In a previous release EkaLore looked at Tesla’s choice to compete on price. This intentional strategy has challenged competitors in multiple markets and marketspaces. In China the competition for EV/NEV sales is fierce. BYD has emerged in 2023 as a profitable, high-volume, EV competitor in China. Other Chinese manufacturers have struggled to compete with Tesla’s pricing even as subsidies from a variety of governmental sources have been reduced.
In the USA the competition for EV/NEV sales has seen Tesla’s marketshare reduced. Tesla still struggles to establish its marketing and service presence in all American states. Major marketing efforts by traditional global manufacturers saw Tesla increase its sales volume. Tesla’s price increases reduced the attractions of traditional manufacturers’ vehicles even as the competition sought volume sales. GM, Ford, and others have acknowledged continuing, and deepening, losses against Tesla’s pricing. Tesla responded, in 2023, with price adjustments and feature packaging to keep prices eligible for subsidies on popular models. Simply, Tesla’s price cuts increased the losses at other manufacturers even as new product lines were brought to the competition.
By the end of 3Q2023 the slowing sales of EV/NEV products from traditional manufacturers in the North American market were indicators of their strategies’ failures. Accumulating inventory on dealers’ lots grew as car loan interest rates climbed. Premium product line volumes were reduced as price increases (at MSRP or due to available ‘trims’) decreased consumer demands in the North American market. New EV/NEV product introductions from EU, Japanese, and Korean manufacturers put pressure on Tesla to keep up volumes. Tesla has responded with multiple price adjustments (up and down) as highly awaited product (CyberTruck) nears deliveries.
Tesla has been able to maintain a reduced margin even as it hurt competitors profit margins across their fleets. In the EU/UK marketplace the volume of vehicles from Tesla Germany has changed market dynamics. Every vehicle sold by Tesla removed a profitable vehicle from a marketspace where incumbents felt they had a ‘home market advantage’. Tesla Germany is likely to produce 250000 vehicles, and possibly more, in 2023. Additional product lines for the German plant have been rumored.
The rapid increases in Tesla’s sales volume in the EU, USA, and China have reduced the competitive choices for traditional manufacturers. Increased marketshare for EV/NEV products favors Tesla with greater acceptance of products in more markets. Political, and public, perceptions favor subsidies and preferential treatment for EV/NEV like Tesla.
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