Some Tesla Model 3 cars get US rebates over $1,300

San Francisco — Tesla is offering discounts of more than $1,300 on some Model 3 cars in its U.S. inventory after even bigger discounts in Europe, according to a Reuters review of its website, even as the electric car maker has lowered prices in the U.S. increased for most new cars ordered this month.

Faced with economic headwinds and increased competition, Tesla has this year aggressively lowered vehicle prices in several regions and is resorting to automakers’ traditional tactics of offering incentives to clear inventory, analysts said.

On Tuesday, CEO Elon Musk told shareholders that Tesla will start advertising for the first time, a move analysts say could boost demand. Musk warned that Tesla was not immune to the global economy and predicted that the next 12 months will be tough.

Tesla raised prices of some new models slightly twice this month in the US, although prices remain much lower than before the price cuts began this year.

According to the website, Tesla is now offering discounts of more than $1,300 on some Model 3 cars, compared to the $250 rebates earlier this month on some Model Y and Model 3 vehicles. As of Friday, the $250 discount was no longer offered on the Model Y.

US pricing for the Model 3 starts at $40,240 and the Model Y at $47,490.

“Tesla begins to rely on incentives in the same way traditional automakers do when their dealer inventories begin to spend too much time on the lot,” said Edmunds.com director of Insight Ivan Drury, adding the incentives “signal that Tesla has begun with something oversupplied on the market.”

Tesla plans to launch a refreshed version of its Model 3 sedan this year to refresh its aging product lineup. The price cuts to boost sales volume reflect the pressure Tesla faces from competition and an aging product lineup, Jim Farley, CEO of rival Ford Motor Co, said last month.

HEAVY DISCOUNTS IN EUROPE

Tesla’s US rebates this month follow deep rebates in Europe as production from factories in China and Berlin outpaced demand.

Tesla is offering discounts of up to 3,490 euros ($3,841.79) for a China-made Model 3 and 3,660 euros ($4,028.93) for a Berlin-made Model Y, according to Tesla Info’s global inventory list. Other markets such as France, Germany, UK and Italy offer similar discounts.

Tesla researcher Troy Teslike tweeted Friday that Tesla has solved its inventory problem in China by exporting from that market.

“The problem is that the cars that are exported end up in stocks in Europe that are close to an all-time high. Now Europe has a stock problem, but not China,” he said.

Tesla did not respond to Reuters’ request for comment, but Musk said at the shareholder meeting that the company’s approach is simple.

“We look at what the demand is and then we adjust the prices to meet the demand,” he said.

In the first quarter, Tesla had 15 days of global inventory, less than the industry standard but the highest in nearly three years. The industry average for inventory in the United States alone is 35 days. Tesla also produced more cars than it sold, which analysts say put pressure on the company that has no dealers to take on excess inventory.

When demand slows, the stock “starts to become a drain on money very quickly,” said Tyson Jominy, an executive at JD Power consulting firm.

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