2024-02-13 16:54:37
Elon Musk, the CEO of Tesla, has a Valentine’s gift for you:
Tesla cut U.S. prices for certain versions of the Model Y by $1,000 earlier this week, a signal to rivals and potential EV buyers that deflation in the EV market is not over yet.
Prices for electric vehicles overall fell nearly 11% in January from a year ago, according to new data released Tuesday by Cox Automotive’s Kelley Blue Book. Tesla vehicle prices fell 20.6% year over year in January.
Tesla sent out emails inviting consumers to visit a store and experience Tesla’s “Romance Mode” for Valentine’s Day.
What’s that?
These include heated seats, a virtual fire on the dashboard screen and “your favorite love songs on shuffle.” We’ll look forward to what late-night comedians can do with this raw material.
“Since most people don’t like to buy cars in the middle of winter, Tesla is offering a $1,000 incentive to do so,” Elon Musk wrote on his X.com social media platform. “This is the essential dilemma of manufacturing: factories need continuous production to be efficient, but consumer demand is seasonal.”
That noise you hear is the sound of all the auto executives and traditional dealership operators slapping their foreheads. They have known regarding the seasonality of car demand for years. Now Tesla presents it as a new justification for discounts? Club!
Here are some better reasons for Tesla to apply Barry White moves to reluctant buyers.
Hyundai is offering a $7,500 discount on its line of electric vehicles this month, offsetting the loss of a federal tax credit of the same size. Rivian has reduced prices for its R1 series truck and SUV.
Volkswagen offers discounts equivalent to 17% of the average transaction price, according to KBB. That represents regarding 6% of the average transaction price in January 2023.
How long will this last?
Tesla’s operating margin in the fourth quarter equaled approximately $4,000 per vehicle delivered. Tesla’s operating margin in the fourth quarter fell 45% from a year ago, but Tesla has room left to adapt to further price cuts. Rivian, Lucid, Polestar and other EV startups don’t.
Traditional automakers are reaching the limits of how much they are willing to lose on electric vehicles.
Source: Reuters
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