Tesla’s case, that’s why every car sold gets 15,000 dollars and reduces the list price by 20%

Tesla’s case, that’s why every car sold gets 15,000 dollars and reduces the list price by 20%


ROME – Tesla may have lost 675 billion in market capitalization in 2022, but when it earns an average of four times more than the world’s leading manufacturer for each car sold, it can afford to turn the tables, focusing on volume at the expense of profits. This is what Elon Musk announced in mid-January to significantly reduce the price list between 6 and 20% of his cars on a global scale: according to Reuters analysis, in the third quarter of last year Tesla found a car sold for $ 15,653. Almost twice, again according to Reuters, of the Volkswagen group (which, however, has 12 brands, from general specialists to the most profitable Bentley, Porsche and Lamborghini), four times more than Toyota, more than five times more of Ford. A mountain of profit you can sit to beat down the competition, reduce prices and profits, enter the electric car price war, and solve the demand problem that Tesla may have had. Especially after the economic downturn in China, which together with the United States accounted for 75% of its global market last year.

Elon Musk (advertisers)

A price war that could put other manufacturers of zero-emission cars – new and traditional – in trouble, which it had begun to compete with with some success. Some of them are the same ones in Europe who were most worried about the impending invasion of Chinese zero-emission vehicles from the east. Quality, good and affordable. Instead, friendly fire (almost) arrived from the west.

Tesla announced a sudden reduction in price lists (“immediately”, notes an American analyst) explaining because of the smell of the markets: we were able to do this, according to the press release, due to the effects of the “strategic series.” choices associated with the regionalization of production and supply chains, which have improved global distribution and now allow us to pass these cost reductions on to our customers as well. It’s true that Musk has introduced a new, more efficient production process, but Reuters’ pocket math says more about why he can afford it.

Especially since Wall Street, which was already worried about the Twitter story that would disturb the manager, has not even taken Tesla’s decline in the fourth quarter well, or that the Californian manufacturer had grown in 2022 without reaching 1.4 million vehicles compared to 1.31 it was found, in any case + 40% compared to 2021. So Musk accelerated considering that on the horizon there is a risk of recession, a new increase in interest rates (perhaps below the United States, where inflation is decreasing) and a decline in the reputation of prints from March to December, returned.

In the United States, prices for the Model 3, the sedan that enters the electric range, and the Model Y SUV have been reduced by an average of $10,000 (equivalent to 16% according to Evercore ISI analysts). But more importantly: the SUV now starts at a price below $55,000, the threshold at which buyers have benefited from a $7,500 tax credit since January as part of the IRA Reduction Act passed by the Biden administration (the billionaire’s government aid program in the name of energy transition).

What will other electric vehicle manufacturers do? The Europeans are asking the Brussels Commission to introduce public support for our industry and negotiate more equity in the US, where subsidies are intended to be made in the US. But long periods of politics are not made for markets, which require immediate responses.

Tesla Model Y

Tesla Model Y

In Italy, the rear-wheel drive Model 3 has a list price of 44,990 euros, it was 58,470 before Musk’s razor. The paradox, however, is that on the website if you want to buy this sedan “ready for delivery with less than 50 km on the odometer”, the price is higher than new to order: from 47,579 euros. A good reason why some former customers are protesting as it seems to be happening in China, where – reports Reuters – the world’s largest electric car manufacturer Byd has not yet lowered its price lists to meet Elon’s challenge. At $5,456 per unit sold, BYD “has more room in the price war than Volkswagen, Toyota or GM.” In the wide field of Europe we will see.