Tesla’s price cuts take the lead against average U.S. cars prices

After Tesla’s most recent price cuts, the EV maker’s best-selling EVs now directly compete with gasoline cars on price. At $38,990, the base Model 3 is $8,700 less expensive than the U.S. average for buying a vehicle.

According to Bloomberg Green research, the starting price of a Model Y SUV is $3,700 less than the approximate $48,000 national average for new cars. Moreover, Tesla began lowering its prices at the start of the year, putting pressure on established automakers who were already finding it challenging to turn EVs into a profitable venture.

Sam Korus, an analyst at Ark Investment Management, oversees funds with roughly $1.27 billion in Tesla stock, said: “Now the fun part of cost declines… life after price parity.” He continues, “There is no reason why EV prices or battery costs should stop falling at price parity. The product’s price can decrease or stay in the same price range while performing better.”

Although Tesla’s reductions last week had minimal impact on its stock price, this year’s constant cuts have alienated some investors. Gary Black, managing partner at The Future Fund, said last week’s changes alone will cost Tesla $1.2 billion a year starting in 2024. Black has pushed for Tesla to invest money in conventional advertising efforts rather than price reductions on his widely followed X social media account. It “Amazes me that Tesla uber-bulls are trying to spin the price cuts as positive,” Black wrote in a post on October 6. Instead of offering price reductions, “We would prefer Tesla use long-term advertising investment to educate owners of internal combustion engines to go EV.”

The starting price of the Model 3 is now $6,500 less than the cheapest BMW 3 Series, which is frequently considered as Tesla’s direct gasoline-powered rival. The full-size sedan Model S and the three-row SUV Model X, two of Tesla’s higher-end vehicles, have also seen price cuts. Those reductions make the vehicles the most affordable models compared to the U.S. average transaction price. Nevertheless, according to Edmunds, the baseline price for a new car in the U.S. in September was $47,698.