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
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
Italy Faces Population Decline Amid Youth Emigration
Trump Accuses China of Violating Trade Agreement
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Russia Accuses Serbia of Supplying Arms to Ukraine
Gerry Adams Wins Libel Case Against BBC
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
EU Majority Demands Hungary Reverse Anti-LGBTQ+ Laws
Top Hotel Picks for 2025 Stays in Budapest Revealed
Iron Maiden Unveils 2025 Tour Setlist in Budapest
Chinese Film Week Opens in Budapest to Promote Cultural Exchange
Budapest Airport Launches Direct Flights to Shymkent
Von der Leyen Denies Urging EU Officials to Skip Budapest Pride
Alcaraz and Sinner Advance with Convincing Wins at Roland Garros
EU Ministers Lack Consensus on Sanctioning Hungary Over Rule of Law
EU Nations Urge Action Against Hungary's Pride Parade Ban
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
U.S. Considers Withdrawing Troops from Europe
Russia Deploys Motorbike Squads in Ukraine Conflict
Critics Accuse European Court of Human Rights of Overreach
Spain Proposes 100% Tax on Non-EU Holiday Home Purchases
German Intelligence Labels AfD as Far-Right Extremist
Geert Wilders Threatens Dutch Coalition Over Migration Policy
Hungary Faces Multiple Challenges Amid EU Tensions and Political Shifts
Denmark Increases Retirement Age to 70, Setting a European Precedent
Any trade deal with US must be based on respect not threats', says EU commissioner
UK Leads in Remote Work Adoption, Averaging 1.8 Days a Week
×