There Have Been Concerns That Tesla Price Cut Could Trigger A Price War
Aa
Share
Tesla's price cuts sparked mixed reactions from investors and Wall Street analysts. Some suggested the move was made in response to waning demand. Others saw it as Tesla putting pressure on competitors. In addition, in the coming week, investors await quarterly earnings reports from Tesla, Microsoft Corp. , Intel Corp. and other large companies for the latest information on how they are doing in difficult economic conditions.
Price war?
For now, traditional automakers that don't have Tesla's EV scale have low profit margins or are losing money on their models. Tesla's price cuts are likely to put pressure on car companies to further reduce the cost of electric vehicles and could eventually lead to a price war.
Tesla is doing well
The number of car buyers researching Tesla surged after a price cut in early January. The Model Y was the second most searched vehicle on the website, with the Model 3 moving up 36 places. The starting price for the Model Y is currently around $53,000, down from around $66,000. That's still more than the entry-level Mach-E model, but below some of Ford's higher-end EVs. The base price of the Model Y is about $10,000 less than the starting price of the General Motors Co Cadillac Lyriq, a similarly sized SUV that the automaker is launching.
Shortly after the price cut, applications for financing Tesla vehicles tripled at Tenet, a New York-based start-up that provides financing to buyers of electric vehicles. Which can be summed up by saying that the influx of customers remains at a high level.
Read next: SEO’s Program That Aims To Transform The Structure Of The US Market| FXMAG.COM
Ford against Tesla
Some car dealers say they are worried about losing customers as a result of Tesla's price moves.
Ford posted record Mach-E sales last year and has strong demand for its range of electric cars. The company continues to monitor the market to stay competitive, he said.
GM CEO Mary Barra and Ford CEO Jim Farley have declared their goal of finally dethroning Tesla as the top seller of electric vehicles in the US, but they are far behind for now. According to sales figures and estimates from research firm Motor Intelligence, Tesla sales accounted for approximately 65% of total U.S. electric vehicle sales in 2022, beating Ford's 7.6% and GM's 3.5%.
Tesla share price
The Federal Reserve's struggle to tame inflation through aggressive interest rate hikes last year has suddenly changed the outlook for big tech stocks that have pushed major stock indexes to new highs for years. Tesla shares fell 65% in 2022, its worst year ever. Meta Platforms Inc., the parent of Facebook, is down 64% and Netflix Inc. by 51%. Some are betting that technology could take over again if the Fed signals plans to move away from raising interest rates.
Net purchases of a basket of eight popular tech companies by individual investors hit a recent peak in November before declining sharply towards the end of the year. Buying has since picked up slightly in the new year as tech stocks have rebounded.
As for Tesla, individuals have been regular buyers since late 2021, doubling their numbers as shares slumped in late 2022. On January 10, one-day net purchases of Tesla shares hit a record $316 million.
Tesla shares have definitely skyrocketed in the new year. Prices rebounded from 108.10 all the way to 135.50.
Source: wsj.com, finance.yahoo.com
