By Gary S. Vasilash
Last month Tesla did something that OEMs almost never do. (And in its history, Tesla has done lots of things that traditional OEMs almost never do, so at least in this regard it is being consistent.)
It cut the price of its vehicles in China, Germany, and the U.S.
These weren’t slight, either. In the U.S., for example, the Model Y Performance was cut by 19% and the Long Range version by 20%.
There were all manner of assessments as to why this happened. Some suggested that Elon Musk’s Twitter distraction was causing the company to lose sales. Others were pointing out that there is increased competition from some of the traditional OEMs. (Who, to be frank, are bigger on rhetoric about their electric scale today and tomorrow than they are in putting EVs in customer’s driveways.)
Tesla has some 2/3 of the U.S. EV market.
Consider: while the Ford F Series seems like a force of nature when it comes to sales, in 2022 there were 653,957 of those trucks sold—and GM sold 764,771 Silverados and Sierras combined, so it isn’t like either of the primary players have anything near 2/3. Yet a company that wasn’t taken all that seriously 10 years ago now dominates a category.
Shortly after Tesla made its announced cuts, the folks at Ford joined in on reducing the prices of its 2023 Mustang Mach-E models. The reductions ranged from $600 on the Select eAWD Standard Range model to $5,900 for the GT Extended Range.
Ford clearly wants to move metal. What’s curious, though, is that in 2022 it sold 39,458 Mach-Es, which is a 45.4% increase over the number it sold in 2021. It’s not like things were lagging. (Ford execs may have noticed that in July of last year GM cut the prices of the Bolt EV and Bolt EUV by $5,900 and $6,300, respectively, and those vehicles ended the year at 38,120 deliveries, not only close to that Mach-E number, but a 53.5% increase over 2021–greater than the Mach-E rise. Although it is hard to imagine the vehicles being cross-shopped..)
Everyone knows that EVs are more expensive than vehicles with internal combustion engines for a wide array of reasons. And while the overall percentage of EVs sold in the U.S. is still small—5.8%–it is growing, not declining.
So why were the cuts to prices made and will other OEMs follow suit?
Those are the primary questions raised and discussed on this edition of “Autoline After Hours.” Charlie Chesbrough, Cox Automotive Senior Economist, and Joe White, Reuters Global Automotive Correspondent, join “Autoline’s” John McElroy and me to talk about those topics and more.
And you can see the show here.