Why Does Tesla Constantly Reduce the Prices of Its Vehicles?

Elon Musk’s exaggerated price reduction moves worry all companies in the automotive industry. TeslaWhile reaching high sales figures, it increases the number of customers by reducing prices almost every month. This policy, which enabled Tesla to gain superiority in the market, dates back to Ford in the automotive industry. So much so that Tesla is a leader not only when it comes to price strategy but also when it comes to vehicle names. Ford’s He was inspired by the moves he made in the past.

In addition to its price reduction policy, the company also focuses on naming. Seems inspired by Ford it seems. Because Tesla; It gives its vehicles names such as Y, X and S. Another automotive giant that did this years ago was It was Ford. between two companiesHistory is all about repeating itself.Let’s look at the similarities that make you say “.

Ford’s description of a fast running horse:

Henry Fordfirst of all “If I asked my customers what they wanted, they would want a horse that runs faster!” he said. However, over time, Ford did not listen to the wishes of the customers and this was his biggest mistake.

The process in which Ford rose, “Every demand creates its own supply.It coincided with a period when the “principle” was dominant. During this period, there was a serious demand for automobiles and Ford wanted to become an automobile giant by giving people what they wanted. Ford’s strategy initially achieved its goal.

During this period, the business world emphasized efficiency. Over time, this led Ford to move away from being customer-focused. During this period, Ford was successful by producing only the Model T and increasing efficiency. At one point, the difference between the price of a horse-drawn carriage and a Model T has almost doubled.

On the other hand; GM had historical moves that emphasized user experience.

While these were happening on the Ford front, GM’s president, William C. (Billy) Durant, did not know much about automobiles. However, by bringing together many small companies General Motors (GM) He created a giant under his name. GM included different automobile brands. Alfred P. Sloan Jr. When he became president of GM, there were so many diversified vehicles and brands.

Alfred enabled brands to be separated according to customer profiles. Cadillac It was for the rich, buick was for young people, Chevrolet was for working people. GM began to appeal to a wider customer base than Ford by offering color and size options to suit customer preferences. In addition, by renewing its vehicle models every year, it managed to create the perception among customers that their vehicles were becoming obsolete. Credit and installment sales also played an important role in GM’s success.

In its competition with GM, Ford It collapsed due to lack of vision and inability to keep up with the changing times. GM achieved success by adopting strategic approaches.

It seems that Tesla’s policy has taken lessons from this.

Ford CEO Jim Farley said that looking at all this, Tesla’s vehicle prices today discount policy behind In Ford’s T model He says that lies in the strategy he implemented.

Tesla, which does not allocate a budget to update the design and improve the user experience in this way, just like Ford, continues to make software and interior design changes in the current model instead of making up the exterior design of the vehicle like other brands. In this way, you can save money by skipping the development process of new models. can reduce prices.

However, Tesla’s low price policy with cheap labor It seems that it could not arouse enough repercussion in China. Chinese brand BYD, known as the second in the world in electric vehicle sales, closed October with a sales increase of 5% compared to the previous month and 38% compared to the previous year.

Tesla, which decided to produce its vehicles in China in the past period and gave up this decision after a short time and decided to produce its model at the cheapest price in Germany, will be in trouble if the same trend continues. He may lose to his Chinese rival.

Battery costs in electric vehicles are also decreasing.

According to the report shared by Midas, the costs of batteries in electric cars will gradually decrease in the coming years. This means that vehicle manufacturers in price determination It means it will be more comfortable.

When Tesla launches a cheap vehicle, ‘even if it’s just a claim’, other companies are affected.

It has been in Tesla’s factory in Germany for a while now. €25,000 It is said that it will produce a vehicle with a price tag. As soon as this issue emerged, it caused a decline in the shares of rival companies in China.

Although falling battery costs and other expenses benefit all electric vehicle manufacturers, Tesla is undoubtedly in this regard. leading company. We will see together how this will take shape in the coming time.

Ford lost in its competition with GM because it implemented the same policy that Tesla follows these days. I wonder? Will Tesla end up the same? Or is Tesla making a move that suits today’s dynamics?

However, one of the biggest messages that Tesla has announced to the automotive industry is that it is an autonomous car brand rather than an ordinary car brand. Therefore, it leaves the performance of the vehicle in the background and It focuses on software in general. Of course, time will tell us how sustainable this understanding is.