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XCancel My Order: Tesla’s Price Cuts Put SoCal’s EV Scene in Jeopardy
David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
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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?
Fisker
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.”
Rivian
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
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
- Autonomy Feeling the Brunt of Tesla's New Musk Effect ›
- New Year, New EV Doom Forecast ›
- Newly Rebranded Car Subscription Startup Autonomy Will Offer Tesla’s Model 3 ›
- Karma Prices Its Electric Car at $80K to Compete With Tesla’s Model S ›
- Tesla to Open Supercharger Network to Non-Tesla Vehicles - dot.LA ›
David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.
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LA Tech ‘Moves’: LeaseLock, Visgenx, PlayVS and Pressed Juicery Gains New CEOs
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
“Moves,” our roundup of job changes in L.A. tech, is presented by Interchange.LA, dot.LA's recruiting and career platform connecting Southern California's most exciting companies with top tech talent. Create a free Interchange.LA profile here—and if you're looking for ways to supercharge your recruiting efforts, find out more about Interchange.LA's white-glove recruiting service by emailing Sharmineh O’Farrill Lewis (sharmineh@dot.la). Please send job changes and personnel moves to moves@dot.la.
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LeaseLock, a lease insurance and financial technology provider for the rental housing industry named Janine Steiner Jovanovic as chief executive officer. Prior to this role, Steiner Jovanovic served as the former EVP of Asset Optimization at RealPage.
Esports platform PlayVS hired EverFi co-founder and seasoned business leader Jon Chapman as the company’s chief executive officer.
Biotechnology company Visgenx appointed William Pedranti, J.D. as chief executive officer. Before joining, Mr. Pedranti was a partner with PENG Life Science Ventures.
Pressed Juicery, the leading cold-pressed juice and functional wellness brand welcomed Justin Nedelman as chief executive officer. His prior roles include chief real estate officer of FAT Brands Inc. and co-founder of Eureka! Restaurant Group.
Michael G. Vicari joined liquid biopsy company Nucleix as chief commercial officer. Vicari served as senior vice president of Sales at GRAIL, Inc.
Full-service performance marketing agency Allied Global Marketing promoted Erin Corbett to executive vice president of global partnership and marketing. Prior to joining Allied, Corbett's experience included senior marketing roles at Disney, Warner Bros. Studios, Harrah's Entertainment and Imagi Animation Studios.
Nuvve, a vehicle-to-grid technology company tapped student transportation and automotive sales and marketing executive David Bercik to lead the K-12 student transportation division.
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
This Week in ‘Raises’: Curri Scoops Up $42M, Mosaic Scores $26M
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
A local logistics platform raised fresh funding to put toward product development, infrastructure and sales and marketing initiatives, while a San Diego-based fintech company closed its Series C funding round to expand its investment in AI which will empower high-growth SMB and mid-market finance leaders.
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Venture Capital
Curri, a Ventura-based logistics platform, raised a $42 million Series B funding round led by Bessemer Venture Partners.
San Diego-based financial platform Mosaic raised a $26 million Series C funding round led by OMERS Ventures.
AHARA, a Los Angeles-based startup focused on providing personalized nutrition suggestions, raised a $10.25 million seed funding round led by Greycroft.
Per an SEC filing, San Diego-based developer of peptide therapeutics designed to assist in the treatment of autoimmune diseases and disorders selectIon raised $5 million in funding.
Miscellaneous
Los Angeles-based Sensydia, a company working on non-invasive cardiac diagnostics, said this morning that it has received $3 million in a NIH grant.
Raises is dot.LA’s weekly feature highlighting venture capital funding news across Southern California’s tech and startup ecosystem. Please send fundraising news to Decerry Donato (decerrydonato@dot.la).
Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.
Why a Downturn in Esports Investments Isn’t Something To Fear
Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.
Last year, global venture capital investment in esports dropped by more than 40%. Investors have been rapidly selling off teams and franchises, and the industry has witnessed a consistent decline in ad spend. This has prompted many critics to coin the term “esports winter,” referring to a fall-off in the industry, an indication that VCs believe their investments didn’t achieve success as expected.
A recent article in The New York Times highlighted two major esports leagues that recently divested from their teams: Madison Square Garden sold its team CounterLogic Gaming to NRG in April, while Team SoloMid sold its League of Legends Championship Series team in late May.
Arguing that the industry still has potential for growth, several gaming executives at a LA Tech Week panel said that instead of an “esports winter,” the industry was experiencing a period of “normalization.” The panel at SoHo House in West Hollywood featured Brian Anderson, CEO of Culver City-based esports outfit FlyQuest Sport, Gene Chorba, head of developer relations at Roku and Felix LaHaye, founder of United Esports.
“I'm actually very skeptical of the claim of an esports winter,” Anderson said. “I think that what I'm seeing in the market right now, ultimately, is just a lot of venture capital firms that deployed capital into the eSports space that are not generating the returns that they were looking for, and have now done the press junket and are labeling it an esports winter.”
“In reality,” Anderson said, “esports, in my view, is alive and well.”
Anderson said there were a lot of “unrealistic expectations” around esports since it became popular in 2016, and the current decline was a sign that the market was correcting itself. “This is a necessary pain point that any nascent industry is going to go through as it matures and develops, and I think that in, let's say, 24 months, 36 months, esports will be in a much better financially sustainable place,” he said.
“I think we're having a little bit of a normalization,” Chorba said. “We saw the entire economy was being shot to the moon, with nothing behind it… we were seeing valuations of companies, public and private, that just didn't make sense for what they were building.”
Other tech industries have experienced a similar “normalization” in recent years. Cryptocurrencies, NFTs and big tech have all seen a downturn in recent months after being flooded with VC interest for many years.
According to the panelists, the existing viewer base for esports was a clear sign that the industry still had potential for growth. “There's still a ton of attention on professional video games. There's still so much grassroots fan support,” Anderson said. “As long as organizations and developers are able to figure out how to actually monetize that fan base, I think esports is still alive and well and here to stay for a long time.”
According to Insider Intelligence in 2022, there were 532 million esports viewers globally, with nearly 30 million viewers in the U.S.; this is expected to increase to 34.8 million by 2026.
Chorba explained that the reduction in ad spend and brand deals in esports shouldn’t worry investors because these crucial revenue streams have slowed down for other industries as well. “Ad-supported is hemorrhaging money and really just trying to wait out what's really a bad economy right now,” he said. As more people stop paying for cable, Chorba said, eyeballs will move onto streaming sites like YouTube or Twitch to watch gaming content.
LaHaye and Chorba said that one of the reasons for the decline in esports investments could be that executives and VCs are running esports companies like tech or SaaS companies. “As a matter of fact, they are not tech companies. They are ad-supported entertainment products,” LaHaye said.
By taking their companies to IPOs too early, certain esports companies ruined their chances in the market, LaHaye added. “There's also a downswing that's done by a rush to [go] public,” he said. “There are some fairly poor business models in esports that are going through a rougher time.”
“[Game publishing] is a hit-making business,” LaHaye said. “I think there tends to be confusion between what is a fundamental issue for the esports industry itself and some business models within the esports industry being bad business.”
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Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College. Send tips or pitches to samsonamore@dot.la and find him on Twitter @Samsonamore.