Marianne Simmons, a self-proclaimed “Tesla fangirl,” bought her second electric vehicle from the company in September: a high-performance Model Y worth more than $77,000. Then the company lowered the price on Thursday and he realized he could buy the same car today for $13,000 less.
“I feel cheated. I feel like I’m benefiting as a consumer,” said Simmons, 32, a web designer in Naples, Florida. “Right off the bat, I’m out $13,306. The reduction is huge and will affect many people who are in the process of buying a vehicle.
This is the reality that Tesla Inc. vehicle owners are facing. after the company slashed car prices by 20%, as part of Chief Executive Officer Elon Musk’s push to increase sales volume due to weakening demand. For existing customers, the resale value of their cars will be affected along with the drop in new model prices.
“For existing owners, it’s really tough,” said Ivan Drury, director of insights for the research website Edmunds.com. “Anyone who bought a Tesla recently will feel the immediate impact if they rent.”
Drury said the cut in new vehicle prices would hit used cars directly and could reduce their value. New-car buyers want to smell the new car, he said, so the price of what they already own can drop even more.
It’s an age-old problem in the auto business: Consumers buy a vehicle only to see a rebate advertised days later that will save them several thousand dollars. This time is different because dealer discounts are often limited-time sales and Tesla’s rebates are bigger than regular rebates.
In fairness, Simmons and other Tesla enthusiasts aren’t the only car buyers who will see resale value. Used model prices fell 15% in December, while new ones hit a record average of nearly $50,000, according to Cox Automotive researchers.
Tesla’s price cuts are the biggest among new car sellers. More expensive models take the biggest hit. The base price of the Model Y is down 20% to start at $53,000, the performance edition of the car Simmons bought is down 19%. The Plaid Edition of the larger Model S sedan is cut by 14%.
Austin Flack, a television producer in Los Angeles, said he listed a 2018 Model 3 with the Full Self-Driving Beta software package for $51,000 in December, but dropped that price to $36,000 as Tesla dropped incentives at the end of the year. He said he had to drop the price back down to $30,000.
Jack Bradham, a cloud services developer in Charlotte, North Carolina, said he was baffled that the black Model Y long-distance edition vehicle he bought in December had gone down.
Bradham, 46, said in a phone interview that he ordered the car late last year and said he had to wait until January to get it. Then he got a call on December 10 from a Tesla salesman saying he could get the car by Christmas. He said he was excited for the early delivery and agreed to buy the $69,000 EV.
Now, he said, he had to wait because he might get a discount if he took delivery in January; The same car now costs $12,000 less.
Bradham said that sometimes people miss the sale, but the size of the price cut bothers people, along with the lack of communication from the company.
“No one to contact. I called and tweeted, no response.
Andrew Checketts, of Santa Barbara, California, said he picked up a seven-seat Model Y in early December after Tesla “hounded” him with text messages promoting a $3,750 discount at the time. If he waits a month, he can buy a car for less.
“I have a solar that is scheduled to be installed. It is very difficult to give money to Tesla and not be able to see the car this morning,” Checketts said in an email. He said instead of driving a Prius today.
Tesla prices have been up and down in the past year. The company raised prices by 3% to 5% in March as a shortage of semiconductors led to production cuts in the auto industry and automakers and dealers both got top dollar on all vehicles.
The company then cut prices in December by $7,500 in the U.S., leading analysts to believe that demand for EVs has softened and added to the stock that was the most in the past year. Tesla shares are down 69% in 2022.
Tesla also cut prices in the US and China late last year. In an audio chat on Twitter on December 22, Musk again said that he will lower the price even more to prevent economic problems. “If you want to increase unit volume, then you have to adjust the price down,” he said.
Bradham, a developer of cloud services, said he expects Tesla to offer breaks to new buyers, such as free charging. Simmons said the company should offer the Full Self Driving feature for free.
Still, Tesla owners have no recourse.
“I will never buy a Tesla again,” Simmons said. “That says a lot to me. I’m a huge Tesla fan. I’ll go with a competitor like Lucid or Rivian.
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