Tesla price cuts push EV market toward affordability with broader influence

Key Points

  • 🚗 Tesla’s recent price cuts have contributed to making electric vehicles (EVs) more affordable.
  • 💰 Electric vehicle prices have decreased by more than 22% year-over-year, averaging $50,683 in September 2023.
  • 📉 While other luxury automakers like Audi, Mercedes-Benz, and Porsche increased their prices in September, Tesla offset these increases by cutting its own prices in the United States.
  • 📊 Tesla’s price cuts influenced a broader downward trend in EV pricing and contributed to shorter-term price reductions.
  • 📈 EV sales are increasing due to greater supply and more choice, with 15 new EV models available compared to a year earlier.
  • 💲 Tesla’s transaction prices decreased 5.5% from August to September and 24.7% year-over-year, offsetting price increases by other automakers.
  • 🌐 The electric vehicle industry as a whole decreased 2.9% from August to September and 22.4% from September 2022 to September 2023.
  • 👍 While Tesla’s price cuts have been viewed both positively and negatively, they have made EVs more accessible to consumers.
  • 🎯 Upcoming changes to the EV tax credit may provide additional benefits from these price adjustments.

Tesla cut prices on its cars once again recently and contributed to a broader scope of affordability for electric vehicles. As new vehicle transaction prices declined once again in September, according to Kelley Blue Book data, Tesla is the culprit, helping consumers find industry-leading vehicles for a reasonable price.

Electric vehicle prices are down more than 22 percent year-over-year, standing at an average of $50,683 compared to $65,295 during September 2022.

While luxury automakers Audi, Mercedes-Benz, and Porsche all marked September 2023 with increases in pricing compared to the same month a year prior, Tesla helped offset these increases with cuts of its own in the United States.

Tesla led the EV sector with its price cuts, which influenced a broader downtrend in EV pricing. While the 22 percent decrease year-over-year stands, Tesla is also pushing prices down in shorter terms. For example, they decreased nearly $2,000 from August to September alone.

EV sales continue to increase as well, as the EV supply sits at 97 days at the beginning of October. This is down from 111 days, the peak of 2023, which occurred in early July.

Stephanie Valdez-Streaty, director of Industry Insights at Cox Automotive, said:

“EV sales continue to grow in the U.S., partly due to strong supply and more choice. At last check, we had 15 new EV models for sale that were not available a year earlier. Better choices and more options are helping push prices lower and drive higher sales.”

For Tesla, transaction prices decreased 5.5 percent from August to September and 24.7 percent year-over-year. This helped to cancel out increases from BMW (4.4%), Daimler (11.5%), Ford (4.9%), GM (1%), Hyundai (2.8%), Stellantis (5.6%) and Volkswagen (4%).

The electric vehicle industry as a whole decreased 2.9 percent from August to September, and 22.4 percent from September 2022 to September 2023.

Tesla’s price cuts have been looked at in a good and bad light by investors and analysts. While they decrease margins and could make for some bearish sentiments on Wall Street, consumers are enjoying the lower prices because it puts more EVs in their price point.

It also allows more consumers to have access to electric vehicles, and with upcoming changes to the EV tax credit as a part of the Inflation Reduction Act, there will be even more benefits to come from the price adjustments.

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