Tesla has made headlines in the past month with a series of price cuts on its vehicles. As a result, the Model 3 sedan is now being sold at a price that is $4,930 lower than the average new vehicle sold in the United States. This means that the Model 3 is now the cheapest it has ever been relative to the average price of a new car in the country. A recent analysis by Bloomberg confirms this.
Tesla’s Model Y SUV has also seen a price drop of $13,000 at the beginning of the year. Despite this, it was already the third best-selling SUV in the US in 2021, following Toyota RAV4 and Honda CR-V. After the Model Y sold out its build slots for at least the first quarter in the US, Tesla slightly increased its prices again.
The price cuts by Tesla came suddenly and steeply on January 12, and other automakers soon followed suit. For example, Ford Motor Co. also slashed the prices of its electric Mustang Mach-E. The shakeout phase of the electric vehicle market is starting to emerge, with General Motors Co. set to launch electric versions of its Chevrolet Blazer and Equinox SUVs later this year.
At the same time, gasoline-powered cars are getting more expensive. Due to the shortage of computer chips, raw material inflation, and manufacturers’ decisions to keep inventories low while spending heavily on electric car development, the average cost of a new car has increased by over $10,000 since the start of the pandemic, reaching $47,920 in January.
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