SAN FRANCISCO, Ca. -Last month, Tesla dropped its prices dramatically — up to 20 percent. Here’s how the announcement is having ripple effects, from the impact on Tesla owners to the changes it could spur across the auto industry.
When a leading company cuts prices, all their rivals feel pressure to follow suit — it’s economics 101.And the textbook scenario is playing out in the headlines.
On Monday, Ford announced it was cutting prices on the Mustang Mach-E, an electric SUV that competes against Tesla’s Model Y. Prices dropped by between $900 and $5,900, depending on the vehicle’s options.
It was clearly a response to Tesla, and Marin Gjaja, the chief customer officer of Ford’s electric vehicle business, confirmed to reporters that the company was “responding to changes in the marketplace.”
The big question now may be whether other companies can afford to follow suit. Tesla, which started out as an automotive underdog, now has become the overwhelming market leader in the EV sector.
It makes healthy profits on electric vehicles that big automakers are, in many cases, still making at a loss — or struggling to make at volume.
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