टेस्ला की कीमतों में कटौती और सेवा संबंधी मुद्दों से यूरोपीय लीजिंग कंपनियां परेशान हैं, सुधार के प्रयास जारी।

टेस्ला की कीमतों में कटौती और सेवा संबंधी मुद्दों से यूरोपीय लीजिंग कंपनियां परेशान हैं, सुधार के प्रयास जारी।

Tesla's price cuts and service issues irk European leasing companies, efforts to make amends underway.

Tesla struggles in Europe as price cuts devalue fleets, causing leasing firms to turn to Chinese EVs. First-quarter fleet sales drop 2.3% despite a rising market.

  • Automobile
  • 107
  • 20, May, 2024
Jyoti Ahlawat
Jyoti Ahlawat
  • @JyotiAhlawat

Tesla's price cuts and service issues irk European leasing companies, efforts to make amends underway.

Tesla is working to appease European leasing companies after repeated retail price cuts devalued their fleets and its slow service and costly repairs alienated corporate customers. The efforts include unofficial discounts on new in-stock car purchases and attempts to address widespread service, repair, and ordering complaints, which leasing firms say Tesla has historically ignored, according to Reuters interviews with nine executives from major leasing and rental-car firms, and about a dozen corporate fleet managers.

Tesla's price cuts aimed to boost sales amid softening global demand for electric vehicles and rising competition from Chinese EV makers like BYD. However, this negatively impacted the bottom lines of its European customers, where fleet purchases constitute nearly half of auto sales.

Leasing companies purchase new cars and arrange leases based on projected resale values. Sudden price drops undermine these residual values, causing financial losses for leasing firms.

"There’s nothing worse than continuously dropping the value of a fleet buyer’s assets," said Richard Knubben, director general of Leaseurope, a leasing and rental industry group representing national associations across 31 countries.

"Tesla is now actively telling our members: We can give you discounts and compensate you," Knubben added. "But Tesla's residuals have dropped so fast, I'm not sure the discounts they're offering are enough."

Tesla did not respond to requests for comment.

While Tesla's falling resale values and tensions with fleet customers are known, its efforts to address them have not been previously reported.

A top executive at a large European car-leasing firm, speaking anonymously due to lack of authorization to comment publicly on Tesla, said that starting mid-2023, Tesla offered unofficial end-of-quarter discounts up to 2,000 euros ($2,134) on Model 3 and Model Y for leasing-company purchases, if in stock. Since late last year, these discounts have been available continuously.

Tim Albertsen, CEO of Ayvens — Europe's largest auto-leasing company with a fleet of 3.4 million cars, about 10% of which are EVs — acknowledged Tesla’s service improvements but noted the damaging impact of falling resale values. "Tesla has understood that and is coming with solutions that help us with that," he said, declining to elaborate on specific mitigations.

Arval, the car-leasing unit of BNP Paribas, is now negotiating with three Chinese automakers for EV purchases after incurring losses from declining Tesla values. Arval Deputy CEO Bart Beckers recounted telling Tesla last year, “You are really shooting yourself in the foot,” when the automaker began cutting prices.

Arval leases about 170,000 EVs within its 1.7 million-vehicle fleet. Beckers said Tesla is working to resolve repair and service issues but noted that Chinese EV makers, Tesla's new challengers, seem to be maintaining strong resale values.

Rental-car companies face similar issues with Tesla's resale values. Hertz has been selling off Teslas in the US, while German rival Sixt has stopped buying them. Sixt reported that lower residual values on EVs from Tesla and other brands reduced its 2023 earnings by 40 million euros ($42.7 million).

CRITICAL CUSTOMERS

Fleet customers play a crucial role in the automotive market, particularly in Europe, where companies often lease large numbers of cars for employees, partly due to tax incentives. According to market research firm Dataforce, leasing and rental-car company purchases accounted for 44% of Tesla sales last year in the UK and 15 EU countries.

In the first quarter, Tesla's fleet sales in these countries fell by 2.3%, while the overall market grew by 3.5%. Despite this decline, the share of Tesla's business from leasing companies and rental car firms in these markets increased to 49%.

Globally, Tesla's sales and profits are declining after a period of sharp growth. The automaker reported an 8.5% drop in global deliveries during the first quarter, marking its first decline in four years.

This drop in fleet sales in 16 European countries follows a 57% growth in 2023 compared to the previous year, according to Dataforce. Tesla achieved the same percentage growth for overall sales across Europe, as reported by the European Automobile Manufacturers Association.

Previously, Tesla enjoyed a first-mover advantage, with European corporate customers having few alternatives for EVs to meet internal climate goals or EU emissions targets.

However, this is changing rapidly. Chinese automakers like BYD are introducing lower-cost electric models to Europe and aggressively targeting Tesla's corporate customers, according to fleet managers and executives from leasing firms. Additionally, legacy automakers such as Volkswagen and BMW are producing increasingly competitive EVs.

Jyoti Ahlawat

Jyoti Ahlawat

  • @JyotiAhlawat