Some folks say Tesla’s recent price cuts are a bad idea or a sign of failure. Meanwhile, others call them genius. How you choose to qualify them is up to you, but there’s no denying that Tesla and CEO Elon Musk do things differently than most of the auto industry, and these price cuts are a perfect example of how Tesla’s direct sales model may become the way of the future.
When Tesla cuts its prices, we learn about it almost immediately, which is interesting since the company doesn’t typically make an announcement. You have to be familiar with Tesla’s current pricing and check its website on a regular basis to notice the changes, which are sometimes substantial.
If Tesla makes a price cut in the US, it applies to all cars sold on our shores regardless of the location. This is because there are no dealers to control prices. Tesla has said many times over the years that its prices are transparent, and it has also noted that it doesn’t typically offer discounts or incentives, and you shouldn’t expect markups.
But wait, Tesla doesn’t advertise its prices and it has certainly raised and lowered them aggressively and often. However, the point is that at any given time, you can consult Tesla’s website and get the official price, place your order, and lock it in. When you show up to take delivery, there won’t be some crazy markup, nor should you expect the Tesla store to throw some cash on the hood. There is no dealer trying to make an extra buck or convince you to buy.
Meanwhile, though some of Tesla’s rivals have announced price cuts on competing models, such as the Ford Mustang Mach-E, the real pricing tends to happen at the dealers. It doesn’t really matter what pricing or incentives the automaker advertises since the dealers set prices, and there aren’t official rules against market adjustments.
Tesla also tends to offer some massive discounts when it actually does cut prices. If it wants to get the media’s attention and attract buyers, perhaps $13,000 off the best-selling Model Y will do the trick. As rival automakers take notice, they may advertise a price drop, but it’s typically much more negligible, and once the dealer potentially does its market adjustment and add-ons, the savings could disappear.
As shared by Teslarati citing the article above, even if a dealer were to provide a $10,000 price cut to something like the BMW iX, the media wouldn’t likely learn about it or cover it. In addition, it may not even matter since other folks in other areas may not be able to get such a discount anyhow. It’s merely local news, not something on a national scale.
Finally, it seems Tesla’s margins are so much higher than the rest of the industry that it can afford big price cuts, followed by more price cuts. Meanwhile, some legacy automakers are making it clear they’re still losing money on every EV they sell, and dealers aren’t seeing big returns from EV sales unless they’re adding market adjustments. For these reasons, it appears that in many cases, it’s just plain hard for Tesla’s rivals to reduce prices on EVs.
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