Tesla's Commanding Lead
Tesla has a superior advantage with profitability in the EV price war. Tesla earned $15,653 in gross profit per vehicle in Q3, 2022. This is 2x Volkswagen, 4x the comparable figure at Toyota, 5x more than Ford, and almost 3x that of BYD.
Tesla has decided to take the nuclear approach to get thin margin EV players off the table, according to Bill Russo of the Automobility, an industry consultancy in Shanghai. A bigger pie with fewer slices and more to eat for those who remain will be how things go moving forward.
Tesla can absorb its price cuts and still remain profitable. You may also look at BYD in the chat below and think they are close to Tesla in profitability. That is for ICE (gas) cars. Eventually, BYD will have to stop selling those and BYD EV's are not nearly as profitable for them.
Most other auto makers are not making any profit whatsoever on EVs.
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Can Other EV Companies Keep Up?
There are a number of companies that compete with Tesla in EV's. They are:
Most of these companies are hardly producing any EV's at scale. Only Nio, BYD, Xpeng, and Ford have any kind of scale for EV's. Toyota has, unfortunately, been lagging with its EV production.
I think there is still a sentiment that EV's are not going to take over the auto market. As costs continue to go down for them and maintenance and fuel costs are less, and the economics continue to show that EV's are more and more advantageous over gas cars, people are going to buy EV's. Economics will rule the day.
I don't think other companies who are already building gas cars can compete with Tesla - not easily. I see Nio, BYD, and Ford as the only 3 companies in this list that have a chance to survive with EV's.
As Tesla continues to bring down costs, they will be able to lower prices even more. Tesla's end game is FSD for all its vehicles - the Model 3, Model Y, Model S, and Model X, along with the Cybertruck, will all be FSD capable. Tesla would sell its vehicles at 0 margins if they had to to grab market share.
What do you think of the EV price war? Will any company compete with Tesla?
In Related News: Tesla FSD Finishes 2022 With 285K Users
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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.