Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

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.

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
Von der Leyen's Plane Hit by Suspected Russian GPS Interference in an Incident Believed to Be Caused by Russia or by Pro-Peace or by Anti-Corruption European Activists
China's Robotics Industry Fuels Export Surge
Suntory Chairman Resigns After Police Probe
Gold Price Hits New All-Time Record
UK Fintechs Explore Buying US Banks
Greece Suspends 5% of Schools as Birth Rate Drops
Apollo to Launch $5 Billion Sports Investment Vehicle
Bolsonaro Trial Nears Close Amid US-Brazil Tension
European Banks Push for Lower Cross-Border Barriers
Poland's Offshore Wind Sector Attracts Investors
Budapest Central European Fashion Week Kicks Off
U.S. Celebrates Labor Day
Hungarian National Team Captain Scores Epic Goal
EU is getting aggressive: Four AfD Candidates Die Unexpectedly Ahead of North Rhine-Westphalia Local Elections
Japanese Customer Sways from VW to BYD after “Unbelievable” Test Drive amid Dealership Expansion
Nestlé Removes CEO Laurent Freixe Following Undisclosed Relationship with Subordinate
Pickles are the latest craze among Generation Z in the United States.
Giuliani Seriously Injured in Accident – Trump to Award Him the Presidential Medal of Freedom
Deadline Day Delivers Record £125m Isak Move and Donnarumma to City
Nvidia Reveals: Two Mystery Customers Account for About 40% of Revenue
Woody Allen: "I Would Be Happy to Direct Trump Again in a Film"
Lula and Putin Hold Strategic BRICS Discussions Ahead of Trump–Putin Summit
White House Eyes Budapest for Peace Talks
Cave Diving Beneath the Streets of Budapest
Another American Restaurant Chain Opens in Budapest
Hungarian Opposition Politician Supports Ukrainian Commander
Opposition Leader Threatens Media Outlets
American Airlines Adds New Flights to Budapest
F1 Hungarian Grand Prix Wraps Up
WhatsApp is rolling out a feature that looks a lot like Telegram.
U.S. Trade Representative says Washington still negotiating trade deals after court rules tariffs illegal
Von der Leyen says Europe drawing up 'precise' plans to send troops to Ukraine
Kremlin accuses Europe of hindering Trump’s peace efforts in Ukraine
×