Tesla cuts spark a price war between car manufacturers

The harbingers of a price war are currently gathering in the electric car market around the world, while the American General Motors and German Volkswagen groups have announced that they do not intend to join such a war.


This comes at a time when Tesla, the largest producer of electric cars in the United States, recently announced a reduction in the prices of some of its models by up to 20%, then Ford Motor announced a reduction in the price of its electric car, the Mustang Mach E, by about $4,500 per car on average.


And there are movements in the electric car market driven in part by the US government subsidy program for electric cars under the Inflation Reduction Act signed by US President Joe Biden weeks ago.


Tesla cuts spark a price war
Tesla cuts spark a price war between car manufacturers



And Bloomberg News indicated that both Ford and Tesla indicated the need to reduce consumer prices so that buyers could benefit from tax breaks of up to $ 7,500 when purchasing an electric car at certain prices.


Investors fear that these cuts, along with the launch of dozens of new models of electric cars on the market later this year, will lead to an expansion of the price war in the market and thus harm the profitability of companies.


For her part, Mary Barra, CEO of General Motors Group, the largest car producer in the United States, and her counterpart in the German Volkswagen, Oliver Blume, said that they could avoid reducing the prices of their electric cars.


Early last month, Tesla announced further price cuts for its Model 3 and Y cars in China, as the company introduced its latest Model S and X models.


According to the company's website in China, the starting price of the domestically manufactured SUV, Model Y, has been reduced to ($37,875), according to Bloomberg News.


This is a record low for China, as this price is 43% lower than the starting price of 65,900 registered on Tesla's website in the United States. The price of the Model 3 dropped to 229,900 yuan from 265,900 yuan, about 30 percent lower than in the United States.


The company then slashed the prices of its cars in key US and European markets in a bid to boost sales, after several disappointing quarters.


Tesla reduced the price of its cheapest Model Y by 20% and cut the prices of its most expensive models in the US market by amounts of up to $21,000.


Bloomberg added that Tesla also made significant discounts in countries such as Germany, Britain, and France.


And earlier this week, Ford Motor Company reduced the selling price of its electric car, the Mustang Mach-E, by about $ 4,500 on average, after its competitor Tesla cut the prices of its cars, which fuels price competition in the electric car market.


The price of the cheapest category in the Mach-E model starts at $ 45,995, a decrease of $ 900 per car, while the largest reduction was in the GT Extended Range, amounting to $ 5,900, starting at $ 63,995.


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