Tesla’s Pricing Strategy Ahead Of All Car Manufacturers

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Tesla's Pricing Strategy Ahead Of All Car Manufacturers

The leading electric car manufacturer, Tesla, recently broke the news of a major price drop in their vehicles. With about 20% off the original price, Tesla’s decision is making a significant impact on the electric vehicle (EV) industry and competitors.

The presented deal has now sparked discussions about how Tesla’s pricing strategy is changing the market.

Tesla's Electric Cars: How the Price Cut is Changing the Market

Over the last year, Tesla has fallen short of its 50% auto sales target by roughly 10%. That makes Tesla’s steep price discount at the beginning of 2023 a smart strategy for boosting the company’s sales. This is also an advantage to making Tesla’s popular EV models become the best-selling ones.

What’s more intriguing about this move is its influence on the buy-and-sell dealership industry. Take, for example, the Tesla Model Y, which is currently trading on the wholesale network for between $79000 and $81000. On the other hand, Tesla reduced the Model Y’s price from $74000 to $69000. This raised concerns about the fall of Tesla’s resale value and the ability of dealers and recent buyers to recoup their investments. 

Nonetheless, Tesla’s pricing strategy is a major factor that’s changing the market for electric cars. The electric vehicle industry will become more competitive as a large number of new and technologically advanced EVs are expected to hit the market in 2023. Other electric vehicle manufacturers may be pressured to reduce their prices in response to Tesla’s aggressive pricing of its popular models.

Keeping up with the increasing electric vehicle competition will be challenging now that Tesla is setting the standard.

Tesla Plaid S

Tesla, the Standard for Electric Cars

Several electric vehicle manufacturers have surfaced in the industry over the years including Nio, Rivian, Xpeng Motors, and Lucid Motors to name a few. However, Tesla is able to establish a dominant position in the electric car market and maintain its lead over rivals. 

This popular EV brand remains on top by introducing a few innovative selling points that are far ahead of its competitors. Tesla is focused on putting extra effort into studying consumer preferences so they can meet demand with appealing electric cars. Now, with the recent price drop, Tesla is giving customers one more reason to patronize its electric vehicles. 

In comparison to other EV manufacturers, Tesla shows their superiority since they’re able to change prices on their cars in response to the current state of supply and demand in just a snap. This is a very rare occurrence in the auto industry, especially at this time when inflation is rising. 

The success of Tesla’s cost-effectiveness is expected to continue as its electric cars are continually innovating in many aspects. Tesla’s new battery technology is said to be much cheaper, greater in long-range performance, and also smaller in size. The battery’s light weight contributes to the vehicle’s weight reduction, which improves acceleration efficiency. On top of that, Tesla is committed to improving its advanced features as such going completely autonomous, which causes other manufacturers to fall behind.

Tesla’s business strategy sets the bar high which both existing and upcoming EV manufacturers will strive to meet. For this reason, competition is expected to heat up across many areas of the EV space. 

The war between automakers will be waged on their vehicle performance, battery, design, and most importantly, the price, which largely impacts the electric vehicle industry.

Impact of Tesla's Price Cut on the Electric Car Industry

The increasing demand for electric cars started a skyrocketing growth in 2021. Looking back, a factor that influenced this to happen is the low-interest rate for electric cars. Plus, some governments began to give subsidies for zero-emission vehicles. At the same time, the increasing cost of gas adds up to the public’s benefit of purchasing electric cars.

However, a study revealed that the covid pandemic disrupted the supply chain, operations, and production in the EV industry. Since people are switching to electric cars, there was a high demand and low supply, resulting in increased pricing for electric vehicles.

This circumstance serves as a disadvantage for other EV manufacturers. Unlike Tesla, its competitors have trouble sourcing basic electric car parts, microchips, and batteries. The inconvenience caused other manufacturers to delay meeting the market demand for electric cars. Which paved the way for Tesla to dominate the industry. 

With Tesla being the first EV manufacturer to make a major price cut, they inch a step closer to their original goal of creating sustainable transportation that’s affordable for consumers. Now that they’re increasingly more accessible to people, the demand for electric cars will expectedly soar. This presents both an opportunity and a challenge for competing electric vehicle manufacturers to improve upon Tesla’s offerings.

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