Tesla Removed All Inventory Discounts in the US in a Bid To Overhaul Its Sales System

Tesla removed all inventory discounts in the US 6 photos
Photo: @SawyerMerritt via X
Tesla steals most customers from Honda and ToyotaTesla steals most customers from Honda and ToyotaTesla price cuts are a punch in the gut to all other players in the EV arenaTesla price cuts are a punch in the gut to all other players in the EV arenaTesla price cuts are a punch in the gut to all other players in the EV arena
Tesla is amidst a major strategic overhaul as it prepares for the next growth wave. The lackluster sales in the first quarter were followed by important changes to the company's structure, including a 10% trimming of its global workforce and key executive reshuffling. Elon Musk confirmed that Tesla's sales and delivery system is also under review, with the most obvious move being the removal of all inventory discounts in the US.
As time passes, we get a clearer picture of the changes Elon Musk prepares at Tesla. Not because he took the time to explain what's happening but because changes are piling up, pointing to a massive restructuring. Based on this, I'd say the era of an EV price war is over for Tesla, with major implications for everyone involved: the customers, the company, employees, and the automotive industry.

It all started with the disappointing results in the first quarter of the year. The delivery numbers were much lower than production, leaving Tesla with more than 46,000 vehicles added to its burgeoning inventory. While Tesla explained the production slump, it failed to acknowledge what caused the delivery fiasco. This seems to confirm the lower demand for electric vehicles across the world, although it's the first time this appears to affect Tesla.

Usually, Tesla has played with the slowing demand by cutting the prices of its vehicles. When this was not enough, it also threw in incentives, ranging from free Supercharging miles, free FSD transfer, or preferential financing rates. However, this time, things are different. There's a paradigm shift at Tesla, prompting Elon Musk to enter the role of war CEO. Musk is aware that the drop in sales means he will have to announce disappointing financial data on April 23 during the Q1 2024 earnings call.

This context probably triggered the shelving of the $25,000 EV project. Musk has not confirmed it yet, and he called a Reuters report on the matter a lie. However, he later announced the unveiling of the robotaxi on August 8. As controversial as it might be, this signals that Tesla is distancing itself from the idea of selling cheap electric vehicles. Considering that Chinese carmakers are already dominating this segment, this is Musk's admission that Tesla lost the price war.

It makes no sense to join the race to the bottom, so Tesla will quit the affordable EV market and pursue other ideas, with autonomous driving and robotaxis now the number one priority. Along with this, Tesla also made important changes to the sales strategy for current models. For once, Tesla reverted its website homepage to its old design. Also, the EV maker removed all inventory discounts in the US, which recently has been as much as 10% of the vehicle price.

Elon Musk explained that the move is part of a bigger initiative to simplify and streamline the entire sales and delivery system. This aligns with the decision to move away from competing on price. However, this doesn't rule out deploying a new incentive system, including low financing rates. Earlier this month, Tesla announced zero-interest loans in China for up to five years. However, with Tesla starved for revenue and margins dropping, I wouldn't be surprised to see the company chasing every dollar it can get on its vehicles.

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About the author: Cristian Agatie
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After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions.
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