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It’s been an interesting couple of days in the electric vehicle world, to say the least. On Friday last week Tesla announced sweeping and substantial price cuts to its fleet of electric vehicles. Musk had previously announced a $7,500 price cut to the Model 3, which I wrote about two weeks ago in the context of its (seemingly very negative) effect on SoCal’s Autonomy, an EV leasing service.
But Musk didn’t stop there. On Friday Tesla dropped prices on basically every model in their fleet:
- The Model 3 Performance dropped 16% from $63,000 to $54,000
- The base level Model 3 dropped 6.4% from 46,990 to $43,990
- The Model Y Long Range dropped 25% from $65,990 to $52,990
- The Model Y Performance dropped 19% from $69,990 to $56,990.
- The Model S dropped 11% from $104,990 to $94,990
- The Model S Plaid dropped 15% from $135,990 to $114,990
- The Model X dropped 9% from $120,990 to $109,990.
All of these prices are before the $7,500 rebate from the Inflation Reduction Act, and now, with the lower price points, more of Tesla’s fleet will qualify for the deal as well. Regardless of how you feel about Elon Musk, a new Model 3 for $36,490 is tough to ignore.
The changes come after a year in which the EV company raised prices several times due to inflation, strong demand, and supply chain constraints. The new drops bring the vehicle pricing back down to pre-2022 levels or further. Back in June 2022, Musk had signaled that Tesla might drop prices “if inflation calms down,” and now, with the consumer price index finally starting to show some signs of relief, it seems the CEO has made good on that promise.
While this is certainly excellent news for consumers looking to buy a vehicle, it lays bare exactly how far out in front Tesla is in the EV race in the United States. These price cuts make Tesla’s offerings extremely competitive at virtually every price point that both legacy automakers and new startups are targeting. The Hyundai Ioniq 5 starts at 41,450. The Kia EV6 starts at $48,500. The Ford Mustang Mach-E starts at $46,895.
So what does that mean for the Southern California EV companies?
The Tesla price cut is likely going to be a tough pill to swallow for Fisker. The EV automaker’s base model, Ocean, starts at $37,499 and has a range of 250 miles. The car will likely not qualify for the IRA rebate, however, due to being assembled by Magna Steyr in Austria. Meaning the base level Model 3 will be cheaper and have 22 additional miles of range. Granted, the Model 3 is a sedan and the Ocean is an SUV, so these cars may not compete directly. But one look at the Fisker subreddit and you can see the writing on the wall: the community is absolutely littered with posts from users who claim they’ve canceled their reservation or are seriously thinking about it.
User Accurate-Fact8226 wrote: I am going to be canceling my order of Fisker. It really doesn’t make sense to get a Fisker after the massive price cut on the model y.
Another told dot.LA in a private message that in addition to the price drops, the more immediate availability of the Teslas was making him seriously consider making the switch. He had actually preordered the upcoming Fisker Pear, but says he needs a car sooner rather than later, and the Tesla price cuts have peaked his attention. “If it were to be more available, like how you [can] order a Tesla right now … I would strongly consider getting a fisker ev… especially if the prices were lower than a Model 3,” he wrote. Adding that, “The wait time is what’s killing my patience.”
The Tesla price cuts will probably affect Rivian the least because Tesla doesn’t (yet) have a vehicle that competes with Rivian’s R1T pickup or the R1S SUV. However, be advised, if you make a post on the Rivian subreddit asking if people are considering canceling their preorders, you will be swarmed by an army of brand loyalists accusing you of trying to manufacture drama or farm karma. Apparently, since the Tesla news broke, the forum has been inundated with posts asking this same question over and over again. The r/Rivian zealots will tell you it’s a stupid question and they’re already sick of talking about it after just a few days. But a bit more probing would suggest that there are in fact some Rivian reservation holders who are at least mulling their options over.
At the same time, Rivian is still years away from profitability and burning cash at a fairly astounding rate. That Tesla can afford to slash prices like this and maintain profitability shows the size of the gulf between the two companies. And while Rivian’s current offerings don’t compete with Tesla’s, the Cybertruck–meme that it has become–may still hit the market one day.
Vinfast got off to such an abysmal start in the United States that it’s hard to even say if the Tesla price cuts are going to be the nail in the coffin or if the company was already six feet under. Back in December, I covered the company’s baffling decision to handicap its first 999 units on US soil to just 180 miles or range, but still charge customers $55k. That performance to price point ratio made absolutely no sense then, and makes even less sense now.
For $55k you can now get a Tesla Model Y Long Range which will take you roughly 326 miles on a single charge. That’s more than 146 more miles than Vinfast’s VF8 “City Edition.” Plus, in the event you do need to charge the car, you get access to Tesla’s supercharger network, which is far superior to any alternative. Vinfast is still so new that it feels like the company could turn things around, but these Tesla price cuts definitely don’t make things easier. - David Shultz
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