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Elon Musk Responds
Elon Musk responded to a statement that Tesla is starting a price war between battery and internal combustion engine cars. The chart showed data from Tesla, Bloomberg Intelligence, and Edmunds, while comparing Tesla vehicles pricing to the average car in the U.S.
Tom says that the Tesla Model Y became one of the top three SUVs in America, even though it cost more than twice as much as the RAV4 and Honda CR-V. After Tesla's 5th price cut in 2023, the cost barrier has been reduced to a small amount.
He goes on to talk about the Model Y price being cut by 24% in 2023 which is unheard of for such a high-volume vehicle in its prime. The closest thing might be the Ford Model T cutting its price in 1920 by 28% while in its infancy.
The Model Y now costs $5,300 less than the average price of a new car in the U.S. when you factor in the IRA tax credit. Tom goes on to wonder if the prices will rebound after Tesla does refreshes of the Model 3 and Model Y like they did with the Model S and Model X in 2020.
Elon Musk responded with this:
Tom, we’re not “starting a price war”, we’re just lowering prices to enable affordability at scale— Elon Musk (@elonmusk) April 15, 2023
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Tesla Will Keep Lowering Prices
Tesla is going to keep lowering the prices of its vehicles, as much as it needs to, in order to make them affordable. If the current market cannot afford the price of Tesla vehicles, they will lower the price. You can call this a demand issue or whatever you want, but Tesla has shown that they want their cars to be affordable. They will cut prices before they do traditional media advertising.
Tesla does do quite a bit of advertising, in fact, via its Twitter account and Elon Musk's Twitter account with over 130 million followers. Tesla Twitter has nearly 20 million followers and between these two accounts, Tesla can do most of the advertising it needs to.
I see Tesla continuing to lower the price of these two vehicles, and I don't think a refresh of the Model 3 and Model Y is being done, so Tesla can raise prices. It is being done, so Tesla can keep lowering prices.
All of this is kind of irrelevant because Tesla's biggest bet is on its FSD software that will allow Tesla vehicles to operate as a Robotaxi fleet. This is where the real money lies and the more Tesla vehicles Tesla can produce and sell, the more of these fleet vehicles will be on the road when it comes time to awaken the fleet.
Do you think Tesla will keep lowering prices? Was Elon Musk right here?
In Related News: Tesla Model Y Is Starting to Lead the World in Sales
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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.
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