Beautiful Virgin Islands

Tuesday, Mar 28, 2023

Tesla has declared a price war on electric-vehicle and traditional automakers alike. There are signs Elon Musk's company is making early gains.

Tesla has declared a price war on electric-vehicle and traditional automakers alike. There are signs Elon Musk's company is making early gains.

Tesla has slashed Model 3, Model Y, Model X, and Model S prices in 2023. And it's not just gunning for the EV market.

Elon Musk's Tesla has declared an electric-vehicle price war in the US. Since the start of 2023, the automaker has dramatically cut the cost of buying a Model 3, Model S, Model X, or Model Y — heaping pressure on other EV makers as well as traditional automakers like Ford and GM.

While it's too soon to call a winner in the price war, there are signs Tesla is making early gains.

Tesla started lowering prices in mid-January, cutting the cost of an entry-level Model 3 sedan — the company's best-selling vehicle — by 6.4%, to $43,990. It also slashed the cost of the basic Model Y SUV to $52,990 — 20% cheaper than the previous price tag of $65,990.

Tesla also lowered prices for its Model S sedan and Model X SUV in January, then reduced them again in early March. The basic Model S now retails at $89,990, down 14% from the start of the year, while the entry-level Model X costs $99,990 — a price cut of approximately 17%.

Ford is the only traditional automaker to have followed Tesla in cutting EV prices in 2023, discounting its plug-in Mustang Mach-E range by between about 1% and 8.8%.

Dramatic price cuts such as Tesla's are aimed at undercutting rivals and boosting market share. But while price competition isn't uncommon among automakers, the size of Tesla's cuts suggest the company is seeking to dominate the entire industry — not just EVs.

"Tesla's competition isn't just other EV makers, it's other carmakers," Seth Goldstein, an analyst at Morningstar, told Insider. "They're cutting prices so that the Model 3 can eventually compete with other sedans and the Model Y can compete with other SUVs."


Dramatic price cuts appear to stoke demand


Musk believes the discounts will attract new buyers who previously saw a Tesla as being outside their price range. "There's just a vast number of people that want to buy a Tesla car, but can't afford it," he said during Tesla's fourth-quarter earnings call in January. "These price changes really make a difference for the average consumer."

Jessica Caldwell, the executive director of insights at the car-shopping website Edmunds, told Insider: "We saw interest spike for the Model 3 and the Model Y after the price cuts, so it definitely did move the needle."

The cuts have generated comparatively more interest in the Model 3 and Model Y — Tesla's cheaper models — than the more upmarket and more expensive Model S and Model X, she added.

Meanwhile, buyer waiting times for the Model Y have climbed by between two and four weeks since January, research by AllianceBernstein found.

A case study of Tesla's success in undercutting a competitor with price reductions can be found in China. BYD, the country's leading EV manufacturer, suffered an $18 billion valuation wipeout between February 1 and March 3, which analysts attributed to BYD's efforts to discount its vehicles in the face of Tesla's own cuts.


Discounts more obvious to would-be buyers


Tesla's model of selling directly to consumers through its website means price cuts are more easily communicated to would-be buyers. That isn't the case for traditional automakers that rely mainly on sales via dealer forecourts.

Caldwell said price-cutting is "a lot more complicated" for traditional automakers, "because they are selling to their dealer who has final say in the price, whereas Tesla doesn't operate like that." She added that consumers generally like Tesla's approach to price cuts "because it's very straightforward."

However, there's a big downside for Tesla in making dramatic price reductions: angering recent buyers. After the January cuts, some customers expressed frustration that a vehicle they'd just purchased had plunged in value overnight.

"Price cuts also annoy customers," Caspar Rawles, the chief data officer at Benchmark Mineral Intelligence, a price-reporting agency, told Insider. "Maybe people will also hold out for another price drop in another two months, which is also a problem," he said.


A new 'affordable' Tesla could be the 'golden goose'


Tesla is reportedly working on a new, more affordable vehicle that's expected to cost around $25,000.

Some Tesla stockholders said they were disappointed the company didn't unveil the so-called Model 2 at its recent investor day — and some analysts believe the new vehicle might not come to market until 2025.

But the launch of a Tesla priced in the same ballpark as a Chevy Trax or Ford Focus would land a crippling blow to traditional automakers, Dan Ives, an analyst at Wedbush, told Insider.

"The lower-priced future Model 2 is key to going after the masses, with the golden goose being a sub-$30,000 vehicle," he said. "It's Tesla's world with everyone else paying rent."

It's too early to declare Tesla the victor in the price war it started but it seems to be taking ground — with potentially more to come in the form of the Model 2.

Newsletter

Related Articles

Beautiful Virgin Islands
Close
0:00
0:00
AOC explains why she opposes banning TikTok
I have a dream, MLK inspiring speech
UK: Humza Yousaf replaces Nicola Sturgeon as SNP leader and first minister in Scotland
Aretha Franklin, Marvis Staples - Oh Happy Day
In a dramatic U-turn against His Government: Judicial Reform Legislation Must Be Halted, Says Israeli Defense Minister Yoav Gallant
BVI Freedom Song
Gordon Moore, a co-founder of Intel Corporation, died at 94
Billy Preston - You Can't Beat God Giving (Live)
Powell: Silicon Valley Bank was an 'outlier'
VIRGIN ISLANDS REGGAE CARIBBEAN RIDDIMZ
Donald Trump arrested – Twitter goes wild with doctored pictures
Oh Happy Day Edwin Hawkins - Anthony Brown w FBCG Combined Choir
NYPD is setting up barricades outside Manhattan Criminal Court ahead of Trump arrest.
'Stand by Me' performed by Karen Gibson and The Kingdom Choir
Credit Suisse's Scandalous History Resulted in an Obvious Collapse - It's time for regulators who fail to do their job to be held accountable and serve as an example by being behind bars.
National Anthem of the British Virgin Islands - Oh, Beautiful Virgin
Home Secretary Suella Braverman tours potential migrant housing in Rwanda as asylum deal remains mired in legal challenges
Hello Dolly
Paris Rioting vs Macron anti democratic law
for KING & COUNTRY - Amen (Reborn) [feat. Lecrae & The WRLDFMS Tony Wi
'Sexual Fantasy' Assignment At US School Outrages Parents
Bob Marley - Get Up Stand Up
Credit Suisse to borrow $54 billion from Swiss central bank
Yes He Can
Russian Hackers Preparing New Cyber Assault Against Ukraine
What A Friend We Have In Jesus
Jeremy Hunt insists his Budget will get young parents and over-50s back into work
Unforgettable
If this was in Tehran, Moscow or Hong Kong
Touch The Hem Of His Garment
Nashville police officer, and a female driver shooting one another
The Lord's Prayer
TRUMP: "Standing before you today, I am the only candidate who can make this promise: I will prevent World War III."
THE GOD MOVEMENT...BEAUTIFUL BVI
Mexican President Claims Mexico is Safer than the U.S.
Siyahamba
A brief banking situation report
Ray Charles And The Voices Of Jubilaton, Oh, Happy Day
Lady bites police officer and gets instantly reaction
Ramblin' Rose
We are witnessing widespread bank fails and the president just gave a 5 min speech then walked off camera.
Protoje - Who Knows ft. Chronixx
Donald Trump's asked by Tucker Carlson question on if the U.S. should support regime change in Russia?.
Pressure - Virgin Islands Nice
Good news: The U.S. government is now guaranteeing all deposits, held by, Silicon Valley Bank, and the funds are available as of today
Phil Wickham - House Of The Lord
Silicon Valley Bank exec was Lehman Brothers CFO
My God Is Real (Yes, God Is Real)
In a potential last-ditch effort, HSBC is considering a rescue deal to save Silicon Valley Bank UK from insolvency
The Lion King Circle of Life by LEBO M. — LIVE at the HAVASI Symphonic
BBC Director General, Tim Davie, has apologized, but not resigned, yet, following the disruption of sports programmes over the weekend
Louis Armstrong - When The Saints Go Marching In
A Mississippian man, who was once considered a “ticking time bomb,” has lost a whopping 165 kilograms! What motivated this incredible transformation?
Kanye West Sunday Service - hallelujah, salvation, and glory
Elon Musk Is Planning To Build A Town In Texas For His Employees
Jonathan Nelson - I Believe (Island Medley
The Silicon Valley Bank’s collapse effect is spreading around the world, affecting startup companies across the globe
From The Virgin Islands Sqad Up
City officials in Berlin announced on Thursday that all swimmers at public pools will soon be allowed to swim topless
Common, John Legend - Glory
Fitness scam
Anthony Evans vs. Jesse Campbell - If I Ain't Got You
Market Chaos as USDC Loses Peg to USD after $3.3 Billion Reserves Held by Silicon Valley Bank Closed.
I have a dream, MLK inspiring speech
A primitive judge in Australia sparked outrage when he told a breastfeeding woman to leave his courtroom for being “a distraction"
Aretha Franklin, Marvis Staples - Oh Happy Day
Barcelona is feeling the heat as they face corruption charges over payments to former vice-president of Spain's referees' committee, Jose Maria Enriquez Negreira
BVI Freedom Song
Senator Tom Cotton: If the Mexican Government Won’t Stop Cartels from Killing Americans, Then U.S. Government Should
Billy Preston - You Can't Beat God Giving (Live)
Banking regulators close SVB, the largest bank failure since the financial crisis
VIRGIN ISLANDS REGGAE CARIBBEAN RIDDIMZ
The unelected UK Prime Minister Rishi Sunak, an immigrant himself, defends new controversial crackdown on illegal migration
Oh Happy Day Edwin Hawkins - Anthony Brown w FBCG Combined Choir
Old clip of Bill Gates saying Ukraine is a big, fat, corrupt sinkhole is going viral
'Stand by Me' performed by Karen Gibson and The Kingdom Choir
Man’s penis amputated by mistake after he’s wrongly diagnosed with a tumour
National Anthem of the British Virgin Islands - Oh, Beautiful Virgin
In a major snub to Downing Street's Silicon Valley dreams, UK chip giant Arm has dealt a serious blow to the government's economic strategy by opting for a US listing
Hello Dolly
JP Morgan Becomes First Bank to Predict UK Will Avoid Recession
for KING & COUNTRY - Amen (Reborn) [feat. Lecrae & The WRLDFMS Tony Wi
JP Morgan Becomes First Bank to Predict UK Will Avoid Recession
Bob Marley - Get Up Stand Up
How do stolen goods end up on Amazon, eBay and Facebook Marketplace?
Yes He Can
It's the question on everyone's lips: could a four-day workweek be the future of employment?
What A Friend We Have In Jesus
×