Tesla has crossed another goal line – once again way ahead of what its competitors have been able to do when it comes to EVs.
In this case it has nothing to do with high tech dashboards, fast charging, range or the like – the latest news of note from Tesla pertains to price.
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According to Bloomberg, Tesla – who has been cutting prices incrementally on its electrics for the better part of a year – has reached a new low. And that’s not bad news for customers, who can now buy a Tesla for the same amount, or less than, the average price of a gasoline powered car.
Bloomberg Green assessed the data after Tesla’s latest round of price cuts – they’ve initiated a half dozen since January – and says that the base Model 3 sedan now starts at just $39K – $8,700 under the average sale price of a new car or truck in the US. The Model Y SUV is priced $3,700 below.
It’s called price parity – and it’s been a goal for every automaker who hopes that they can reach scale and lower the price point for customers who are wary of the high cost of entry for an EV. Many market analysts see this coming, by and large, in the next several years.
So if Tesla is there now, will this create a big competitive advantage for the company that’s led the way on electrics? Perhaps, but according to Bloomberg the move has created some debate among Tesla’s investors.
Gary Black, one fund manager, believes the most recent price cut alone will come with an annual cost to Tesla of $1.2 billion starting next year. Other investors, according to Bloomberg, believe that the price cuts are Tesla’s way of propping up demand after owner Elon Musk has become viewed by some as a contentious figure in the public eye.
Either way, they are likely to work at driving sales – at least in the near term. The report notes that, when the $7,500 federal tax credit is added to the new low base price of Model 3 and its fuel savings, ownership cost becomes on par with that of a Toyota Corolla.