The strategy has worked, Tesla’s car sales have increased significantly
Electric car company Tesla has cut prices several times this year to increase Tesla’s car sales. It has also done huge work. Tesla sold a record number of cars in the second quarter of this year, according to company data.
According to the BBC, in the second quarter of the year, Tesla sold a total of 466 thousand 140 cars, which is 80 percent more than the same period of the previous year. In the first quarter, Tesla produced a total of 480,000 vehicles.
Tesla has reduced the price of the car in the UK, US and China markets. That worked. Apart from Tesla, China’s major car companies also reported that car sales increased in June.
At the beginning of the year, Tesla founder Elon Musk said that the company’s right decision would be to increase sales at lower profits.
Tesla’s strategic decision to increase sales is to mass produce cars. Bill Russo, chief executive of consulting firm AutoMobility, said that is the main reason behind the increase in Tesla’s car sales, especially because of the mass production of the Model 3 and Model Y, Tesla cars won the price war.
Policy interest rates are being raised around the world to combat high inflation. As a result, the demand is decreasing. Tesla has been forced to cut electric vehicle (EV) prices five times this year. In this context, Tesla CEO Elon Musk said that he has abandoned the mentality of making excessive profits in the existing reality.
Despite declining earnings brought on by price reduction, Tesla stated in April that it has no intentions to increase the price of its automobiles. “We have not started a pricing war,” Musk stated, “instead, we are just attempting to lower the cost of cars and raise people’s purchasing power.
Last April, Tesla cut the price of the Model 3 sedan by $1,000. In addition, the price of the Model Y crossover is reduced by two thousand dollars. Tesla’s most expensive Model S and Model X prices have been reduced by $5,000.
Meanwhile, investment company Wedbush Securities official Dan Ives told the BBC, “The decision to reduce the price of electric cars in the Chinese market is very useful for Tesla.” China became second big market after North America.
Tesla has reduced the price of cars in China to compete with locally produced electric cars. However, in addition to Tesla, sales of locally produced electric vehicles have increased in China. Beijing-based Li-Auto also said it sold a record 32,575 vehicles in June.
Apart from this, the car sales of Shanghai-based Neo and Guangzhou-based Zpong have also increased a lot. Their car sales in June were 10,707 and 8,620 respectively.
Tesla’s overall revenue rose 25 percent in the first quarter of the year due to price cuts, but their profits fell 24 percent during the same period. Tesla will release the figures for the second quarter of the year on July 19.