Prepare to see plenty of Teslas on the road in 2023

Price change for Tesla in 2023, and with the new prices, one thing seems clear: the market will be flooded with Model 3 and Model Y. Let’s go back to the why and how in this file.

Tesla turned the market upside down at the very beginning of 2023. Indeed, with significant price drops on the Model 3 and Model Y, it is the great return of certain Tesla at a price making them eligible for the maximum ecological bonus. The big question of the moment is therefore: why did Tesla lower its prices around the world?

We are going to come back in detail to the reasons for this drop, which was after all expected, by trying to explain Tesla’s behavior. In addition, we will indicate why, in our view, Tesla’s 2023 is going to be the year of all records, despite increasingly stiff competition.

A year 2022 in halftone

In March 2022, we wrote about the end of the Tesla Model 3 at a canon price in France, which marked the end of a rather exceptional phenomenon. In practice, the 2022 Tesla Model 3 was up to 40% more expensive than the previous year, with an equivalent configuration. This was naturally felt at the level of sales in France, and this phenomenon was accentuated by the arrival of another less expensive Tesla at the end of the summer.

This is of course the Tesla Model Y Propulsion, which has shaken up the market for Elon Musk’s rhyme vehicles in France a little more. As incomprehensible as it may seem, we had a range that started at 49,990 euros with the Tesla Model Y Propulsion, and the Tesla Model 3 Propulsion was displayed at a price starting at 53,490 euros, throughout the end of 2022.

With many advantages over the Model 3, the Model Y therefore came to grab some market share from the sedan, which was shunned because of its price, which was difficult to justify in France. We also pointed out during the last weeks of the year that there was a colossal stock of vehicles, forcing Tesla to offer sometimes free Supercharging, sometimes options, and even going so far as to lower prices to try trigger last-minute purchases.

But that’s not enough for Tesla, which now has several gigafactories running at full speed. Besides, the year 2022 ended with a lag between sales and production of nearly 35,000 vehicles, which is clearly new for the firm. How to make sure to sell a production estimated at more than 1.5 million vehicles in 2023? The answer may not surprise you…

In 2023, Tesla wants to sell en masse

On January 13, 2023, Tesla has conducted a price review of its entire range worldwide, and France was not spared. If recent buyers necessarily suffer, new future owners of Tesla can only be delighted: the Tesla Model Y and Model 3 have returned to prices that we have not seen for a very long time.

What was a Franco-French phenomenon in 2021 has become global, as prices have dropped by $3,000 to $13,000 in the USA in particular, and similar amounts in China, proving that Tesla was keeping a lot on hand to be sure of fill its order book.

If we focus a little more on France, the two most popular models of Tesla (3 and Y), have seen their prices drop, but without taking into account the ecological bonus, this is only part of the equationas you can see below.

Thus, the Tesla Model Y Propulsion, in essence, had a discount of 3,000 euros, but in practice for the customer, it is indeed 6,000 euros that are to be deducted from the invoice, thanks to the ecological bonus in force. Indeed, for vehicles with a price of less than 47,000 euros, in 2023 the ecological bonus of 5,000 euros applies. In 2022, the Tesla Model Y Propulsion exceeded 47,000 euros, and the latter was only eligible for the 2,000 euro bonus. The price to be paid by the end customer is thus 41,990 euros in 2023, compared to 47,990 euros in 2022..

For the Tesla Model 3 Propulsion, the gap is even more staggering. Proposed at 53,490 euros in 2022, including the ecological bonus of 2,000 euros, it was necessary to pay 51,490 euros to take possession of the electric sedan. Today, the price to pay is only 39,990 euros, or 11,500 euros less overnight.

Among the other big differences, we can mention the Tesla Model Y Grande Autonomie, which is available today for 53,990 euros, compared to 64,990 euros a few days ago. There is no doubt that second-hand sellers will have to adapt to the new prices, which sometimes become cheaper than the prices displayed on the classifieds sites.

Buying a Tesla becomes the default purchase

In the world of electric vehicles, who is able to offer a main vehicle for a household at less than 40,000 euros in France? In 2022, even the Tesla Model 3 Propulsion no longer fit into this category, but in 2023, it is making a comeback at 39,990 euros including the ecological bonus.

Opposite, many manufacturers will undoubtedly accuse the blow. With higher prices and delays beyond belief, how can we not see many customers fleeing to Tesla’s new electric vehicles, which are available within weeks?

Among the competitors of the Tesla Model 3 Propulsion, we can mention in particular the Renault Mégane E-Tech, the BMW i4, the Mercedes EQE or the Hyundai Ioniq 6. All these vehicles have one or more common points among the following: they are more expensive, have less autonomy, or are available with delays such that some buyers will pass their way.

For the Tesla Model Y Propulsion, the situation is similar. The Volkswagen ID.4, Kia EV6, Hyundai Ioniq 5 and other Audi Q4 e-tron cannot compete on the three points of price, autonomy and availability. Tesla is therefore putting pressure on its competitors in 2023, by showing that the Tesla Model Y is here to sell in drovesin Europe as elsewhere.

The American manufacturer can afford to adopt such a policy, given that the margin per vehicle is among the highest on the market — a kind of Apple car. The other manufacturers tend to do the opposite in recent months, with repeated price increases for almost the entire industry.

Chinese giant BYD, arguably Tesla’s biggest competitor and biggest threat right now, had no choice but to raise prices in early January in China. In response, Tesla lowered its prices, once again showing the local market that its Shanghai factory is there to flood the market.

Crossing a Tesla will become less and less rare

With all these price drops, the Tesla Model 3 and Model Y will once again become the good plans of the year 2023 without a doubt, especially taking into account the standard equipment. In addition to their ability to recharge relatively quickly and their high-performance driving pleasure, we find a heat pump, leatherette upholstery with profile memory for the driver, heated seats and steering wheel, double glazing and an electric rear trunk. in all Teslas, without any need to select any option.

Add to that Autopilot, remote updates and the integration of the Supercharger network into the navigation, and you will understand that the rest of the industry has a lot to do to reach Tesla’s level in 2023.

This price drop at the very beginning of 2023 therefore comes at the worst of times for almost all of Tesla’s competitors., but if they had the same level of information as us, this drop was indeed expected. Indeed, we were still talking about it in the last weeks of 2022, but with production breaking record after record every quarter, it was not conceivable that Tesla would continue with such high prices, because of a demand that was starting to weaken a bit.

The question that remains unanswered for the moment therefore concerns the sales volumes as well as profits taking into account the new tariffsa question to which the first answers will appear during the end-of-quarter 2023 balance sheet. The Tesla Model Y is still announced as the future best-selling vehicle on the planet according to Elon Muskand it is clear that Tesla is indeed on the right track.

With a Gigafactory in Shanghai churning out more vehicles, factories in Berlin and Austin ramping up, and a factory in Fremont already at capacity, Tesla seems to have fixed its demand problem before it even appeared. With the new tariffs across the planet, there is little doubt that the Texan firm manages to sell all of its production.

In addition, 2023 could be the year of the arrival of new models for Tesla, in particular the Cybertruck in the USA, which is firmly expected to disrupt the market for electric pick-ups. For Europe, it is very unlikely to see a new model arrive during the year. However, the improvements on the Tesla Model 3 and Model Y will undoubtedly arrive on the old continent, perhaps even in the form of new battery packs in the 4680 format, still allowing Tesla to reduce its production costs and perhaps pass them on to the end customer.

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