BMW, Hyundai, GM and Mercedes won’t join Tesla’s EV price war just yet

Tesla’s recent decision to cut prices for its Model 3 and Model Y by several thousand dollars has been described as the start of an electric vehicle price war. But it’s not yet a war that all automakers are rushing to join.

As automakers strive to electrify their fleets and catch up with Tesla’s market lead, they can now also compete with buyers at deep discounts. Ford said Monday it will also cut prices for the electric Mustang Mach-E by an average of about $4,500.

A few days later, Ford might prove to be an outlier here. The edge contacted several automakers with upcoming electric vehicle lines or electric products to ask if they were also considering discounts. So far, two of Germany’s top luxury automakers say they are holding their prices down, as is one of South Korea’s rising leaders in the field.

The edge contacted several automakers with upcoming electric vehicle lines or electric products to ask if they were also considering discounts

Officials from BMW, Mercedes-Benz and Hyundai have all said their companies are not currently planning to cut prices.

“We have no plans to revise our current pricing strategy, which reflects the premium and comprehensive customer experience expected from Mercedes-Benz,” spokesman Robert Moran said in an email.

Hyundai spokesman Miles Johnson expressed similar sentiments. “Hyundai has not taken any specific action in response to competitor price changes, but we are constantly evaluating the overall market to ensure our vehicles are priced competitively,” he said. “Our current electric vehicles, including Kona, Ioniq 5 and the recently unveiled Ioniq 6, offer consumers advanced technology and features at an attractive price.”

Moreover, “on the BMW brand side, I can tell you that there are no plans to reduce the prices of our electric vehicles,” said a spokesperson for the Bavarian automaker.

Officials from General Motors, Polestar and Kia, all of which have several new electric vehicles in the works, did not immediately respond to a request for comment.

“We do not intend to review our current pricing strategy”

GM CEO Mary Barra expressed reluctance to change prices for electric vehicles now during a fourth-quarter earnings call on Tuesday.

“When we look at our strong product portfolio and our interest in the prices we have already announced, we believe we are well positioned,” barra said. “[Going into] the first month of the year we saw very strong customer interest in our products…we believe that right now our prices are where we need to be.

Wall Street analysts aren’t so sure GM can hold its own on pricing, with Wells Fargo post a note who says he expects the automaker to “capitulate on pricing” due to competitive pressure.

Earlier this week, Volkswagen Group CEO Oliver Blume told the Sunday newspaper Frankfurter Allgemeine log that its brands – including Audi, Porsche and others – had no plans to cut prices.

“We have a clear pricing strategy and focus on reliability. We are confident in the strength of our products and our brands,” Blume told the newspaper, adding that the VW Group was focused on “profitable growth” with electric vehicles.

This is probably where Tesla can hit its legacy competition the hardest. Although Tesla has just posted another profitable fourth-quarter and annual result, it has faced questions of weakening demand in the United States and China as its lineup ages and more competitors grow. enter space. His profit margins are also higher than many traditional automakers.

Simply put, Tesla can afford to take that step with other automakers that are still scrambling to get electric vehicles on the road, even if they aren’t yet profitable. Other automakers may cut prices for electric vehicles, but given their high production costs, that means a loss to the bottom line. Marin Gjaja, chief customer officer of Ford’s electric vehicle business, even admitted yesterday that not all Mustang Mach-E models will be profitable on certain trim levels after these discounts.

“Right now we are priced where we need to be”

“In this arms race for electric vehicles, Tesla is uniquely positioned around Musk’s scale, brand, battery technology and DNA, while others are aggressively attacking to market share in this off-roader. game of thrones battle,” said Wedbush Securities analyst Dan Ives, a Tesla bull but also an occasional critic of Elon Musk.

Ives added: “In our view, there is a window of opportunity to gain share in the burgeoning electric vehicle market and 2023 is a pivotal year that will establish the winners and losers in this electric vehicle landscape with Tesla. at the top of the mountain.

Ives said GM has an advantage here, having built the Ultium EV platform that will underpin dozens of new electric vehicles, from high-end Cadillacs to affordable pickup trucks. But for traditional automakers, the battle moving forward will mean balancing profits and achieving sales volume with electric vehicles, Ives said.

Additionally, revised tax incentives for electric vehicles under the Biden administration’s Cut Inflation Act sent the market into something of a giddy state. Not all automakers qualify for the tax credits since their EVs aren’t built in North America — a major loss for Hyundai and Kia, for example, which don’t produce EVs here. Also, in the long term, it’s unclear how EVs with non-American batteries will perform under the new rules.

If you’re a potential EV buyer this year, you might just be the real winner as more cars enter the market and compete on price, provided automakers can overcome fueling issues. supply that has dogged them for much of 2022.

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