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Elon Musk and Tesla Put Big Pressure on Mercedes and BMW

Tesla cut prices for its Model S luxury sedan and Model X full-size SUV this year, putting pressure on other luxury automakers.

Tesla and CEO Elon Musk want to dominate the electric car market.

To do this, they transform their vehicles into four-wheel saloons by equipping them with the latest innovations.

At the heart of this transformation is the controversial fully autonomous driving system. It is an advanced option for Autopilot and a standard driver assistance system in Tesla vehicles.

The FSD has been at the center of regulatory investigations and has been widely criticized, but the system has proved popular with Tesla and Musk fans, and the system has already saved lives, making it a big help for Tesla drivers. I’m saying.

“In 2014, a Model S owner fell asleep while driving and killed a cyclist. With a basic autopilot in 2014, the cyclist would still be alive. This is a real safety issue.” We have to act here because there is,” Musk said. He’s an avid Tesla fan, according to a short video posted on Twitter.

Musk confirmed the March 5 statement.

Tesla launches price war

But it’s not just the equipment.Tesla (TSLA)- Get Free ReportMusk also wants to challenge rivals on price. They started by slashing prices on their most popular and cheapest models, the Model 3 sedan and the Model Y midsize SUV.

On January 12th, EV Leaders slashed prices for various versions of the Model 3 and Model Y. This is primarily to allow potential buyers to enjoy his $7,500 federal tax credit provided by the Inflation Reduction Act after January 1 of this year.

The price cut was unprecedented for Tesla after months of price hikes due to supply chain disruptions and chip shortages. Some variants have been reduced in price by 20%.

Musk said on Tesla’s Jan. 25 earnings call that the move led to strong demand for both models. In fact, the price war has made Tesla cars very competitive with Ford’s offerings, for example. (debt)- Get Free Report— Mustang Mach E — and General Motors (GM)- Get Free Report— Cadillac Lyric and Chevrolet Volt.

Two months ago, Tesla also slashed the prices of its luxury models, the Model S and Model X, but these luxury cars received less attention.

Now Tesla is trying to send a clear message to Mercedes-Benz (DMLRY) BMW (BMWYY) Porsche (pohi) and Lucid (LCID)- Get Free Reportthe main competitor in the luxury EV segment.

The Austin automaker has cut prices on these two models again, it said. Dedicated website.

The price of the Model S sedan is down 5.3% from its price since January 12th to $89,990. Prior to that date, the base Model S was priced at $104,990. Overall, the base price for this version has dropped by $15,000 (14.3%) this year.

The base price of the Model S Plaid is down 4.3% to $99,990 as of March 5th. However, since January 12th, the price of this version has dropped by 19%. This is because the previous price was $135,990. Prices for the Model S Plaid dropped $36,000 this year.

As for the Model X SUV, the base price dropped 9.1% to $109,990 as of March 5th. However, since January 12th, he has fallen 17%. – The price was $120,990.

The base price for the Model X Plaid version as of March 5th is $109,990. This is down 8.3% from January 12th. Prior to January 12th, the price was $138,990. Therefore, the price of this variant has dropped by $29,000, or 21%, this year.

“Big Effect On Demand”

“We found that even small changes in price can have a big impact on demand, so it was very good to learn,” Musk said at Tesla’s Investor Day on March 1. rice field. The CEO added that demand will “go crazy” as the company’s cars become more affordable.

Price cuts on the new Model S and Model X have put pressure on Tesla’s rivals to do much the same. But the open question is whether batteries can afford to sacrifice margins to protect market share while electric vehicle development costs remain high.

“Tesla’s slashing of the Model S and X deserves another smart strategic move by Musk & Co,” Wedbush analyst Dan Ives commented. “The lower price point resonated well, spurring considerable demand on the Model Y/3 and this continues its path. Margins are well ahead of the industry and Tesla is well positioned to cut prices. .”

https://www.thestreet.com/technology/elon-musk-and-tesla-put-enormous-pressure-on-mercedes-and-bmw Elon Musk and Tesla Put Big Pressure on Mercedes and BMW

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