Tesla strengthens market dominance with up to 20% price cut
It has been evaluated that Tesla, led by Elon Musk, is strengthening its dominance in the electric vehicle market after cutting prices.
The Wall Street Journal (WSJ) reported on the 22nd (local time) that despite some investors’ criticism of Tesla, which offered up to 20% discount on the selling price, Tesla’s competitors were facing greater difficulties.
Previously, as Tesla had excess inventory due to sluggish sales, it discounted the sales price of the Model 3 and Model S sedans, and the Model Y and Model X SUVs in the U.S., Asia and Europe markets by up to 20%.
As a result, the price of the Model Y has been reduced from $66,000 to $53,000.
This is about $10,000 lower than the Cadillac Lyric, which is classified as a competitor to Tesla’s Model Y among electric vehicles released by General Motors (GM).
In particular, with Tesla’s discount measures, several vehicles, including the Model Y 5-seater, can receive tax credits of up to $7,500 under the US Inflation Reduction Act (IRA).
From the consumer’s point of view, if tax credits are taken into account, it is now possible to purchase a new Tesla car at a price more than 30% cheaper than before.
The problem is that latecomers in the electric vehicle market, such as GM and Ford, cannot afford to respond to Tesla, which has cut prices.
In the case of Tesla, it is possible to absorb the impact of price cuts to some extent because of the existing high profit rate, but competitors are currently in a state where profits are not very large even if they sell electric vehicles.
Bank of America (BoA) analyst John Murphy said, “Even if competitors sell electric cars, profits are extremely small, or rather, there are cases where they suffer losses.” pointed out that
Last year, Tesla’s share in the US market was 65%, overwhelming Ford (7.6%) and GM (3.5%).
After the price cut, consumer interest in Tesla is growing.
According to ‘Tenet’, a loan specialist for electric vehicle buyers, after the price cut, loan applications for Tesla have tripled.
Howard Drake, who runs a dealership for brands such as Cadillac and Buick in Los Angeles, one of the largest electric vehicle markets in the United States, said, “Tesla’s price cuts are not only for consumers who want to buy electric cars, but also for consumers who want to buy gasoline cars. It is stimulating,” he said.
/yunhap news
