Tesla takes steps to reassure European fleet customers hit hard by price cuts

Tesla is reportedly trying to appease some European car rental companies after the company repeatedly cut retail prices, causing the value of its fleet to decline. Its slow service and expensive repairs also alienated their corporate customers.
Executives at major European car rental companies and fleet managers at more than a dozen companies said Tesla\’s measures include offering unofficial discounts on purchases of new cars in stock and working to resolve widespread service, repair and order complaints.
For years, fleet managers and leasing companies have argued that Tesla ignored these issues.
Tesla\’s purpose of lowering its retail price is to boost sales in response to weak global demand for electric vehicles and intensifying competition, especially from Chinese electric vehicle manufacturers such as BYD.
But that hurt profits at its largest customer in Europe, where fleet purchases account for nearly half of vehicle sales.
Leasing companies buy new cars and arrange leases based on how much they think they can sell them for at the end of the lease.
The sudden drop in prices erodes these residual values, causing rental companies to suffer heavy losses.
Richard Knubben, director general of the Brussels-based European Leasing Association (Leaseurope), said: \”There is nothing worse than a fleet buyer whose assets continue to depreciate in value.\”
He said: Tesla is now actively telling our members: We can give you discounts and compensation.
But Tesla\’s remaining profits are falling too fast. I\’m not sure the discounts they\’re offering are enough.
An executive at a large European car rental company said that starting in mid-2023, Tesla will provide informal quarter-end discounts for leasing companies to purchase Model 3 and Model Y. The discount can be up to 2,000 euros. The premise is that this Both cars are in stock.
The executive spoke on condition of anonymity because he was not authorized to comment publicly on Tesla.
He said these discounts have been going on since the end of last year.
Ayvens is Europe\’s largest car rental company. It has 3.4 million cars, about 10% of which are electric cars.
Tim Albertsen, the company\’s chief executive, said Tesla\’s service has improved, but its declining resale value has taken a toll.
He said: Tesla has understood this and is launching solutions to help us solve this problem.
Arval, the car-rental arm of BNP Paribas, is in talks with three Chinese automakers to buy electric vehicles after it suffered losses as Tesla fell in value.
When Tesla started cutting prices last year, Arval told the automaker: \”You\’re really shooting yourself in the foot,\” said Arval deputy CEO Bart Baker.
Bakers said Arval leases about 170,000 electric vehicles, part of its 1.7 million vehicle fleet.
He said Tesla was working hard to fix repair and service issues, but added that the automaker\’s new challenger — a Chinese electric carmaker — appeared to be avoiding Tesla\’s mistakes and focusing on staying strong. of car resale value.
In the United States, car rental giant Hertz has been selling off existing Tesla cars. German rival Sixt has also stopped buying Tesla cars.
When asked about the impact of Tesla\’s price cuts, Sixt said the decline in residual values ​​of Tesla and other brands of electric vehicles would reduce its profits in 2023 by 40 million euros ($42.7 million).