Tesla Price Cuts Showing Signs of Success vs Automakers: Report
Tesla’s sweeping price reductions in mid-January have sparked what many are calling a price war, due to the automaker’s new pricing undercutting other companies and potentially wooing customers.
Some analysts say the price war, still in its early stages, is showing signs of an early lead from Tesla as the company puts pressure on electric vehicle (EV) manufacturers and legacy automakers alike reports Business Insider.
“Tesla’s competition isn’t just other EV makers, it’s other carmakers,” said Morningstar analyst Seth Goldstein. “They’re cutting prices so that the Model 3 can eventually compete with other sedans and the Model Y can compete with other SUVs.”
Tesla reduced its entry-level Model 3 price in the U.S. by 6.4 percent to $43,990, also dropping the base Model Y price to $52,990 for a reduction of 20 percent.
Additionally, Tesla dropped prices on its luxury-level Model S and X units, with the entry-level configurations of the EVs now retailing at $89,990 and $99,990, respectively. These figures represent a 14-percent price reduction on the Model S from the beginning of the year, and a 17-percent price reduction on the Model X.
The only traditional automaker to follow in Tesla’s price cuts was Ford, which decreased the price of its Mustang Mach-E just a few weeks after the EV manufacturer.
“There’s just a vast number of people that want to buy a Tesla car, but can’t afford it,” Musk said during Tesla’s Q4 earnings call in January. “These price changes really make a difference for the average consumer.”
Tesla’s website advertises the Model 3 for as low as $28,790 in Delaware before destination fees, after a $7,500 federal tax credit, $2,500 Delaware incentive and estimated 6-year gas savings of $4,200.
NIO Says Cutting EV Prices ‘Not an Ideal Solution’, as Tesla Sparks Price War https://t.co/OQN9xNHmqC
— TeslaNorth.com (@RealTeslaNorth) February 6, 2023