On April 12, 2023, local China media firm Hong Kong Economic Times said that Tesla (TSLA) would cut prices. The Model 3 long-range edition price will fall by 11%. The Model Y price will fall by 9%.
Those are steep price cuts. The first round of price cuts in late Dec. 2022 spurred buying interest. Customers on the fence about buying a Tesla talked about the lower price. Demand increased. The latest round of cuts suggests that Tesla has a demand issue.
Economies of Scale
Tesla is expanding its economies of scale. It has the Giga factory capacity, lower input prices from deals with suppliers, and a global network to increase unit sales. General Motors (GM), Ford (F), and Stellantis (STLA) face higher operating costs for their gas-powered vehicle business. They must spend billions to secure supply deals and increase output.
Fisker (FSR) does not have a vehicle on the market yet. It consistently pushed out the availability. The longer it delays unit sales, the more market share potential it loses to Tesla. Customers would opt for an established Tesla brand over a newcomer, Fisker.
Lucid Motors (LCID) reported producing only 2,314 vehicles at its Arizona facility. Lucid cut prices by $7,500 to increase sales. Demand destruction could bankrupt Lucid.
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