Tesla’s price has halved in five years but Elon Musk plans to go further

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Beginning its history with very expensive models, Tesla has accomplished the feat of halving the price of its cars in the last five years, while drastically increasing its margins. But the firm could go even further, thanks in particular to its future Model 2 that could be unveiled soon.

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Since its inception, Tesla has always had a premium brand positioning, notably offering a Model S and later a Model X at very high prices. This also remains the case, while the two stars in the range are respectively shown from 113,990 and 121,990 euros, which makes them ineligible for the ecological bonus. A strategy then announced in the first part of the Master Plan presented in 2006, which describes a range that starts at the top and then a gradual reduction in prices.

Prices halved

A few days before the revelation of the 3rd part of the Master Plan, on March 1, the site electric give a quick summary. And the least we can say is that Elon Musk’s firm seems to have kept his promises. In fact, he managed to divide double the price of their cars in a very short period of just five years. A true tour de force by the manufacturer, while its rivals tend to increase their prices.

We think, for example, of Renault, which has raised the prices of its Mégane E-Tech as well as its electric city cars. This is also the case with Dacia, which has increased the price of its Springs. Strategies very different from those of Tesla, therefore, which a few weeks ago made a significant price drop on its Model 3 and Model Y, going up to 13,000 euros in one night. A fall that follows the difficulties of the brand, especially in China and the United States.

how to explain electric, the now Texas-based company has managed to slash the price of its cars while increasing its operating margin. So, this has risen from -15% to over 15% in five years. A very good result, which is partly explained by the savings that the brand has made by selling its cars directly, without going through a traditional dealer network. In addition, Tesla spends almost nothing on advertising and communication.

This is how it finally became profitable in 2021 (without taking into account carbon credits), with a market capitalization of more than 1,000 trillion dollars. Although it fell hard, it finally rose again at the beginning of the year. Which reassures investors, as the firm was preparing to spend one of the worst years in its history, due to Chinese competition. But that was before the price war!

towards a new decline

This is one of the reasons why the firm decided to drastically reduce its prices, causing a real snowball effect in the market and declaring a price war in which Xpeng, VinFast, Lucid and even Ford are engaged. If Tesla is used to playing yo-yo with the prices of its cars, this is the first time such a sharp and sudden drop has been recorded.

But traditional builders will have to get used to it, while the brand’s models should cost even less in the future. And we owe this to the arrival of a new, cheaper platform, which will be inaugurated by the future Tesla Model 2 or the restyling of the Model 3 (Project Highland). If few details have been revealed yet, it could be formalized as soon as possible. Next March 1 during Investor Day.

The Model 2, future affordable sedan, could share its lower part with the Robotaxi promised by Elon Musk with 4680 batteries, much cheaper to produce than those currently mounted in the brand’s cars. In addition, they offer a greater density, which allowsimprove battery life without increasing size. Therefore, the amount of lithium needed would be less, while the price of lithium tends to rise sharply, while some fear a shortage. New sodium batteries (no lithium) are expected this year.

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