By slashing the prices of its Model 3 and Model Y, Tesla has completely shuffled the cards in the electric car arena. These two models were already recommended, but they are really becoming essential. Should I buy them now or wait? Here are some answers.
Tesla and price cuts, we know. When it was launched in France, the Tesla Model 3 in the Standard Range+ version (now called Propulsion) sold for around 50,000 euros. At the beginning of 2021, the Texan manufacturer drastically reduced the sale price of the entry version to less than 45,000 euros. With the bonus threshold effects, we go to a final price of 36,800 euros and a drop of more than 10,000 euros.
An increase of 17,000 euros in a few months
The party lasted for more than a year, before the price was raised, preventing Elon Musk’s car from being eligible for the maximum green bonus. The car underwent many price increases throughout 2022, eventually sitting at 53,490 euros. With the new 2023 bonus, the car cost almost 17,000 euros more. Therefore, most potential customers abandoned the Model 3 to order a cheaper Tesla Model Y Propulsion, as it sold for €49,990 and was launched in September 2022.
The lower price of the Model Y Propulsion in France was an anomaly that we had revealed many times. We expected a price adjustment, which would allow the Model Y to sell for more than the Model 3 in the long run. But we did not expect this price drop for the two Tesla electric cars. And especially not in such a big drop!
Elon Musk promised last summer that Tesla’s prices could fall when inflation subsides. Therefore, everything indicated that Tesla would increase the price of the Model Y Propulsion after a few months, to put it back in front of the Model 3 Propulsion. Since this week’s price has dropped, the Model 3 now sells for less than the Model Y, but not through price increases for the SUV. Excellent news for potential customers of the Texan manufacturer.
The big question we can ask ourselves is: Should we rush to the Tesla Model 3 and Model Y with this new price drop, or should we wait?? In other words, are the new prices the deal of the year?
Let’s take the problem point by point to try to answer this delicate question.
Price uncertainty for the coming months
The first argument that makes us say rush into a Tesla showroom if you want to buy a Model 3 or a Model Y is the certainty that Elon Musk’s electric cars can hardly get cheaper . Far be it from us to announce that Tesla is selling at a loss with these prices, but they really seem very low to us.
Especially since, unlike in 2021, the price of Tesla has fallen all over the world: in China, in Europe, but also in the United States. On the other side of the Atlantic, the Model S and Model X have also seen their prices drop this week.
So yes, Tesla’s operating margin is huge. This The manufacturer that earns the most money from the sale of its carscompared to other major manufacturers. In China, in the third quarter of 2022, Tesla earned $9,711 per car sold, compared to $7,469 for Mercedes and $5,949 for General Motors. The difference is huge, as the Asian media chart shows. IT Home.
Looking at the global numbers, Tesla sold 343,830 electric cars during the same period, earning $4.968 million. That is to say a profit of more than 14,000 euros per car sold. So Tesla can afford lower prices, but with reductions ranging from €3,000 to €11,000 in France, and similar amounts in China and the United States, the margin will inevitably shrink in the coming months.
So the big question is whether Tesla can afford to keep these prices for a long time, or if it’s fair. a way to clear inventory and increase demandto allow factories to run at full capacity.
A price drop to fill the order book?
Remember that Tesla is going through delicate moments in terms of stock and demand. This is the first time that the American company has so much stock on hand. That is why we have seen many discounts and gifts around the world at the end of 2022 to try to sell everything before December 31, to look good with investors.
On the demand side, the various price cuts in China during the second half of 2022 have raised many concerns among auto industry analysts. Delivery times in China have been reduced over timelike Tesla has too many electric cars to sell.
So much so that the vice president of Tesla China had to speak to deny her rumors. During the very recent price drop in France, Tesla made the same speech. In essence, the manufacturer justifies this price drop by optimizing production and logistics, and by a calmer period (the end of COVID, the war in Ukraine stabilized, the semiconductor crisis that is less violent, etc.). Enough to allow, according to Tesla, to see the future with more serenity and to adapt prices accordingly.
If Tesla lowers prices to increase demand and therefore output at its factories, the risk is that car prices will rise again when factories are running at full capacity and struggling to keep up with demand. This situation is not unthinkable, since it has already occurred in its last months, when certain models required more than 12 months from the order before being produced and then delivered.
The evolution of the ecological bond
We must not forget that in France, the prices of the Model 3 Propulsion and Model Y Propulsion are really very low compared to other markets, thanks to the mechanism of the ecological bonus. And we don’t know how this will evolve in 2023. It may be reduced for the richest households. Will this happen in 2023 or rather in 2024? Impossible to predict.
If you can also benefit from the conversion bonus (scrap bonus), then the rates are even more affordable. True, higher than the average sales value of a car in France (around 25,000 euros), but much cheaper than equivalent electric cars.
In other words, currently, the Tesla Model 3 Propulsion and Model Y Propulsion enjoy the best value for money in the automotive industry. Surely the competition should not greet this price drop with enthusiasm.
Can Teslas cost even less?
It’s unclear if Tesla will raise prices for the Model 3 and Model Y in the coming months. But it is likely. If it did, it would not be immediately, but when the Gigafactories around the world are saturated. Which will take a bit of time. Especially since the production capacities are mind-boggling: approximately 1.6 million cars a year if we take Q4 2022 production into account, but potentially 2.5 million with all factories at full capacity.
The big question is, therefore, whether Tesla will be able to further reduce its prices, despite the current inflation and the rise in the price of raw materials, and in particular the lithium necessary for the manufacture of batteries.
As we saw above, this possibility should be ruled out in the short term, at the risk of Tesla selling at a loss or reducing its innovation capabilities too much. The American company needs cash for its expansion and, in particular, to build new factories.
If Elon Musk’s firm is currently the leader in the electric car industry, ahead of the Chinese giant BYD (which is getting dangerously close), it is still ahead of traditional players such as Volkswagen. But the latter are investing massively, with production capacities (all engines combined) of several million vehicles per year for each.
In any case, what is certain is that with their prices, the Tesla Model 3 and Model Y will be a success, in France, Europe, the United States and China. Elon Musk’s goal of making the Model Y the world’s best-selling car by 2023 is no pipe dream. It is very probable. What would make it the first electric car to hold this title.
Should you buy a Tesla Model 3 or Model Y now?
You will have understood this by reading this file. If you’re currently in the market for an electric car and have your sights set on a Model 3 or Model Y, now is the time to take the plunge.
In fact, it is almost certain that the prices of these two models will not drop in the coming months. No reason, unless the competition matches those rates. But this is impossible, since competitors have much less room for maneuver. And, on the contrary, they gradually increase the price of their vehicles.
On the contrary, there are chances that the price of Model 3 and Model Y will increase in the future. The question that remains unanswered is: when?
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