American electric car manufacturer Tesla announced new price reductions for its best-selling cars, the Model Y, after its inventory of this model reached its highest levels ever.

The company decided to reduce the price of the car, which belongs to the category of multi-purpose sports utility vehicles (SUV), by $4,600, while it lowered the price of the higher-performance and longer-range Model Y Performance by at least $5,000.

Bloomberg News Agency pointed out that Tesla offered these discounts after its total production of this model during the last quarter of last year exceeded total deliveries by 46,561 cars, adding more vehicles to the existing inventory.

While the company says that the decline in its global sales is partly due to the conversion of its California factory to produce an updated version of the Model 3 sedan and the temporary closure of its factory in Germany, some analysts do not agree with this explanation.

For his part, Ryan Brinkman, an analyst at the American investment bank J.P. Morgan Chase, said that the difference between the number of cars Tesla produced during the first quarter of this year and the number of cars it sold indicates that the increase in inventory came as a result of declining demand and not supply issues.

Earlier this month, Tesla announced its first quarterly sales decline since 2020, when the COVID-19 pandemic erupted.

The company, headed by billionaire Elon Musk, said it delivered 386,810 cars during the first quarter of this year, compared to about 423,000 cars during the same period last year. Analysts expected sales to increase to more than 449,000 cars during the first three months of this year.

Tesla was forced to suspend production at its factory in Germany temporarily due to a shortage of component supplies resulting from disruption of maritime navigation following attacks by the Yemeni Houthi group on ships linked to Israel in the southern Red Sea and Bab al-Mandab Strait.

At the same time, Tesla converted its large factory in the U.S. state of California to produce a newer generation of its best-selling car, the Model 3. The company’s production during the first quarter reached 433,371 cars, compared to 440,808 cars during the same period last year.

Despite Tesla’s strong sales growth over recent years, there are doubts about the growth pace recently. Customers have shifted back to traditional internal combustion engine and hybrid cars, while Tesla faces increasing competition from local companies in the Chinese market.