As inventory has accumulated, Tesla is continuing its electric vehicle discounts in several markets, which is unusual for the automaker this early in the year.
Despite Tesla’s policy of not offering discounts on its vehicles, the company has frequently violated that policy at the quarter’s end to ship as many cars as possible.
It makes the balance sheet for the quarterly results look better because it reduces the number of vehicles in inventory.
That’s exactly what happened in the most recent quarter, when Tesla offered more substantial discounts than ever before in several markets, leading several analysts to believe that demand was a problem for Tesla.
Usually, the discounts end at the end of the quarter, but Tesla has kept them going into the new year this time.
They already covered Tesla’s price reductions in China, but we now know that the automaker is doing the same in Australia, Singapore, South Korea, Japan, and other markets.
For those who trade in an existing internal combustion vehicle in Singapore, Tesla is offering a discount of $5,000 and a credit of $5,000 to cover the cost of the certificate to drive a car in Singapore.
That pertains to the vehicles already in stock. Additionally, Tesla is giving new customers a free Wall Connector. Tesla has unusually high inventories at the beginning of a new quarter, which coincides with the discount and price reductions.
In most markets early in a quarter, Tesla’s inventory is typically low, particularly overseas, where markets are waiting for new shipments.
However, Tesla has experienced a discrepancy of approximately 50,000 vehicles between production and delivery over the past two quarters.
This has resulted in Tesla vehicle inventory early in the new year in some markets, particularly outside of the United States.
Electrek’s Take
Over the past year, Tesla has significantly increased its production capacity, and it appears that demand is not yet meeting prices.
The situation will undoubtedly impact its gross margin, but the automaker has some leeway there.
However, it will be crucial to determine whether these demand issues persist throughout the year, as they could develop into a problem over time.