A shiver went down the spine of automotive’s mainstream earlier this month when, in the wake of yet more headline price cuts, Elon Musk alluded that he was prepared to slice away at Tesla’s profit margins to boost volumes, in the expectation of income from everything from subscriptions to add-ons – driver assistance tech, extra performance packages and more – compensating.
Cutting car prices at a time everyone else is raising theirs is a hell of a gamble. It’s the antithesis of automotive common sense in so many ways, risking everything from brand exclusivity to residual values. But this is Musk, so you know that he will double down on the strategy – and that he has more chance than anyone else of making going against the grain work.
It’s too early to conclude the full impact of his cuts (beyond perhaps the fact that they indicate Tesla’s supply is out of whack with its demand).
