Some Tesla Model 3 cars get US discounts of more than $1,300

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San Francisco – tesla is offering discounts of more than $1,300 on some Model 3 cars in its US inventory following even deeper discounts in Europe, according to a Reuters review of its website, even as the electric carmaker has raised prices in the US on most recently ordered cars this month.

Faced with economic headwinds and increasing competition, Tesla this year has aggressively cut vehicle prices in several regions and is turning to the traditional automaker tactic of offering incentives to clear inventory, analysts said.

On Tuesday, CEO Elon Musk told shareholders Tesla will try to advertise for the first time, a move that analysts say could boost demand. Musk warned that Tesla was not immune to the global economy and predicted it will be tough over the next 12 months.

Tesla slightly raised prices on some new models twice this month in the US, though prices are still much lower than they were before the price cuts began this year.

Tesla is now offering discounts of more than $1,300 on select Model 3 cars, up from $250 discounts earlier this month on select Model Y and Model 3 vehicles, according to the website. As of Friday, the $250 discount on the Model Y is no longer offered.

US prices for the Model 3 start at $40,240 and the Model Y at $47,490.

“Tesla is starting to rely on incentives in the same way that traditional automakers do when their distributor inventories are starting to spend too much time on the lot,” said Ivan Drury, director of insight at Edmunds.com, adding that the incentives “signal that Tesla has started to slightly oversupply the market.”

Tesla plans to release a facelifted version of its Model 3 sedan this year to update its aging product lineup. The price cuts to boost sales volume reflect pressure Tesla faces from competition and an aging product line, Ford Motor Co Chief Executive Jim Farley said last month.

GREAT DISCOUNTS IN EUROPE

Tesla’s discounts in the US follow deep discounts in Europe this month as output from factories in China and Berlin outpaced demand.

Tesla is offering discounts of up to 3,490 euros ($3,841.79) for a Model 3 made in China and 3,660 euros ($4,028.93) for a Model Y made in Berlin, according to Tesla Info’s global inventory list. Other markets such as France, Germany, the UK and Italy offer similar discounts.

Tesla researcher Troy Teslike tweeted Friday that Tesla solved its inventory problem in China by exporting from that market.

“The problem is that the cars that are exported end up in inventory in Europe, which is close to an all-time high. Now Europe has an inventory problem but China doesn’t,” he said.

Tesla did not respond to Reuters’ request for comment, but Musk at the shareholder meeting said the company’s approach is straightforward.

“We see what the demand is and then we adjust the prices to meet the demand,” he said.

In the first quarter, Tesla had a 15-day global inventory, lower than the industry norm but the highest in nearly three years. The industry average for inventory in the US alone is 35 days. Tesla also produced more cars than it sold, which analysts say put pressure on the dealer-less company to absorb excess inventory.

When demand slows, inventory “starts to become a cash drain very quickly,” said Tyson Jominy, an executive at consultancy JD Power.

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