Is Tesla planning to start a massive price war? Elon Musk hints so

Tesla CEO Elon Musk has hinted that the EV manufacturer can sell cars without a single penny as profit and still earn money from autonomous driving te
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Tesla CEO Elon Musk has hinted that the EV manufacturer can sell cars without a single penny as profit and still earn money from autonomous driving technology in future. (AFP)
Tesla CEO Elon Musk has hinted that the EV manufacturer can sell cars without a single penny as profit and still earn money from autonomous driving technology in future.

It’s not very long since Tesla started a price war when the EV company reduced its cars’ prices by as much as 30 per cent in late 2022. This forced several other global EV manufacturers to rethink their pricing strategy and reduce profit margins. It seems Tesla is again thinking on the same track as its CEO Elon Musk has reportedly hinted that the auto company can sell its cars without a single penny profit and still earn money from autonomous driving technology in future. He also hinted that if Tesla does so, it would be to achieve a higher volume sales target.

Automotive News has reported that Tesla's CEO has hinted at another price war during the company’s Q1 2023 earnings call. He reportedly said that the auto company had taken the view that pushing for higher volumes and a larger fleet is the right choice compared to lower volume and higher profit margins. It is clear that Tesla is rethinking its strategy and trying to generate more revenue passively by offering subscriptions to autonomous driving technology and other services to its vehicle owners.

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The report further claims that investors and analysts have asked Musk about Tesla’s price cuts after the auto company slashed its EVs prices six times in 2023 alone. He reportedly revealed that Tesla’s profit margin is so deep that it can literally sell products at zero profit, and it would instead make money in future through its autonomous driving technology software. "Tesla is in a uniquely strong strategic position because we're the only ones making cars that technically we could sell for zero profit for now and then yield actually tremendous economics in the future through autonomy. No one else can do that. Not sure how many of you will appreciate the profundity of what I've just said, but it is extremely significant," Musk said. The billionaire reportedly assured investors that despite multiple price cuts in 2023 for the entire lineup, Tesla’s margin remains among the healthiest in the industry.

Interestingly, this is nothing new in the auto industry, as several other car manufacturers have already tried their hands with this strategy. However, what’s unique is how far Tesla could go when reducing its vehicles' prices.

First Published Date: 23 Apr 2023, 09:09 AM IST
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