Tesla has been able to achieve price parity with ICE vehicles thanks to recent price cuts. This was a turning point for the industry, as the company significantly accelerated the transition of consumers to electric vehicles.
This past January, Tesla slashed the prices of its electric vehicles, making them more affordable than some of the new gasoline-powered vehicles. Tesla Model 3 now starts at $42,990 before any incentives. However, US consumers have been able to purchase the car with a $7,500 tax credit, bringing Model 3's price down to $35,490 and making the price very attractive.
However, even excluding the federal tax credit, Tesla Model 3 costs $4,930 less than the average new car sold in the US, according to a Bloomberg analysis. Cars with internal combustion engines continue to rise in price while the cost of electric vehicles decreases. The average cost of a new ICE car in January was $49,388, up 6% from a year earlier, according to Kelley Blue Book.
This also means that we can state the fact that electric vehicles have reached price parity with ICE vehicles, and now begins a new round in the electric vehicle revolution started by Tesla. Of course, not the entire segment has been able to reach this milestone. However, manufacturers continue to improve their manufacturing technologies, which will eventually bring down the price of their electric vehicles.
Tesla's recent price cuts have also spurred other electric car makers to re-price their vehicles. Ford, for instance, has slashed the price of its electric Mustang in an attempt to also make it affordable to a wider range of consumers. Nevertheless, Tesla's leadership in this is undeniable.
“In this EV arms race, Tesla is uniquely positioned around scale, brand, battery technology, and the Musk DNA while others are aggressively going after market share in this all-out Game of Thrones battle,” said Wedbush Securities analyst Dan Ives.
The US is trying to become a leader in the electric car race. The Biden administration's programs are designed to speed up this process, and Tesla plays a key role in this, whether it is making electric vehicles or opening part of its Supercharger network to all electric vehicles in North America. All of this makes 2023 a pivotal year for electric vehicles. More affordable purchase prices for EVs and the availability of a wide network of charging stations, combined with rising prices for ICE vehicles, make EVs a more attractive choice for many consumers.
© 2023, Eva Fox | Tesmanian. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.