Tesla is able to lower prices because its cars are so cheap to build


A newly completed Tesla electric car at the official opening of the new Tesla electric car production plant March 22, 2022 near Gruenheide, Germany.

photo: Christian Marquardt (Getty Images)

There’s a reason for that Tesla has been capable his vehicle drastically shortened prices across the board without break out in a sweat. The automaker is reportedly making more money per vehicle than literally all of its competitors. Now, Reuters reports that Tesla uses this fact as another weapon in the EV price war.

the Austin, Texas company was once one of the automotive industryhis biggest moneyLoser, but in 2022 Tesla built quite a lead over everyone when it comes to that benefit per vehicle, depending on the point of sale.

Tesla reportedly earned average earnings $15,653 in gross profit per vehicle for the third quarter of 2022. That’s mind-boggling other automakers like Volkswagen, Toyota and ford – Tesla average values five times the gross per vehicle Profit especially from Ford.

Image for article titled Tesla can lower its prices because its cars are so cheap to build

graphic: Reuters

As the semiconductor shortage and other supplyChain problems swept through the automotive industry, and car manufacturers decided to focus on higher-margin models in order to increase profits, despite declining sales figures. Therefore Tesla and most other automakers decidedly, quite clearly raise prices their vehicles. Add the fact that demand for electric vehicles far exceeded total demand for vehicles in 2022, and You get some seriously high prizes.

According to Reuters, Tesla has invested heavily in new manufacturing technologies to keep production costs down. An example of this is the use of large castings to replace small metal parts. The automaker has also made the decision to move battery manufacturing and other aspects of the supply chain in-house. The company has also standardized vehicle designs to improve economies of scale, which is why every Tesla looks basically the same regardless of specification.

But now that Tesla is cutting prices, it’s putting newfound pressure on mainstream automakers trying to compete in the EV market.

“Tesla took the nuclear option to drive the underperforming, low-margin players off the table,” said Bill Russo, a spokesman for Shanghai-based industrial consultancy Automobility. said Reuters. “Big cake, fewer pieces, more to eat for those who are left.”

Market trends like these will most likely not last forever. According to Reuters, analysts warn that the production capacity of the global electric vehicle market will soon exceed demand. It is reported that demand for electric vehicles in North America will reach approximately 2.8 million vehicles per year by 2026. However, North American EV factories will be able to produce over 4.5 million vehicles over the same period.



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