Tesla started a price war shortly after it cut the price of its cars by as much as 30% by the end of 2022. That has forced several other global EV makers to rethink their pricing strategies and squeeze margins. Tesla CEO Elon Musk appears to be thinking on the same track again, according to reports, suggesting the car company could sell its cars without a penny of profit and future Still profiting from self-driving technology. He also hinted that if Tesla did so, it would be to achieve higher sales goals.
Automotive News reported that Tesla’s CEO hinted at another price war during the company’s first-quarter 2023 earnings call. He reportedly said the car company believed a push for higher sales and a larger fleet was the right thing to do compared to lower sales and higher profit margins. It’s clear that Tesla is rethinking its strategy and trying to passively generate more revenue by offering owners subscriptions for self-driving technology and other services.
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The report further said that investors and analysts asked Musk about Tesla’s price cuts after the car company cut the price of electric vehicles six times in 2023 alone. According to reports, he revealed that Tesla’s profit margins are so high that it can sell products at almost zero profit, and in the future it will make money from its self-driving technology software. “Tesla is in a uniquely powerful strategic position because we’re the only company that makes cars that we can technically sell now for zero profit and then generate actually huge economic benefits through autonomy in the future. No one else can do that To this point. Don’t know how many of you will appreciate the profundity of what I just said, but it’s very important,” Musk said. The billionaire reportedly assured investors that despite multiple price cuts across the entire product line in 2023, Tesla’s profit margins remain among the healthiest in the industry.
Interestingly, this is nothing new in the auto industry, as several other automakers have tried this tactic. What’s unique, however, is how far Tesla can go when it comes to lowering the price of its vehicles.
First published date: April 23, 2023 09:09 IST
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