American electric vehicle (EV) maker Tesla (TSLA) is forced to offer up to a 40% discount to its EV leasing companies in the UK to counter a slump in sales. The news was first reported by The Times, citing industry sources. British motorists can lease a Tesla EV for just over half of what they paid last year. Two main reasons cited for this discount are the sales slump and a lack of storage space caused by unsold Tesla EVs in the UK.
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In July, Tesla’s UK sales plunged by nearly 60% to 987 units, according to data from the Society of Motor Manufacturers and Traders (SMMT). Tesla is facing intense competition from Chinese EV makers, especially BYD (BYDDF), which has been rapidly growing its footprint globally. Tesla’s EV market share dropped to 0.7% in July, while BYD’s grew to 2.3% of all new EV registrations in the UK.
How Will Discounted EV Leasing Help Tesla?
Tesla is offering up to a 40% discount to leasing companies, who will in turn pass the discounts on to final consumers in the form of cheaper monthly plans. For example, a Tesla Model 3 can now be leased for merely £252 a month plus VAT on a 36-month lease at Silverstone Leasing, one of Tesla’s partners in the UK. Comparatively, last year, a Tesla Model 3 lease would cost customers between £600 and £700 a month.
Furthermore, Tesla is offering zero-interest finance deals for its EVs in retail stores to boost sales. This move is expected to cost Tesla $6,000 over three years for a £40,000 EV. These steps also ensure that Tesla shifts more units without dropping the headline price of vehicles.
Tesla is responding to the sales slump by offering financial incentives to both leasing companies and end consumers. Meanwhile, in Canada, Tesla is offering unlimited lifetime Supercharging on all new Model 3 inventory vehicles to boost sales of new EVs. It remains to be seen how these promotional efforts will help Tesla regain lost market share in the highly competitive EV market.
Is TSLA Stock a Good Buy?
Wall Street remains cautious about Tesla’s long-term stock outlook. On TipRanks, TSLA stock has a Hold consensus rating based on 14 Buys, 15 Holds, and eight Sell ratings. The average Tesla price target of $307.23 implies 7.1% downside potential from current levels. Year-to-date, TSLA stock has lost 18.2%.
