Elon Musk Just Did This That SHOCKS The EV Industry!
Significant price reductions for Tesla automobiles are currently taking place in the United States, which is having both positive and negative effects on both the electric automaker and the global automotive sector. And so let’s examine what’s the effect of this to future and current Tesla car owners? How much is the cheapest Tesla car? And what is the potential for EV price war? Or could it end the EV plans of other big car manufacturers? Let’s all find out the answer to all of these questions in this video.
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The pricing of Tesla’s new cars were reduced by up to 20% earlier this month, making them more accessible and perhaps qualifying for federal tax incentives. The auto industry is being affected, as well as the resale values of cars for current owners.
Elon Musk, the CEO, hasn’t specifically addressed the price reductions, which run counter to his assertions that the company’s cars will be appreciating assets — a rarity for the market outside of classics and collectible cars.
The price reductions, according to analysts, could be a hint that there is a demand issue because it suggests Tesla is putting sales ahead of profitability.
The Cox Automotive chief analyst, Michelle Krebs, stated that “there is a declining demand, and they want to enhance their sales, or it is a market share grab.”
For the industry as a whole, Tesla’s price reductions put pressure on other automakers to deliver more affordable EVs despite rising commodity costs, cause trouble for used car dealers who must write off the vehicles, and worry Wall Street about the first EV price war amid recessionary fears.
Tesla’s pricing reductions “send a chill across the used car market, make all other EVs and [internal combustion engine vehicles] look progressively more expensive, and are margin compressing,” Morgan Stanley analyst Adam Jonas wrote in a Friday investor note.
Prices for new vehicles are frequently adjusted by automakers. Incentives or the launch of a new model year are frequently used to do this. To avoid disturbing the automotive ecosystem for both consumers and automobile dealers, modifications have historically been modest, whether they are upward or downward.
Musk hinted at such a move last month when he predicted a recession later this year.
“Do you want to grow unit volume, in which case you have to adjust prices downward? Or do you want to grow at a lower rate, or go steady?” Musk stated Dec. 22 during a Twitter Spaces conversation. “My bias would be to say let’s grow as fast as we can without putting the company at risk.”
After the market closed on Wednesday, Tesla released its fourth-quarter financial results.
Used prices
The value of used models declines when the cost of a new car does. Some of the new Tesla models were selling for nearly the same price as their used counterparts, saving buyers hundreds of dollars. This presents issues for both current owners and dealers in used cars, as well as Tesla, which sells used cars straight to customers.
According to Edmunds, the average price of a used Tesla vehicle from the 2020 model year or later plummeted to $58,657 in the first 17 days of January, a 24.5% decrease from the $76,626 record reached in June.
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