Tesla has joined car manufacturers Ford and General Motors (GM) in slowing down on electric vehicle (EV) production due to fears of decreasing demand amid economic uncertainties.
According to Reuters, some automakers and EV startups have already felt the impact, temporarily cutting and delaying their productions.
Understanding the various factors, Tesla CEO Elon Musk noted that the "higher borrowing costs" and others living "paycheck to paycheck" have made it harder to buy an electric vehicle.
"People hesitate to buy a new car if there's uncertainty in the economy... "I don't want to be going into top speed into uncertainty," he said on Tesla's Q3 earnings call on Wednesday.
Tom Narayan, global autos analyst at RBC Capital Markets, also commented on the slow demand, telling Reuters that "there could be a slowdown in EV (demand) in the near term," but "it has more to do with pricing and affordability than a rejection of EVs."
He noted that the decreased demand will improve over time as EVs become more and more affordable, coupled with lower-priced variants.
(Photo : Brandon Bell/Getty Images)
Tesla Model Y vehicles sit on the lot for sale at a Tesla car dealership on May 31, 2023 in Austin, Texas. Tesla's Model Y has become the world's best selling car in the first quarter of 2023.
Tesla Profits Dropped in the 2023 Third Quarter
According to The New York Times, Tesla's profits dropped in the third quarter despite slashing its prices in the United States by around 25 percent.
Tesla reportedly had a net profit of $1.9 billion from July through September, a 44 percent drop compared to the $3.3 billion the company made in the same three-month period a year earlier.
Various price cuts have been made in the electric car industry, including Tesla, amid increasing competition in the market. Elon Musk has previously said it was a sacrifice the company was willing to make just to drive volume growth.
Tesla, particularly in China, made its premium versions up to 6.9 percent cheaper last August, while other models were also made affordable, according to Financial Times.
China's Passenger Car Association reported last week that Tesla sold slightly over 74,000 automobiles in the largest market in the world last month, down from the 84,159 total recorded in August and down 11% from last year.
Tesla in the United States and other markets have reportedly cut prices since last year by increasing discounts and other incentives.
Read Also: Hyundai and Kia Ignite EV Price War with Big Discounts in South Korea
Demand for Electric Vehicles
Ford recently cut production for its electric vehicles after their sales reportedly plummeted and "tanked," citing multiple constraints, including supply chain issues.
General Motors, the automotive company that owns Buick, Cadillac, and Chevrolet, has also delayed electric pickup truck production at its Michigan plant by a year after grappling with flattening demand for EVs.
Lucid Group has recently expressed concerns about the demand for its Air luxury electric sedan and its ability to make 10,000 cars this year following a near 30% drop in third-quarter production and a minor increase in deliveries despite significant discounts.
Garrett Nelson, senior equity analyst at CFRA Research, told Reuters that he saw Lucid "facing daunting headwinds for the foreseeable future from a combination of weak demand and ongoing pricing pressures."
According to GOBankingRates, consumers are not buying an electric vehicle because of its high cost and unequal distribution of charging stations.
Last November, around 4,000 of the 56,256 charging stations in the US were temporarily not available because they were undergoing some form of maintenance.
Related Article: Tesla Cuts Model 3, Model Y US Prices by Up to 4.2%, Aiming for Record Year-End Deliveries
