How Did Tesla Manage To Drop The Prices Of Its Cars
- Written by : Ashton G. Curran
- Date Published : 2023-01-23
- Date Updated : 2023-01-23
- Category / Tag : tesla
Certainly, anyone who bought a Tesla last year has every reason to be unhappy with the decline in resale value. For example, in some European countries, the Model 3 now starts at 44,990 euros after a price reduction of about 3,800 euros, while the Model Y is offered from 46,990 euros with a reduction of about 2,000 euros.
How did Tesla manage to achieve these reductions that in the US reach up to 8,000 dollars? Quite simply, Tesla's profitability. Tesla had a gross profit of $15,653 per vehicle in the third quarter of 2022. More than twice as much as Volkswagen, four times as much as Toyota and five times as much as Ford, according to a Reuters analysis.
We also have to consider that Tesla has a markedly different business model than other major automakers (direct sales, not dealerships). And for this the calculation of profits is different.
A recent Reuters article titled Tesla Uses Profits as Weapon in Electric Price War has mentioned, among other things, how Elon Musk started the EV price war, using as a weapon the large margins that the brand's profitability gives him.