Tesla reduces the price of its cars in the United States and Europe

Tesla has cut prices on its vehicles in the U.S. and other key markets in Europe. As CNBC reports, the price cuts extend to its prices in the UK, Austria, France, Germany, the Netherlands, Norway and Switzerland.

The price drop ranges from 1 percent to 17 percent depending on the car’s specifications, as Reuters points out, referring to Model 3 and Y vehicles in Germany. Tesla’s Model 3 remains one of the most in-demand vehicles in Germany, and the current price cut could position the company well to beat out current competitors like the Volkswagen ID.4.

The motive for the price cut is uniform and boils down to attracting new buyers at a time when competing electric vehicle manufacturers are introducing cheaper cars to the market. In particular, Tesla is facing a significant headwind in terms of reduced demand overall.

The company delivered a total of 405,278 vehicles in the fourth quarter while producing a total of 439,701 vehicles. The price cut could be a game changer for Tesla, as Troy Teslike, an independent EV market researcher, said the Model Y is now priced $13,000 lower before the tax credit and $20,500 lower including the tax credit.

There is speculation that the price cuts will help Tesla get some form of tax credit, a major incentive it has relied on to maintain its market dominance. With retail price being one of the crucial factors considered in offering this EV tax credit, Tesla’s decision now seems to make sense for both the company and its customers.

Tesla and price gouging: a growing trend

This latest price cut from Tesla is becoming a trend, and it’s almost the third time the firm has lowered the prices of its cars around the world. As Coinspeaker reported earlier this month, Tesla has indeed lowered the prices of its Model 3 and Model Y in China.

While the move is intended to attract customers, the price cuts have resulted in what appears to be the opposite of the desired goals. Some customers in China reportedly protested after taking delivery of their vehicles at a relatively higher rate than when the price breaks were implemented.

Unless Tesla can properly find a way to appease customers and increase its demand generally, its shares could continue to suffer as a result of all these uncertain changes. According to a note to investors from Bernstein Analysts on Thursday, Tesla faces increased competition with higher interest rates and slower consumer spending than in recent years.

“We believe many investors are underestimating the magnitude of the demand challenges Tesla faces,” they said, giving Tesla an “underperform” rating and a $150 price target. At the time of writing, Tesla stock is changing hands at $117.81, down 4.65% in pre-market.