Tesla has announced and implemented steep pricing drops on many of their highly sought after models starting in August and apparently the automotive world finds that problematic.
Pricing from Tesla has decreased much since the last quarter of 2022, less than a year ago.
If you wanted a Tesla Model Y, their most popular model worldwide, you would have to pony up $64,990 and probably wait a while to get it. After visiting Tesla’s website and building the identical model (standard range) you would come up with a price of $47,740 and that is before a $7,500 tax credit by the Federal Government, leaving a final cost of $40,240.
Delivery times for this model to my address are estimated at September-October, depending on the paint finish. That means whoever bought a Model Y last year has taken a $24,750 hit before any other usual new car depreciation. Ouch!
Industrialist Elon Musk has explained on his X (formerly Twitter) social media postings that prices were dropped in relation to more inventory, production cost lowering, supply chain issues being resolved, and the higher interest rates on automotive loan financing. Musk also believes lowering his basic models to reflect the average costs of a new car can help in the wider implementation of full EV cars.
The Model 3 and Y are also getting a refresh next year and lower prices will clear any inventory. Other tech heavy companies drop prices on older models before the release of new ones, so this isn’t out of the ordinary.
Tesla ownership is as much a lifestyle as anything else, so many owners that fought tooth and nail last year to buy one are understandably upset. Postings on X have revealed owners of higher model Teslas, like the Model X and Y, with appraisals showing them upside down by more than $50,000.
Price drops on new models also trickle down to used car prices, where some pre-owned Teslas sold higher than new models last year.
With used car companies such as Carvana and CarMax having heavy inventory in these cars and already struggling, expect to see stock prices dropping with layoffs happening soon.
Car pricing is a delicate balance already, and Musk has thrown a wrench in the entire industry. My thoughts are this will lead to more Tesla’s sales and a big grab in their market share, but it also may cause issues with their fan base.
Other EV manufacturers will have to lower their pricing to compete even remotely with Tesla, which was dominating the market even at the high costs.
With lower pricing, widespread adoption of the Tesla charging infrastructure, and name recognition, Tesla is going to be hard to beat. They do need to work on winning back their early adopters, who feel jaded by this move.
Tesla is also one of the only American car manufacturing outfits that isn’t going to be affected by any strike of the United Auto Workers of America. That is going to be an advantage to them as we will see in the next few weeks, but that is a different article.
As for me, I will see you on the road!
