It is not often that a company lowering prices causes outrage from customers, but that is precisely the situation Tesla is facing after reducing vehicle costs.
As previously reported by The Dallas Express, videos of angry Tesla customers protesting and vandalizing Tesla stores in China went viral after the company announced it was slashing prices. Many are upset that the cars they just purchased are now selling for thousands less than they paid.
CEO Elon Musk said last week that demand for Tesla’s electric vehicles (EVs) has surged following the price cuts. Tesla cut prices in part to qualify some models for the federal electric vehicle tax credit, according to the Wall Street Journal.
This month, Tesla dropped some prices by as much as 20% overnight, at a time when competitors are raising prices on their own EVs. The cost of a Model Y was reduced by $13,000, according to Autoblog.
“I feel like I got duped. I feel like I got taken advantage of as a consumer,” Marianne Simmons, who bought a Model Y for $77,000 in September, told Fortune. “Right off the bat, I’m out $13,306. It’s such a large reduction that it’s going to affect a lot of people who just bought a vehicle.”
Tyson Jominy, J.D. Power’s vice president of data and analytics, said he has never seen a car company make such a sizable immediate price cut across its vehicle lineup, according to the Wall Street Journal.
The Model 3 RWD, Tesla’s cheapest, fell $3,000 from 2022 prices to $43,990, according to Ars Technica.
Tesla price reductions are not a result of weakening demand, as the company reported record fourth-quarter revenue last week, as previously reported by The Dallas Express. Tesla shares rose over 11% immediately after the Q4 print.
Musk said he wants to target consumers who may have been priced out of the EV market previously.
“Price really matters,” Musk said on the Q4 earnings call.
“There’s just a vast number of people that wanted to buy a Tesla but can’t afford it.”
The price cuts are working, forcing the company to scale back the discount on the Model Y SUV, raising it by $500 after seeing strong demand after the mid-January price drop, according to the WSJ.
Vikas Khanna paid around $65,000, not including sales tax, in December for his Model Y SUV. If he had purchased it just weeks later, he would have saved around $5,000, according to the Wall Street Journal.
“It just reminded me and solidified why Tesla, as an organization, is one that I can no longer trust,” said Khanna.
Not only are recent Tesla buyers angered by the lower prices, but existing owners’ resale value took a hit as the cost of a used model has cratered. The price of a used Tesla has fallen over $18,000 from its highs six months ago, according to Electrek.
Tesla’s direct-to-consumer model makes it more flexible to adjust prices overnight. For legacy automakers that sell through dealerships, price cuts across the board would be a more complex endeavor, according to J.D. Power’s Tyson Jominy.
The big car manufacturers generally adjust their prices by offering discounts, cash-back offers, or incentives on a month-to-month basis, according to the WSJ.
Those who are so angered that they are seeking to return their vehicles have met with little luck. Kapil Sharma, who took delivery of a Model Y two weeks before the price cuts, asked his Tesla service center whether a refund would be possible, according to the WSJ.
“We do not have a return policy, and we do not price match or price adjust completed orders,” the company told him.