After 20 years of development and pricing adjustments, Tesla appears to have lost the race for affordable EVs to General Motors. GM has made moves that have pushed up the price of automotive products overall, and they are hostile to EVs. Volkswagen is also aiming squarely at Tesla. Read on to learn more about this development. It may even change the direction of the EV race.
Tesla’s head start on long-range electric cars is fading
The company’s price hikes are aimed at maintaining its high gross profit margins, which were 33% in the most recent quarter. While Tesla has a commanding head start in the luxury electric vehicle market, it has allowed traditional automakers to battle for dominance in the more affordable EV space. However, as the number of electric vehicles on the road rises, investors may wonder whether the company can keep up.
In a recent report, McKinsey analysts provided suggestions to automakers who want to make the transition to electric vehicles. The researchers offer suggestions for adapting to the new vehicle market and turning a profit from sales. Their recommendations mostly target large automakers that have few electric car models. The company reports that the Tesla Model S and the Nissan Leaf were the top selling electric cars in the US last year. Meanwhile, the BYD Tang is considered to be the GM Chevy Volt.
Tesla’s pricing moves have pushed up overall automotive prices
While Tesla’s prices have remained flat since the start of the year, other automakers have seen their costs rise substantially. GM, Nissan, Ford, Toyota, and Subaru all saw increases of more than 20% between September 2020 and September 2021, while Tesla’s price increases were far below the industry average. These factors could explain why consumers have been unable to afford these new models, and why Tesla’s pricing moves have pushed up overall automotive prices.
While a Tesla Model 3 can cost up to $46,000 in the U.S., it still costs at least $20,000 more than the previous year. In fact, the Model 3 Standard Range now starts at $46,990, up from $38,190 last February. Rivian was also among the earliest automakers to raise prices, announcing its own price hikes on March 1 for the Rivian R1T pickup and R1S SUV.
GM’s prices steps are hostile to EVs
GM’s PR team has initiated a full court press against EVs, announcing new plans every week. These steps are fundamental to GM’s long-term future. GM’s stock price has gained 55.3% over the last year, and is up 223.9% from its February 5th 2020 low. However, the price hikes are not enough to convince investors to buy GM’s shares.
While there is no way to guarantee that the market will switch over to EVs overnight, General Motors is taking steps to support the transition. GM announced plans to invest $7 billion in Michigan in battery production, creating 4,000 new jobs. They are also planning to build a third battery manufacturing site with LG Energy, an in-house supplier. The company is committed to launching over two dozen new battery-powered electric vehicles by 2025.
GM’s 2020 plan calls for no more gas or diesel vehicles. However, GM’s 2030 goal calls for no more than 30 EVs in the US. That means if GM follows this plan, its EV sales will be significantly less than the two hundred thousand Equinox models sold in 2020. A few months later, Mary Barry spoke at an event devoted to EVs.
Volkswagen is aiming squarely at Tesla
A new all-electric SUV from Volkswagen is a direct challenge to Tesla Inc. The German automaker is still years behind Tesla in mass-market electric car development, but it has made multibillion-euro moves to produce battery cells and develop software. Volkswagen’s strategy is meant to cut off Tesla in the middle, and its new car may do just that. Its first all-electric car will be available for sale by 2020, with a starting price of $23,000.
VW Group is the world’s largest automaker, and its recent announcement of a 600-horsepower sports car, the Mission E, has created quite a buzz. It’s also planning to launch an all-electric crossover, the Audi e-tron quattro, while Mercedes and BMW are expected to hatch similar models. General Motors is also getting into the electric vehicle space, having launched the Chevrolet Bolt last year, beating out Tesla to market.
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