On Friday, April 7, 2023, Tesla (TSLA) announced another round of price cuts on all U.S. models. This could look like either desperation or a genius move.
It is neither.
Tesla has the manufacturing dominance, inventory, and market share advantage to cut prices. This further pressures the profit margins of competitors. For example, General Motors (GM) invested in Lithium Americas (LAC) only for LAC stock to fall from $24 to below $19 last week. GM will lose billions in research and development costs as EV prices fall.
Ford (F) is losing billions on its EV project. It cannot catch a break in pivoting from gas-powered vehicle sales to EV.
Rivian (RIVN), Fisker (FSR), and Lucid (LCID) do not have the production scale to break even. They will continue to burn even more cash flow as EV prices fall.
Tesla Model 3 and Model prices will fall by $1,000. The Model S and X prices will fall by at least $5,000. This increases customer interest in the well-regarded brand. Tesla has the service infrastructure and charging stations available for customers. It is ahead of the competition with self-driving.
When Tesla’s self-driving is safe enough, customers who reserved their purchase will further enjoy their vehicle.
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