11-12-2023, 03:51 PM
https://www.businessinsider.com/elon-mus...gy-2023-11
Elon Musk has started an electric-vehicle price war that Tesla can't finish.
Under increasing pressure from new competition, Tesla spent the past year slashing the average price of its models by roughly 25%. The Model 3 fell from $48,000 to $44,380. The luxury Model S, meanwhile, plunged from a high of $130,000 to $96,380. The cars, as they say, have been priced to move.
It's an unusual business strategy, to put it mildly. "I can't think of another point in the history of automotive when a brand that wasn't going out of business cut prices 20% a year," Mark Schirmer, the director of communications at the research firm Cox Automotive, told me. Tesla is hoping that lower prices will drive up sales and slow the advance of the company's rivals — maybe even scare some of them out of the market altogether.
But that's not what's happening. Lower prices are not translating into higher sales. The number of cars Tesla delivered to customers in the third quarter actually declined. Revenue is dropping, and the company's once fat profit margins are getting squeezed — down to 17.9% in the third quarter, compared with 25.1% a year ago. Competitors aren't being driven out of business, either. Once totally dominant in the EV space, Tesla's share of the US market has fallen from 62% at the beginning of the year to only 50% today.
Elon Musk has started an electric-vehicle price war that Tesla can't finish.
Under increasing pressure from new competition, Tesla spent the past year slashing the average price of its models by roughly 25%. The Model 3 fell from $48,000 to $44,380. The luxury Model S, meanwhile, plunged from a high of $130,000 to $96,380. The cars, as they say, have been priced to move.
It's an unusual business strategy, to put it mildly. "I can't think of another point in the history of automotive when a brand that wasn't going out of business cut prices 20% a year," Mark Schirmer, the director of communications at the research firm Cox Automotive, told me. Tesla is hoping that lower prices will drive up sales and slow the advance of the company's rivals — maybe even scare some of them out of the market altogether.
But that's not what's happening. Lower prices are not translating into higher sales. The number of cars Tesla delivered to customers in the third quarter actually declined. Revenue is dropping, and the company's once fat profit margins are getting squeezed — down to 17.9% in the third quarter, compared with 25.1% a year ago. Competitors aren't being driven out of business, either. Once totally dominant in the EV space, Tesla's share of the US market has fallen from 62% at the beginning of the year to only 50% today.