Tesla is leaving the market for low-end electric cars to traditional automakers
Tesla yesterday (June 15) released the fourth price increase of the year, which increased the starting price of several versions of Model 3, Y, S, and X by 5% each. Tesla frequently changes its prices and rarely explains why, but over the past two years the company has faced shortages of semiconductors, factory shutdowns in Shanghai due to epidemics, and rising prices of key battery metals such as nickel.
Tesla’s price hike will help the company maintain some of the highest gross profit margins in the auto industry – even in the most recent quarter – 33% – despite rising supply chain prices. So far, the company has explored the market for high-margin luxury electric vehicles (EVs) and is content to let traditional vehicle manufacturers like GM and Nissan struggle to control a less lucrative market for affordable EVs.
GM has never made a profit on its most popular EV, the Chevy Bolt. Since 2019, the carmaker has slashed the price of the Bolt by 29% to make the Nissan Leaf the most affordable EV on the market. Over the same period, Tesla has increased the starting price of the Model 3 (Standard Range, Rear Wheel Drive) by approximately 25% and the Model Y (Long Range, All Wheel Drive) by 29%.
The future of affordable EVs will be decided by traditional vehicle manufacturers
Tesla’s dominance in the U.S. EV market होती which accounted for approximately 70% of last year’s total sales झाल्या has helped increase the average price of a new electric car in the U.S. by 28% since 2019. But if the U.S. To decarbonize the transportation sector, automakers like GM and Honda will need to deliver on their promise to sell affordable EVs for less than $ 30,000 by the end of the decade.
This will help electric cars reach the same price as gas-powered cars, removing the biggest hesitation for US drivers about buying an EV.