

In this region, the value of a new Model 3 with a long-term battery bought in January this year in Britain is expected to fall 46% to 31,300 pounds in January 2024 at 57,435 pounds (about 65,000 coins), according to the agency prices sector CAP HPI. An abysmal drop if we compare it between September 2021 and 2022, when the drop was only 4%.

This devaluation is significant because, as a general rule, although second-hand prices tend to be generally lower, recently they were very close to the originals. However, that line, which the rest of the rival teams have, does not follow Teslius.

The first images suggest a new Tesla supercharger, addressing a common complaint among non-Tesla electric car owners.

On the other hand, the expected drop in value for the model 3 of 46%, a £50,395 electric Polestar 2 bought in January will be worth around £33,000 by early 2024, a loss of £17,395, ie 35%, according to the aforementioned HPI CAP. .

This reduction in Tesla’s models makes its cars potentially more expensive to finance than its rivals. The reason is that, according to the rental or purchase contracts, users must have any amount of value that the car loses during the rental period.

“Tesla has also struggled to scale its used sales operation, which has often sold cars that are too cheap,” explains Dylan Setterfield, CAP HPI’s head of forecasting. This also played a big role in Tesla’s pre-owner values ​​falling after a year of adding.

Tesla prices globally, unlike other manufacturers that use branches or local dealers that offer discounts and incentives to help drive sales.

Another problem with the American brand is the lack of models available, which is not the case with rivals. This means less of a cushion against a general drop in demand than worse economic conditions.

Although Tesla’s opinion is that the other rivals are wavering at lower prices, the truth is that the other brands have not stood still and have not followed in their footsteps. partly, lest it should be for fear of causing disgust in the use of the market.

“I expect Tesla to drive down the price, but we will continue to protect the price of our electric vehicles,” Luca de Meo, chief executive of Renault, said earlier this year. “When you do this, you destroy customer value for sure.”

The only one that lowered the price is Ford, and only in Europe it made an electric Mustang. Mercedes has reduced the cost of the electric E-Class in China, whose original price was too high.

World Nation News Desk
World Nation News Desk
World Nation News is a digital news portal website. Which provides important and latest breaking news updates to our audience in an effective and efficient ways, like world’s top stories, entertainment, sports, technology and much more news.
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