There are a few reasons why Tesla is likely to cut the price of the Tesla Model 3 in 2023. In this post I give you my 5 reasons why this will happen.

1. Production

For the first time in the company's history, Tesla has reached a production level at its Shanghai factory that allows reservations to be filled faster than new ones are added. We can already see this effect in China.

Here, customers have the option of receiving certain models within 2 weeks. So what does this situation mean for us in Europe? By the end of the first quarter of 2023 at the latest, it can be expected that almost all of the reservations for Europe will have been served. At that point, Tesla will have to make a decision about what strategy to use to acquire new customers.

2. Prices

If we look at Tesla's price development, we only knew the way up in 2022. Unfortunately, the times when we could get a Tesla Model 3 (standard variant) for 45,000 euros or less are long gone. However, the reasons for the price increase in 2022 were obvious. Demand far outstripped production, so raising prices made more money while reducing demand. So if Tesla wants to generate new demand again, at some point you will have to turn to the old group of buyers again, who will only access them again at 45,000 euros and lower.

3. Scale

In 2022 it looks like Tesla will increase its production by almost 49% compared to 2021. Of course, scaling also opens up opportunities to reduce costs given the number of cars. These cost reductions, but also the increased production without a larger factory, reduce the overall cost of the car. The scale and increased efficiencies in Shanghai should almost offset higher supplier costs. Thus, from the cost side, Tesla produces the cars almost at the same level as at the beginning of 2022.

4. Promotion

In Germany, funding will be lower by 2023. This trend will continue downwards in the future. So we not only have the premium prices, but also higher costs for customers from 2023. It can be assumed that demand will decrease as a result and that it will be awaited whether Tesla will show a reaction here.

5. Electricity Prices

In addition to the points mentioned above and the high prices for a new purchase, there is also the topic of electricity prices. Not every customer can charge at home. There will be some customers who will also watch the electricity price and wait until the prices have stabilized again.

Conclusion

Tesla has many opportunities to generate new demand. The question is not if Tesla will make a price reduction of the Tesla Model 3, but when it will happen.

The above points are just a few points that can lead to reluctance on the part of customers. On the other hand, there are also some reasons that show that Tesla can also cope with this.

It will be exciting to see how Tesla will deal with this topic here in 2023

by Marian