It is no secret that the global economy took a pretty significant hit during the worldwide pandemic lockdown due to COVID-19. It is well documented that the automotive industry was hurt as well. Automotive sales and production were off dramatically due to dealership and plant closures. Now that the manufacturers are slowly starting their factories back up, and more dealerships are starting to open, there is a question looming over the industry. What is the best way to kickstart the automotive industry again? Tesla thinks it has one possible answer.
Tesla Discounts Inventory
Tesla, the American electric vehicle manufacturer, just announced that they are discounting their models. The discounts are as much as six percent. According to Reuters,
“On Wednesday, Tesla’s website showed the starting price for its Model S sedan is now $74,990, down from $79,990. Its Model X SUVs are now priced at $79,990, from $84,990, and the lowest-priced Model 3 sedan is $2,000 cheaper at $37,990.”
There are discounts for most of the lineup in China as well. All of the Tesla vehicles are imported to China with one exception, the Model 3. That model is also manufactured in China. So, it will not receive a discount there.
For comparison, other manufacturers are offering goodies to restart their portion of the business as well. Ford, General Motors, and FCA have started to offer zero-percent financing availability. They are also offering deferred monthly payments.
No more freebies
In a strange twist. Tesla is also raising the cost of ownership at the same time that the discounts are being rolled out. Tesla is now removing the free supercharger quick-charging service for new Model S sedans purchases. The same is true for the Model X sport utility vehicle.
So, in essence, Tesla is offering a discount on one hand, while with the other hand piling on another cost. In that light, the discount seems a little bit like the old cliche of robbing Peter, to pay Paul. That is, having a distraction in one place so that people will not notice something harmful in the other place. Although, the charging fees may not equal the discounts, depending on how often and for how long the vehicle is used.
Job concerns weigh heavy on consumer minds
Many people are still concerned about their jobs. Many employers are facing seeming increasingly insurmountable obstacles to finances and formerly normal work processes. So, it might take a good bit of time for the economy to get going again. However, if people do return to the previous normal commutes, sooner or later, the odds favor vehicles needing replacement.
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Barron’s reported that Tesla beat first-quarter expectations, to the surprise of many. But, Tesla and indeed, all manufacturers, are waiting for the end of the second quarter to get a better picture of how hard they have all been hit by the worldwide COVID-19 pandemic lockdown. In the meantime, the discounted vehicles from Tesla, and the low finance rates others are offering should help gather some adventurous consumers into showrooms.