Tesla’s Big Price Cuts Fuel Owner Backlash

The operator of one Tesla-focused YouTube channel organized a petition asking that customers who purchased cars before the lower prices took effect get free or discounted software downloads. It has received more than 6,000 signatures. 

Tesla didn’t respond to requests for comment about the customer reaction to the cuts. 

Tesla in mid-January slashed prices nearly 20% on some vehicles, an unusually steep markdown that comes as rivals raise sticker prices on their own EVs.  

Such a groundswell of customer angst about a price cut is uncommon in the auto industry, where car companies frequently discount models to stimulate sales—albeit in a more selective way. Tyson Jominy, vice president of data and analytics at research firm J.D. Power, said he has never seen an auto maker make such an immediate, deep cut across multiple models.

Tesla shares rose last week, continuing to build on their 2023 gains, after the company reported record fourth-quarter profit and an upbeat demand outlook.

“Price really matters,” Mr. Musk said during the company’s earnings call Wednesday. “There’s just a vast number of people that wanted to buy a Tesla car but can’t afford it.” Mr. Musk said the company nudged up the price of a Model Y by about $500 because of strong demand following the mid-January price cut.

Vikas Khanna, a 48-year-old healthcare executive, paid around $65,000, excluding sales tax, in late December for a Model Y SUV, which included a $7,500 discount offered by Tesla at the time. The price cut would have saved him about $5,000, taking into account fees and upgrades, according to a review of his purchase order.

“It just reminded me and solidified why Tesla, as an organization, is one that I can no longer trust,” said Mr. Khanna, who had bought two Teslas over the years before his recent purchase. 

Mr. Khanna said he understands that companies have the leeway to adjust pricing, but he sees a distinction between fluctuations on a car price and other goods, such as mobile phones.

“You don’t take out a loan for an iPhone,” he said. 

The backlash is the latest hurdle for Mr. Musk and Tesla, which have also faced questions from investors and Wall Street analysts about the underlying demand for the company’s vehicles, and whether the CEO’s Twitter takeover has been a distraction. Tesla’s stock price fell 65% last year, but the stock has rebounded about 44% this month as investors focused on Mr. Musk’s bullish forecast for demand and vehicle output, analysts said. 

Following a price cut in China this month, some Tesla owners said on Chinese social media that they felt betrayed. Around 100 Tesla car owners gathered at a showroom in Changsha, a city in central China, a day after the EV maker announced price cuts, according to a video posted by state media. They showed up with a collective letter requesting compensation such as free charging or loyalty points. 

Tesla’s price cuts come as many U.S. competitors are introducing new EVs, and the reductions undercut some rivals’ models and could potentially pressure other car makers’ profit margins, analysts said.

Tesla, which sells directly to customers, has more flexibility to adjust pricing relative to legacy auto makers that sell through dealerships. Adjusting the manufacturer’s suggested retail price overnight would be costly and cumbersome for traditional car makers, Mr. Jominy said. 

Instead, car companies typically set pricing for a specific model year, and adjust by offering discounts, cash-back offers or other incentives on a month-to-month basis.

A decline in Tesla resale values also has rankled some owners. Through the first 17 days of January, the list price of model-year 2020 or newer used Teslas was down 25% from the June peak, about double the rate of the industrywide drop, according to data from research site Edmunds.

Dennis Wang, who runs a YouTube channel for Tesla owners and buyers, started a petition seeking compensation in the form of free services for Tesla owners who purchased their vehicles in 2022. The goal is to return value to Tesla drivers who felt slighted by the cuts, he said.

“I think this is a great opportunity for them to, you know, rewrite the sentiment,” said Mr. Wang, who has purchased several Tesla vehicles in the past decade but wouldn’t personally benefit if his petition is successful. 

Kapil Sharma, an industrial consultant who lives outside of Atlanta, asked his Tesla service center about the possibility of a refund after the company slashed prices. He had taken delivery of a new Model Y, his first Tesla, two weeks earlier. 

“We do not have a return policy and we do not price match or price adjust completed orders,” the company told him in a text message exchange reviewed by The Wall Street Journal.

—Rebecca Elliott and Selina Cheng contributed to this article.

Write to Nora Eckert at nora.eckert@wsj.com