Tesla’s car prices have seen a significant drop in the past five years, and the company has a chance to replicate this success with its forthcoming electric platform.
The news of the electric car market revolved mainly in the recent period around Tesla’s prices and the war that Elon Musk unleashed against competing companies, as Tesla’s car prices decreased globally and pushed Ford to reduce the price of the Mustang Mac E, for example…
But Tesla and its CEO were one hundred percent correct, as the price drop caused a huge increase in demand for Tesla cars, prompting it to increase production to meet the increased demand. And that’s after the demands dropped to an alarming level in late 2022.
Keep in mind that this isn’t the first time Tesla has cut prices on its cars, as Tesla’s halving of prices didn’t happen overnight, but it has gradually cut prices over the years.
As mentioned earlier, Tesla’s price cut may have triggered a price war in the electric vehicle market, but it is in a strong position to win that war thanks to the industry’s highest gross profit margin.
Tesla has managed to cut its average selling price in half since 2017 while improving its operating margin from -15% to +15%.
Despite the price drop last month, some analysts expect Tesla cars to see new lows during 2023.
But what we’re really interested in is the question: can Tesla cars still see prices drop by half over the next five years? Perhaps that will happen with the next generation of its electric platform.
The third generation of Tesla’s electric platform:
When Tesla launched its Model S and Model X cars, they were based on the first generation of its electric platform, then the Model 3 and Model Y came out with the second generation, and Tesla is currently preparing to unveil the third generation of its electric platform in March.
There aren’t many details available on the new Tesla platform, but it should focus on reducing costs and improving manufacturing capacity to reach a new level of productivity.
For his part, Elon Musk has repeatedly made it clear that Tesla’s plan is to expand its industrial scale to 20 million cars per year while reducing costs.
Some experts believe that Elon Musk’s plan is to deliver an electric car with a compact design in the range of only 25,000$.
