Elon Musk on the "Offensive": After Price Reductions in Electric Cars: Tesla Initiates "Price War".

Several thousand euros cheaper in one fell swoop: Tesla has significantly lowered the prices of its cars in the USA and in Europe in the past week.

Elon Musk on the "Offensive": After Price Reductions in Electric Cars: Tesla Initiates "Price War".

Several thousand euros cheaper in one fell swoop: Tesla has significantly lowered the prices of its cars in the USA and in Europe in the past week. This not only made headlines, but also drew the ire of customers who paid correspondingly more for their car. On the other hand, those who are still about to buy a vehicle should be happy.

In fact, analysts see the sharp price cuts as a well-considered move. The measure could have an impact not only on Tesla but on the entire industry, several analysts told the US technology portal "The Verge". Some even spoke of a first shot in the emerging electric car "price war".

Jessica Caldwell, executive director of insights at US auto buying site Edmunds, told The Verge, "Tesla's recent price cuts reflect a significant shift in the electric car market." In 2023, a wave of new EV [electric vehicle] options will hit the market, but as production from most manufacturers will be limited, Tesla is positioning itself. The US electric car manufacturer wants to attract customers "who don't want to wait or are skeptical about EV technology by luring them with something that all buyers react to - an offer." So the price cuts should protect Tesla's market share and make it a mainstream auto company.

Last Friday, Tesla reduced the price of the entry-level Model Y to 44,900 euros. This makes the mid-range SUV 9100 euros cheaper than before. The starting price of the Model 3 is now 43,990 euros - 6000 euros less than before the price reduction. The day before, Tesla had already significantly reduced its prices in the USA. Robby DeGraff, an analyst at the US automotive research firm AutoPacific, spoke of a "really amazing price reduction that is rare in this industry" in relation to the US market. Buyers can now claim tax benefits.

And that is exactly the point: the purchase of a Tesla should also become more lucrative thanks to the tax advantages that have now become possible. In fact, they are now significantly cheaper to buy than the vehicles of the competition. This is obviously also crucial for Tesla, because the competition is growing more and more. In China, where Tesla recently reduced the sales prices of the Model 3 and Model Y by more than ten percent, domestic car manufacturers are putting increasing pressure on the company headed by CEO Elon Musk. Tesla is also facing increasing competition in the USA, for example, which has been different for a long time. "But now Tesla needs to be competitive in several areas, including price, design and performance," says Caldwell.

Dan Ives, a tech analyst at Wedbush Securities, called the price cuts a "right, timely strategic poker move by Musk and the company." Ives spoke of "the right medicine at the right time", as quoted by "Yahoo Finance". The US investment bank believes that overall price cuts could boost global demand/supplies by 12 to 15 percent in 2023, according to the tech analyst. This shows "that Tesla and Musk are going on the 'offensive' to boost demand in a weakening environment." Ives continues: "This is a clear shot across the bow for European and American automakers (GM and Ford) that shows that Tesla will not play in the sandbox with an electric car price war underway."

"Tesla now has a global scale (Austin, Berlin, further expansion in China) that it didn't have a few years ago and has the margin flexibility to take aggressive actions like this to seek further market share in this EV to win the arms race," says Ives.

Sources: The Verge, Yahoo Finance, with material from dpa

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