Question
Tesla's decision to lower the price of its electric vehicles could potentially put pressure on its competitors in the electric vehicle market. This is because lower prices could make Tesla's vehicles more attractive to consumers, thereby increasing Tesla's market share. Competitors may be forced to lower their prices in order to compete, which could impact their profit margins. Additionally, Tesla's focus on reducing costs to increase product availability could lead to a higher production volume, which could further increase its market share and put additional pressure on competitors.
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When Tesla decided to lower the price of all its North American electric vehicles in May 2020, the market initially saw this as bad news. Traditionally, automakers use discounts as incentives to increase sales during periods of low demand. However, because Tesla is a tech and automotive company, Tesla wanted to reduce costs to increase its product availability. Because price sensitivity is a huge factor to EV adoption, lower prices dramatically increased the amount of cars Tesla sold in the US in the following months.
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