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
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
Wave of Complaints Against Apple Over iPhone 17 Pro’s Scratch Sensitivity
Munich Airport Reopens After Second Drone Shutdown
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
×