These doubts were born after the manufacturer of electric vehicles carried out a series of price cuts on its cars in China and the United States in the fourth quarter of 2022. Tesla on Jan. 12 even carried out an unprecedented drop in prices of its four models ranging from 7% to 20% on almost all markets.
This unprecedented gesture raised fears of a demand problem as the global economy is expected to fall into recession this year, which would discourage consumers from making unnecessary purchases.
“The most common question we’ve been getting from investors is about demand,” Musk said in his opening remarks during the fourth quarter earnings’ call. “So I want to put that concern to rest.”
“Thus far in January we’ve seen the strongest orders, year to date, ever in our history. We currently are seeing orders at almost twice the rate of production. So that means that it’s hard to say whether that will continue twice or production but the orders are high,” he continued.
As a result, “we’ve actually raised the Model Y price a little bit in response to that,” the Techno King added.
‘Customer Interest In Our Products Remains High’
Indeed, the base price of the Model Y Long Range SUV in the United States had fallen to $52,990 but since then it has risen to $53,490, according to the firm’s website. This represents an increase of $500.
“Customer interest in our products remains high,” added Chief Financial Officer Zachary Kirkhorn.
Musk is optimistic about the demand going forward despite uncertainties surrounding the economy. He believes that lowering prices will help stimulate this demand and above all allow the company to reach a new target in terms of customers.
“So we’re doing what we think demand will be good despite probably a contraction in the automotive market as a whole so basically, price really matters because a vast number of people that want to buy a Tesla car, but can’t afford it,” the billionaire said.
“And so these price changes really make a difference for the average consumer,” Musk argued. “It has always been our goal at Tesla to make cars that are affordable to as many people as possible. So I’m glad that we’re able to do so and yeah, so I think it’s a good thing, all things considered.”