Photo: Tesla
Tesla decided to hike up the prices of its vehicles just days after cutting them again, the sixth time this year. Despite the fact that the increase is only marginal, it hints at the downward trend switching toward a dynamic approach in pricing.
The American EV manufacturer enjoys massive success along with a dedicated fanbase, partly because it's been a player on the scene for a long time and benefits from an established brand, despite its aversion to advertising. But companies are always focused on growth as well as profitability, and Tesla's strategy for growth in 2023 involved cutting down prices a total of six times in the U.S. since the start of the year, with the last price cut happening Tuesday, April 18.
But that cannot last forever, especially in a global economy that is constantly fluctuating. Companies can't endlessly keep taking financial hits to boost sales. Or at least they must take calculated losses, compensated by the company's growth. The result is that Tesla is now hiking the prices back up, although not by much.
At the very top of its range, the Model S and X Plaid variants jumped by just 2.4%, from $105,990 to $107,490. As far as the more pedestrian versions are concerned, the prices also increased by relatively small numbers, with 2.6% for the non-Plaid Model X and 2.9% for the S. However, despite this recent jump, Tesla's cars are still much cheaper than they were at the start of the year, with a difference between 16 and 23%.
But as more automakers step onto the EV scene, quite a few chinks in Tesla's armor have started being revealed, meaning such a strategy might not work in the long run. While the cars are undeniably quick and sport some of the best mileage in the business, that's all they have going for them.
Plenty of issues come with that performance and badge, with poor build quality being one of them. Just recently, a case of suspension failure involving a ball joint popping out of the control arm occurred, proving this point. That's without even talking about uneven panel gaps, poor-quality window seals, or the questionable interior, although that can be subjective, at least in terms of aesthetics.
And just cutting prices is only a temporary fix for these underlying issues. Even with Tesla's massive sales volume, investors won't be happy with the company running on low margins for too long, as showcased by the recent increase. Tesla must face the competition and improve its products to steadily grow its customer base. It is no longer the biggest fish in the EV pond, with BYD's sales figures skyrocketing. And unless it starts making much more significant changes, other manufacturers will overtake it as sales and profit are concerned.
But that cannot last forever, especially in a global economy that is constantly fluctuating. Companies can't endlessly keep taking financial hits to boost sales. Or at least they must take calculated losses, compensated by the company's growth. The result is that Tesla is now hiking the prices back up, although not by much.
At the very top of its range, the Model S and X Plaid variants jumped by just 2.4%, from $105,990 to $107,490. As far as the more pedestrian versions are concerned, the prices also increased by relatively small numbers, with 2.6% for the non-Plaid Model X and 2.9% for the S. However, despite this recent jump, Tesla's cars are still much cheaper than they were at the start of the year, with a difference between 16 and 23%.
But as more automakers step onto the EV scene, quite a few chinks in Tesla's armor have started being revealed, meaning such a strategy might not work in the long run. While the cars are undeniably quick and sport some of the best mileage in the business, that's all they have going for them.
Plenty of issues come with that performance and badge, with poor build quality being one of them. Just recently, a case of suspension failure involving a ball joint popping out of the control arm occurred, proving this point. That's without even talking about uneven panel gaps, poor-quality window seals, or the questionable interior, although that can be subjective, at least in terms of aesthetics.
And just cutting prices is only a temporary fix for these underlying issues. Even with Tesla's massive sales volume, investors won't be happy with the company running on low margins for too long, as showcased by the recent increase. Tesla must face the competition and improve its products to steadily grow its customer base. It is no longer the biggest fish in the EV pond, with BYD's sales figures skyrocketing. And unless it starts making much more significant changes, other manufacturers will overtake it as sales and profit are concerned.
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