The Tesla EV Price War Claims More Victims
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Tesla Price War Claims More Victims

Tesla's Price Cuts Impacting Suppliers, Price War May Amplify Concerns

The dramatic price cuts Tesla implemented last month upset plenty of customers, kicked off a price war, and are putting pressure on everyone.

Widely seen as a reaction to the company’s late ’22 stock slump and lagging consumer interest in the face of capable new electric products from more established legacy brands, the massive Tesla price cuts – in some cases allowing new Tesla buyers a 31% discount compared to customers who’d bought their new Tesla just a few days before – sent shockwaves throughout the EV world.

The first “victims,” if you can call them that (and we will) were, of course, Tesla’s own loyal customers, who saw the resale value of their EVs plummet virtually overnight. “If I wasn’t at work,” wrote one Tesla owner on a Reddit thread, “I’d be sobbing in the fetal position right now.”

As the shockwaves spread outward, used car dealers were the next to feel the pain. The going price of some used Tesla vehicles fell nearly 20% in recent months, only made worse with the rapid, sudden price cuts and rising inventory rates towards the end of Q4, prompting Charlie Bilello to do the math for everyone else, below.

 
 

Used car giants like CarMax and Carvana were seemingly caught unaware by Tesla’s pricing moves, too, and seemingly liquidated more than two-thirds of their Tesla vehicle inventory in just 72 hours after applying massive discounts of their own.

“It’s not easy to tell on CarMax’s website when they discount a car, but Edmunds tracks it for you,” writes the Autopian’s Matt Hardigree. “They show this Tesla Model Y in Lafayette dropping from $55,998 on January 13th (pre price-drop) to $44,998 in a day. $11,000! Overnight! … If you look around you’ll see a lot of similar price drops.”


CarMax’ Tesla Fire Sale

Edmunds price-tracked showing one Model Y’s $13,000 price cut, via the Autopian.

Across town (metaphorically speaking), Carvana also took a bath with its Tesla inventory, and it seems as if that company has quietly begun liquidating just about everything it thinks it can sell, not “just” Teslas and Ford Mustang Mach-Es … which brings us to the Ford Mustang Mach-E.


Ford Fires Back at Tesla

Image courtesy Ford.

Ford moved to counter Tesla price cuts with some discounts of its own, slashing prices on some new Mustang Mach-E models by up to $5900.

According to Ford, their price discounts are actually a good thing for their customers. “We are not going to cede ground to anyone,” says Marin Gjaja, Chief Customer Officer, Ford Model e. “We are producing more EVs to reduce customer wait times, offering competitive pricing and working to create an ownership experience that is second to none … our customers are at the center of everything we do – as we continue to build thrilling and exciting electric vehicles, we will continue to push the boundaries to make EVs more accessible for everybody.”

Ford hasn’t touched pricing on its sold-out F-150 Lightning pickup yet – except to keep pushing them upwards – but the writing is on the wall, and companies like GM and Rivian seem to be responding.

Well, GM responding – Rivian seems to be in a panic, with CNBC reporting that the company has decided to lay off fully 6% of its workforce, “in a bid to conserve cash as it braces for a possible industry-wide price war.”

Rivian has yet to announce its 2022 earnings (the company plans to report its fourth-quarter and full-year results after the American markets close on February 28th), but the company did reveal last month that it fell short of its goal of producing 25,000 vehicles in 2022, as well as a $5 billion loss through the first three quarters.

Which, you know – seems less than ideal when you’re going into a price war with an expensive new product that probably won’t qualify for Federal tax incentives … especially when your stock’s already cost investors billions, you’ve preemptively cancelled your top-shelf product lines, and you’re shedding established industry partners left and right.


More to Come

Tesla announces $3.6b Semi, 4680 battery factories in Nevada but questions abound
Proposed Nevada factory buildout, via Tesla.

During Tesla’s Q4 2022 earnings call, company executives explained the company would, “be working to cut costs from every angle.”

It’s expected that, as Tesla reduces costs and (it hopes) demand soars, the company will turn to pressuring its suppliers as another way to reduce costs. Dan Sharkey, an attorney Tier 1 and 2 automotive suppliers and co-founder of Brooks Wilkins Sharkey & Turco, maintains that suppliers are already struggling, and the coming price wars will bring even more tough times to suppliers in 2023.

“It’s never good for suppliers when (automakers) cut vehicle prices because that pressure rolls downhill,” says Sharkey. “I never like it, because I know eventually they’re going to try to get it out of one of us … my message is, there’s not going to be any room there. Many suppliers are financially struggling.”

And, if all that seems like a lot, hang on – because this price war is just getting started.


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AUTHOR: 

EIC

5 Responses

  1. A used Tesla is worthless if Tesla won’t provide parts or other aftermarket services needed to support it.
    Tesla has drawn the line in the sand since nearly day 1 of not selling parts for a used/out of warranty or salvaged Tesla (never mind fast charge ability).

    1. It’ll get worse once their “integrated/structural battery” comes into play. Expect more totaled Teslas for increasingly minor accidents.

  2. I think we should go back to the horse and carriage! Remember they used to say “no one will ever put a gas station every 50 mi.² in the United States to provide gasoline for vehicles. That wasn’t true. We have gas stations everywhere. I remember when cordless phones came out. We all said, it would be great if we could have a cordless phone in our car but nobody’s going to put an antenna every square mile around the United States… And that wasn’t true!

    So electric cars are getting cheaper and cheaper and cheaper and now it’s a bad thing to sell cars for less money to the general public! None of you f people at Electrify have it any real background in economics do you? You see, the government just gave out hundreds of billions of dollars and all of that money filtered all the way to the top. There’s no more money floating around at the top so they’re going to generate a way to get more money floating to the top.

    That’s the game! These huge companies are big because we buy their products. Does anyone remember General Motors was in bankruptcy after 9/11 and taxpayers bailed them out! Does anybody remember that Ford killed people by burning them to death in the back of the Ford Pinto… Then Ford stole technology from a guy for intermittent wipers and ended up paying $20 million in penalties

    Tesla brought the electric car into reality, more rigorously said, Tesla brought the electric car to the level of assembly-line and WORKABILITY… just after General Motors created the EV1 (which really worked) and then killed it! BMW created the electric mini Cooper and brought it to the United States for a couple of years and then took them back from everyone, just like General Motors. It’s great that General Motors and BMW created these amazing electric cars, and they did them before Tesla, but nobody’s bagging on them for sitting on the technology for a decade… And even selling the technology to Texaco oil for profits. Where is your reporting on any of this?

    Toyota, who made the amazing RAV4 EV (I owned one myself!!) stopped making electric cars altogether and made a ridiculous hydrogen car which is now totally and utterly worthless. You can’t give that car away! Where is your reporting on that? Hydrogen cars are electric cars. They just create electricity from hydrogen versus pumping it in from a charger. You’re reporting is so bad and so slammed it… And you don’t even see it.

    So my hat is off to Elon for bringing electric cars from fantasy to reality. My hats off to Elon for bringing electric cars to the general public in a way that they kick the crap out of gasoline cars in every way!!!

    Before you pretend you are reporters, you must learn to “report” news and not this slanted nonsense!

    1. Sounds like you’re holding $TSLA all the way down … or up! Best of luck to you (but, like, zero chance you have a PhD).

    2. I’m going to respond again, just in case anyone reading your comment is fooled into thinking you have the slightest idea what you’re talking about.

      First, the GM EV-1 didn’t work. It had a 50-80 mile range and took 15 hours to charge.
      Second, you can still buy an electric mini. Today. BMW never “took it away.” It’s not even a California-only car. You can buy them in Cleveland, Chicago, Tulsa, or wherever minis are sold.
      Third, Toyota still makes a plugin RAV4, and a number of other EVs — the bZ4X is one, the bZ3 is another, and the newly redesigned Prius Prime has a plug, as well.

      So, thanks for playing. Go peddle your crazy somewhere else.

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