Tesla has long dominated the electric car market, but the brand's market share has fallen slightly in 2023.
Citing data from Cox Automotive, Reuters reported around 300,000 battery-powered cars were sold in the United States during the third quarter, but Tesla accounted for only half of them — the lowest share it has had on record. This is down from the 62% of the market Tesla had claimed in the first quarter.
Perhaps adjusting for this fall in demand, Tesla again cut the cost of its Model 3 and Model Y in October, as well as the performance variations of these cars.
According to Bloomberg, the Model 3 saw a $1,250 reduction to a new $38,990 starting price, while the Model Y had a $2,000 price cut, with its Long Range version dropping to a starting price of $48,490.
Tesla had already cut prices earlier in the year, trying to shut out competition from other electric vehicle competitors. But this latest move could cost the company $1.2 billion a year, as investor Gary Black noted on X, formerly known as Twitter.
We estimate the cost of last night's $TSLA M-3 and M-Y price cuts at $1.2B/year. If TSLA mgmt were to spend 1/10 of that ($100M/yr) on education to increase awareness among potential EV consumers about:
— Gary Black (@garyblack00) October 6, 2023
1/ Tesla's low up-front cost
2/ Ease of charging
3/ # miles a full charge… pic.twitter.com/5PNWQvFLDu
He said that instead of slashing prices, Tesla should focus on advertising its range of zero-tailpipe-pollution cars to educate potential customers on cheap running costs, availability of charging stations, and impressive driving range on a single charge.
Meanwhile, co-founder and CEO of wealth management firm Gerber Kawasaki Inc. Ross Gerber told Bloomberg that Tesla CEO Elon Musk's increased engagement with right-wing politics following his acquisition of X may have discouraged customers who would be in the brand's key demographic.
Reduced prices for electric vehicles are a huge benefit for prospective customers. According to Deloitte's 2023 Global Automotive Consumer Study, one of the biggest barriers to buying an electric car in the United Kingdom, Belgium, and France is the cost.
But choice is also a factor in consumer purchasing decisions, and the increase in competition from brands like Ford, General Motors, and BMW might just be muscling into Tesla's space.
While the investors might be skeptical of Tesla's decisions, motorists looking to move away from dirty-fuel-powered cars to cleaner electric versions will surely benefit — as will the planet from reduced pollution that leads to global heating.
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