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Tesla Waves Keep Crashing

EV market leader's price swings still rippling across the industry.

May 2, 2023
Tesla Waves Keep Crashing

Tesla’s recent price hikes affected its models 3 and Y, which are now $250 more in the U.S.

IMAGE: Pixabay

2 min to read


Tesla’s price changes continue to spur ripple effects throughout the electric-vehicle segment as it responds to market conditions.

After a series of half a dozen price cuts that started in January, the EV market leader raised prices on its two top sellers on Monday in the U.S., Canada, China and Japan.

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Tesla’s prices, though, remained below the levels they stood before it started cutting.

Meanwhile, the day after Tesla’s price trims, Ford cut prices on its electric Mustang Mach-E by up to $4,000, or 8%, on some versions as it switches to a cheaper battery. It was the second price cut on the model this year.

The price swings continued against the backdrop of recently adjusted federal EV tax credits, not to mention inflation and rising interest rates.

The U.S. Treasury Department issued guidance in March that eliminated some models from qualification for the credits and cut other models credit totals in half.

Just 16 models qualified after the changes, which added battery material sourcing requirements that mandate sourcing, processing or recycling of battery materials to be centered in North America or a free-trade partner of the U.S.

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The Tesla Model 3 RWD and the Mustang Mach-E were two models that saw their tax credit eligibility total cut in half to $3,750.

Chinese EV makers also dropped prices after Tesla started the trend. But some legacy rivals aren’t jumping on Tesla’s bandwagon. Volvo, for one, has said it will stick to its EV pricing schedule.

Tesla didn’t reap financial rewards from its slashing sessions, though they boosted sales on some models, and it even made one cut the day before its earnings report. Its first-quarter profit fell 24% year-over-year, though it blamed higher supply and logistics costs and reduced regulatory credits.

In addition to economic anxieties, it’s being forced to compete with brands such as Ford and General Motors as the legacy carmakers build momentum toward all-EV lineups by next decade.

Tesla’s recent price hikes affected its models 3 and Y, which are now $250 more in the U.S.

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The price of EVs is a major factor in many Americans’ hesitance to switch from gas-powered models, and vehicle affordability is a growing concern after pandemic-spurred inventory shortages drove up prices.

An April Edmunds report showed that the average transaction price for a new model reached $47,713 in March, up 33% from five years earlier.

DIG DEEPER: Report Paints Stark Affordability Picture

 

 

 

 

 

Originally posted on Auto Dealer Today

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