- Tesla CEO Elon Musk hinted that another price drop may be on the way for its models.
- Other EV manufacturers have also started dropping model prices.
- This comes as the Model Y becomes the best selling car in Europe.
Tesla may lower its profit margins further in the future
Tesla cut the prices of a range of its EVs earlier this year, which has helped drop around £8,000 off the Model Y’s previous starting price and likely contributed to its accolade of the best selling car in Europe so far this year.
In a recent earnings call, CEO Elon Musk hinted that the company may look at further price cuts to its electric cars to further boost sales, whilst sacrificing profits. Musk’s strategy seems to be that the company can recoup these loss in earnings further down the line, in a way that other car manufacturers may not be able to:
“We’re the only ones making cars that technically could sell for zero profits now, and yield tremendous profits in future, through autonomy”
Elon Musk, CEO of Tesla
Are other electric car manufacturers slashing prices?
Further drops in price could also force other electric car manufacturers to follow suit, in order to maintain sales against rival Tesla. We’ve seen other manufacturers join the price war, with Vauxhall revealing its facelifted Corsa-e. Despite the cost of most other goods rising, it starts around £1,500 lower than the outgoing model with a revised starting price of £32,445.
Ford is another manufacturer dropping its EV prices. Following in the steps of Tesla’s price drops earlier this year, it dropped the Mustang Mach-e starting price by around $3,000 – but only in the US. It also just dropped the starting price of its F-150 Lightning by a whopping $10,000. Interestingly, these price drops are not being applied outside of the US market.
The cheaper options
It’s not just price drops that established manufacturers should take note of, but recent entrants with significantly lower starting prices. The MG4 EV, one of the best cheap electric cars, starts at under £27k, significantly less than the £37,000 Volkswagen ID.3 it rivals. MG is just one of many Chinese brands that are beginning to grab a foothold in foreign markets.
Whilst this revelation may cause concern for manufacturers, it’s great news for consumers. With bans on petrol and diesel cars coming into place throughout the world, and Europe in particular, it’s crucial that consumers have more affordable EV options in due course.
