Tesla reportedly has slashed prices globally on its electric vehicles by as much as 20%, extending an aggressive discounting strategy and challenging rivals after missing Wall Street delivery estimates for 2022.

The move, Reuters said, which prompted a 5.6% fall in Tesla’s shares, came after CEO Elon Musk warned the prospect of recession and higher interest rates meant it could lower prices to sustain volume growth at the expense of profit.

Musk acknowledged last year that prices had become “embarrassingly high” and could hurt demand.

The lower pricing across the US, Europe, Middle East and Africa, following a series of cuts last week in Asia, marks a reversal from the strategy the automaker had pursued through much of 2021 and 2022 when new vehicle orders exceeded supply.

A reduction in cost inflation was also a factor in reducing prices in its top European market, a spokesperson for Tesla Germany told Reuters, without specifying which costs had fallen.

The US price cuts on global top sellers the Model 3 sedan and Model Y crossover SUV, were between 6% and 20%, Reuters calculations showed, with the basic Model Y now costing US$52,990, down from $65,990.

That is before an up to $7,500 federal tax credit that took effect for many electric vehicles at the start of January.

Tesla also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States, the news agency’s report added.