Tesla CEO Elon Musk has slashed the price of Tesla’s electric vehicles several times in the past few months, which has caused quite a stir in the auto industry, especially in the global electric vehicle field. price war. This significantly improved Tesla’s sales numbers. Ford CEO Jim Farley doesn’t think Musk is doing anything new. In his view, Musk is simply following the path that Henry Ford took in 1913.
Henry Ford used this strategy to lower the price of the iconic Ford Model T in order to increase sales of the car, and it paid off. Ford CEO Jim Farley said Tesla’s current EV price war strategy is just repeating that. The Insider report quoted Farley as saying Musk’s move was a play in Henry Ford’s Model T playbook.
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Interestingly, in his 1922 autobiography, “My Life and Work,” Henry Ford explained the importance of lowering the price of the Model T and subsequent models. The iconic figure in global automotive history first began using conveyor belts on the Model Y assembly line in 1913, leading to a significant increase in production. As auto companies were able to produce more cars in less time, Ford began slashing the price of the Model T, paving the way for a contemporary industry price war.
Some 110 years later, Tesla CEO Elon Musk employed a similar strategy to boost sales of Tesla vehicles. Over the past few months, Tesla has consistently lowered prices on the brand’s most popular vehicles. In 2023 alone, Tesla has slashed the prices of its cars six times so far. Musk wants Tesla to double the company’s car production in 2022 and plans to make 2 million vehicles in 2023, as the company ramps up capacity at its newest plants in Berlin and Austin.
While such production increases and price cuts are hurting automakers’ profit margins, which investors don’t like, Elon Musk claims he knows what he’s doing. He even said on a first-quarter 2023 earnings call that it’s better to ship many cars at lower margins and reap those profits down the road, as the automaker aims to grow more cars from its self-driving software. income.
First published date: April 30, 2023 at 08:48 AM CST