{"id":40837,"date":"2023-01-20T09:04:00","date_gmt":"2023-01-20T14:04:00","guid":{"rendered":"https:\/\/autosector.com\/?p=40837"},"modified":"2023-01-20T09:04:00","modified_gmt":"2023-01-20T14:04:00","slug":"report-tesla-uses-profits-weapon","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=40837","title":{"rendered":"Report: Tesla “Uses Its Profits As A Weapon”"},"content":{"rendered":"

The recent electric car price reduction applied by Tesla around the world continues to be a hot topic, as it might significantly affect other manufacturers.<\/p>\n

According to a recent Reuters<\/em>\u00a0article, titled “Tesla uses its profits as a weapon in an EV price war,”<\/em>\u00a0Tesla<\/a> CEO Elon Musk started the EV price war, using the company’s “superior profitability as a weapon.”<\/em><\/p>\n

Well, it seems an exaggeration to call the recent move a war and that Elon Musk started it. The world is more complex.<\/p>\n

In the second half of 2022, we have seen how Tesla’s estimated order backlog is consistently decreasing to less than 100,000 electric cars as of the end of December<\/a>. In other words, we would rather say that the market conditions triggered this move.<\/p>\n

What is interesting in the Reuters<\/em>\u00a0article is the profitability data. According to the report, Tesla is able to earn up to several times more (per vehicle) than large carmakers (like Volkswagen, Toyota or Ford).<\/p>\n

\n

“Tesla earned $15,653 in gross profit per vehicle in the third quarter of 2022 – more than twice as much as Volkswagen AG (VOWG_p.DE), four times the comparable figure at Toyota Motor Corp (7203.T) and five times more than Ford Motor Co (F.N), according to a Reuters analysis.”<\/p>\n<\/blockquote>\n

We must keep in mind that Tesla has a noticeably different business model than other major carmakers (direct sales vs. dealers), which does not allow us to directly compare them (part of the revenues go to dealers).<\/p>\n

However, it’s true that the fundamental advantage of Tesla was lower manufacturing cost, which allowed it to achieve such high margins and noticeable price cuts when needed.<\/p>\n

There is a chance that lower prices will translate into a higher number of orders and a continuation of expansion. At the same time, other manufacturers might be put in a difficult situation, depending on their potential to also reduce prices.<\/p>\n

Reuters<\/em> refers to the early 20th Century when Henry Ford slashed the prices of the Model T or Toyota’s cost advantage in the 1980s and 1990s. The year 2023 might be truly crucial for Tesla.<\/p>\n

We are very curious about what will happen, but let’s note that there is always a risk that even price cuts will not help if the global economy enters some bigger recession.<\/p>\n

<\/section>\n","protected":false},"excerpt":{"rendered":"

The recent electric car price reduction applied by Tesla around the world continues to be a hot topic, as it might significantly affect other manufacturers. According to a recent Reuters\u00a0article, titled “Tesla uses its profits as a weapon in an EV price war,”\u00a0Tesla CEO Elon Musk started the EV price war, using the company’s “superior […]<\/p>\n","protected":false},"author":1,"featured_media":40838,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-40837","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-cars"],"_links":{"self":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/40837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=40837"}],"version-history":[{"count":0,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/posts\/40837\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=\/wp\/v2\/media\/40838"}],"wp:attachment":[{"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=40837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=40837"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/autosector.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=40837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}