After six price reductions in four months, Tesla's tariffs are slightly increasing again for the first time. Competitor Ford is going the opposite way with the Mustang Mach-E.
It's complicated. This is how the topic "Tesla and the prices of its car models" can be summarized. No other manufacturer changes prices at such short intervals. A real system was not recognizable in it until now. Except that the trend was strongly upwards over time. Smaller price cuts that Tesla interspersed in between did not change that.
Then, in mid-January 2023, came the surprise: Tesla massively reduced its prices around the world. The strongest in the USA, where the starting price of the Tesla Model Y Long Range fell by 20 percent to $ 52,990 (currently the equivalent of around 48,200 euros), according to Reuters. Since then there have been a few more prize rounds; altogether there were six in only four months. As a result, the cheapest Model 3 with rear-wheel drive and a small battery cost only $39,990 (just under €36,400) in mid-April. In the meantime (as of May 3, 2023), the base price has risen slightly to $40,240 (a good €36,600).
All model versions of the Model Y recently became cheaper by 3,000 dollars. The cheapest version of the electric SUV started at $ 46,990 (almost 42,800 euros) for about two weeks. At the beginning of May, the price rose again by 250 to 47,240 dollars (43,000 euros). A positive side effect: From a purely price point of view, all currently available "small" Tesla series qualify for the new US e-car subsidy and the associated tax credit of up to 7,500 dollars (6,827 euros).
Price reduction, no "price war"
The consideration of making your own mass products fit for the premium certainly played a role in the price reductions. Earlier, Elon Musk admitted that prices had risen "embarrassingly high," which could hurt demand. In addition, the Tesla boss fears a recession and the associated higher interest rates. On Twitter, he recently responded to a Bloomberg reporter's Twitter post: "Tom, we're not starting a 'price war', we're just lowering prices to make them (Tesla cars; ed.) affordable on a large scale close."
In Germany, the Model Y basic model has become 12,000 euros cheaper since the turn of the year; the list price is currently 41,990 euros. Minus the German e-car subsidy, the basic version of the Model 3 is currently available for 38,470 euros. In this country, Tesla soberly justified the price reductions with improvements in the design and manufacturing processes, more stable supply chains and, as a result, increased vehicle production, which together have improved economies of scale. The resulting savings are passed on to customers.
Mustang Mach-E from 42.995 dollars
Back to the USA: The first Tesla competitors here quickly felt challenged to enter the price war. Ford started it. On January 30, 2023, the US manufacturer announced that it would rapidly reduce the prices of the Mustang Mach-E. He reduced the price of the top version GT from 69,895 to 63,995 and in a further step in early May to 59,995 dollars (from a good 63,600 to around 58,250 to 54,600 euros). The model variant California Route eAWD Extended Range now costs 56,995 instead of 63,575 dollars (almost 51,900 instead of around 57,900 euros).
The massive price reductions of the basic versions with a standard battery (see photo show above in the article), which will in future be equipped with LFP (lithium iron phosphate) instead of classic lithium-ion cell chemistry, are likely to be even more relevant for mass business. With the base equipment Select, the prices of both the rear-wheel drive and all-wheel drive versions are reduced by 3,000 to 42,995 and 45,995 dollars (39,100 and 41,900 euros, respectively). With the higher-quality premium equipment, the Mustang Mach-E is even 4,000 dollars cheaper: As RWD it now costs 46,995 dollars (42,800 euros) and as AWD it is 49,995 dollars (45,500 euros).
The group justifies the price reductions in a similar way to Tesla: massively increased production, secure supply of supplier parts and raw materials and thus improved economies of scale, which are passed on to customers. In addition, thanks to the new cell chemistry, the LFP battery packs are cheaper because they require far fewer critical raw materials such as nickel and cobalt.
F-150 Lightning more and more expensive
With the electric pick-up F-150 Lightning , the price development has not yet had an impact: The tariff of the basic version rose within a year and a half of production from 39,974 to 59,974 dollars (36,500 to a good 54,700 euros) . A price reduction is currently not in sight for the Lightning. Apparently there isn't as much pressure here as in the compact SUV segment; After all, the Cybertruck is not yet on the market. The cards may be reshuffled in the summer when Tesla's electric pickup finally officially enters the market. Or 2024, when the base variants of the F-150 Lightning will also receive LFP batteries.
Different situation in Europe
"We will not give anyone any ground," said Ford manager Marin Gjaja when announcing the Mustang Mach-E's lower US prices in January. The statement makes it clear: On the market there, the struggle for market share is fierce. Even if that means that the yield falls temporarily. The main thing is that the competition is selling fewer cars and that the focus is on the company's own models as an alternative because of their attractive prices.
In Europe other rules seem to apply in this regard. There are no immediate plans for price cuts here, a spokesman for Ford France said, according to "Automotive News Europe".The same applies to Volkswagen. VW will not fight a price war with Tesla, said Oliver Blume of the "Frankfurter Allgemeine Sunday newspaper". "We have a clear price strategy and rely on reliability. We trust in the strength of our products and brands," said the CEO of the VW Group.
Lucid with temporary discounts
With Lucid, another Tesla competitor tried to turn the tables: At the beginning of February, the Californians reduced the prices of their debut Air - at least in the USA. Anyone who bought a copy of the Touring and Grand Touring model versions by the end of March received a discount of 7,500 dollars (a good 6,800 euros). However, the Lucid Air does not qualify for the US EV award; it is way too expensive.
"We still believe our customers deserve $7,500 in credit if they choose an electric vehicle," said Zak Edson, Lucid's vice president of sales and service, when announcing the discount. However, the measure was not as altruistic as the Californians claim. Lucid did not grant the discount for the $ 87,400 (about 79,800 euros) expensive basic model Pure. Lucid had raised the price of the Touring model version only last year, from 95,000 to 107,400 dollars or 86,700 to 98,000 euros. After all, the Grand Touring now costs less than it did at the beginning: its price journey started at $139,000 (126,800 euros) and led over $154,000 (140,500 euros) to now $138,000 (almost 126,000 euros).
Model S and X significantly cheaper
Tesla accepted the challenge and also reduced the prices of its large series. The Model S is now available for $84,990 instead of $94,990 (almost €77,600 instead of €86,700). The particularly strong plaid variant (see photo show at the top of the article) costs only 104,990 instead of 115,240 dollars (about 95,800 instead of 105,200 euros). The price falls are even greater for the Model X SUV, whose base rate falls from $109,990 to $94,990. The Model X Plaid now costs the same as the Model S Plaid; previously it was available from $120,240 (almost 110,000 euros).
Will Lucid, Mercedes and Porsche follow suit?
Now the question arises as to whether the consistently more expensive competition will give in to the pressure that the discount tariff of the Model S Plaid, which has a peak output of 760 kW (1,034 hp), is building up, and will also lower prices. Comparable to the Model S Plaid in terms of power, the Lucid Air Grand Touring has already been mentioned. The AMG version of the "only" 560 kW (761 hp) Mercedes EQS costs at least 147,500 dollars (134,600 euros) in the USA. The Porsche Taycan Turbo S, which costs as much as 187,400 dollars (171,000 euros), parries this performance value.
Situation in China
In China, Tesla began reducing prices at the beginning of January.There, individual model variants have become cheaper by 14 (Model 3 Rear Wheel Drive) and 13 percent (Model Y Long Range). This is the world's largest electric car market, which is also more competitive than the American one. Because in China, the local manufacturers are still involved, and they have long since become an alternative for buyers not only in the low price categories, but also in the premium segment.
Mercedes has already had this experience. The large electric sedans EQS and EQE initially recorded weak sales figures in China, which prompted the Swabians to massive price reductions on the market there. Example EQS 450+: Its base price fell in mid-November 2022 from 1.08 million to 845,000 yuan - or the equivalent of almost 143,000 to around 112,000 euros. With the EQE, the savings were significantly lower, but still noticeable at the equivalent of around 6,850 euros.
Toyota BZ4X almost 4,000 euros cheaper
The price war in China is also taking place at a much lower level. Toyota had massively reduced the price of its Model Y competitor BZ4X - just four months after its market launch. The basic model now costs 169,800 instead of 199,800 yuan or the equivalent of 22,500 instead of 26,400 euros. For comparison: In Germany, the model costs at least 47,490 euros; in this country, however, it competes with a larger battery and better equipment.
Elon Musk may claim otherwise, but the price war between electric car manufacturers has long been underway. Not necessarily in Europe, where the Tesla competition is still waiting. But on the most important world markets in China and the USA. This is of course good news for customers who plan to buy an electric car in the near future. That doesn't necessarily apply to Tesla's competitors: At a time when raw materials and supplier parts are still scarce and expensive, price cuts are putting pressure on their returns. Anyone who does not have the necessary free capital to absorb this will produce many cars. However, this production is expensive, which means that the manufacturer runs the risk of no longer being able to cover its costs from regular cash flow.
Tesla is speculating on such scenarios. Elon Musk now believes his company is financially stable and powerful enough to weaken competitors or even drive them out of the field. The plan can work, but it doesn't have to. Whether it works will depend primarily on how many rivals are playing the game. It is possible that the steadfast are the winners in the end.