Tesla Inc‘s TSLA groundbreaking battery-electric Model Y SUV has made a bold move in the German market by surprisingly offering a more competitive sticker price compared to Toyota Motor Corp‘s TM Prius plug-in hybrid vehicle (PHEV) due to recent price cuts.
Shift in Pricing
What Happened: The rear-wheel drive version of the Model Y SUV is currently listed at 44,990 euros ($48,588) on Tesla’s Germany website. Meanwhile, the Long Range model is priced at 52,490 euros and the Performance version at 58,490 euros.
This new pricing structure places the Model Y below the Prius PHEV, which starts from 45,990 euros for the base variant in the European country.
Global Strategy
Dropping EV Prices: Tesla’s strategic initiative in Germany involves a significant shift in pricing for its Model Y. The company has steadily reduced prices since the beginning of 2023, effectively making the electric SUV more appealing to German consumers. Prior to the price reduction, the Model Y carried a starting price of approximately 54,000 euros.
Beyond Germany, Tesla embarked on a broader price adjustment strategy across all major markets in 2023 to stimulate sales. By the end of the same year, the Model Y emerged as the best-selling vehicle worldwide, with over 1.2 million units delivered, surpassing a Toyota vehicle.
Vision Behind the Pricing Strategy
Tesla CEO’s Vision: In a recent fourth-quarter earnings call, Tesla CEO Elon Musk highlighted that despite its premium pricing relative to other top-selling models such as the Toyota RAV4 and Corolla, the Model Y secured the best-seller title.
Musk expressed, “So, people are really stretching their wallets to be able to afford a Tesla. It’s quite a difficult thing for them to do.” Musk’s insight underscores the prevalence of consumer willingness to invest in a Tesla despite the higher cost.
During the third-quarter earnings call last October, Musk even suggested that customers would be unlikely to opt for a RAV4 if a Tesla vehicle were priced equivalently.