Tesla (TSLA.O) cuts prices of electric cars by up to 20% globally, ramps up aggressive rebate efforts and challenges rivals after falling short of Wall Street’s 2022 delivery forecast .

The move marks a reversal of the automaker’s strategy over the past two years, when new car orders outstripped supply. That comes after CEO Elon Musk warned that the prospect of a recession and rising interest rates could mean the company could push prices lower to sustain growth at the expense of profits.

Musk admitted last year that prices were “embarrassingly high” and could hurt demand.The stock rose 0.9% on Friday and fell as much as 6.4%. Last year, Tesla’s stock had its worst year since its inception due to slowing growth in China and Mr. Musk’s distraction on Twitter.

Tesla lowered prices across the United States, Europe, the Middle East and Africa, following a series of cuts last week in Asia, in what analysts saw as a clear shot at both smaller rivals that have been bleeding cash and legacy automakers aggressively ramping up electric vehicle production.

“Competition is coming and they are responding with price cuts,” said Thomas Hayes, chairman and managing member at Great Hill Capital.

The discounts may make EV cars affordable to people who were previously priced out of the market. U.S. and French buyers could take advantage of both the discounts and federal tax credits available in both countries for certain electric vehicle purchases.

The U.S. price cuts on Tesla’s 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 $52,990, down from $65,990.

These reductions precede the $7,500 federal tax credit that took effect on January 1 for many EVs, which could result in rebates of 30% or more.

Tesla also slashed the prices of its Model X luxury crossover SUV and Model S sedan in the United States.

A spokeswoman for Tesla Germany said lower cost inflation was also contributing to price cuts in key European markets, but did not specify which costs were lower.

In Germany, Tesla cut the price of the Model 3 and Model Y by about 1% to almost 17%. The best-selling Model Y is now €44,890 ($48,499), down €9,100.

Prices were also reduced in Austria, Switzerland and France.

In France, a customer who bought the Model 3 for his €44,990 can get a further discount through his €5,000 government subsidy for an EV program with a threshold of €47,000. The move expands the cars in Tesla’s lineup that qualify for the Biden administration’s tax credit.

Before the price cut, the five-passenger version of the Model Y was ineligible, which Musk called “a mess.” After the price reduction, the long-range version of the Model Y will be covered.

Deutsche Bank estimates that after tax credits, the Model Y could cost $18,000 less than Ford’s rival Mustang Mach E, but Tesla’s gross margins are among the highest in the industry, reaching 2023. is estimated to decline by 3 percentage points from 2022. Brokers said Tesla’s “bold aggressive move” secured growth and put its competitors in serious trouble.

Competitor stocks took a further hit as Tesla’s stock fell.

U.S. automakers General Motors (GM.N) and Ford Motor (F.N) fell 4.5% and 6% respectively, recording the biggest declines in the broader S&P 500 index and Sterantis in Europe. (STLA.MI) fell. 3.7%, Volkswagen AG (VOWG_p.DE) fell his 3.6%. Wedbush analyst Dan Ives said the move could boost global shipments by 12% to 15% this year, indicating Musk is responding to increased competition.