Wednesday, February 10, 2016

Will the Next Tesla Sell for $25,000?

Tesla Motors was the first company to launch a pure electric car to the world market. Since 2008 the company has released a series of models gaining the recognition they deserve. The company’s main objective is to produce highly affordable electric cars in order to appeal to a much lower market. Each model introduced has been cheaper than the last in hopes to make electric cars more prominent on the road.
After the launch of the Model X in 2015 which sold at a price of $69,000, we then see a major drop in pricing from its first model the Roadster selling at $100,000. In that same year Tesla announced their plans to produce their first affordable all electric car with a price as low as $35,000. As promised, Tesla’s Chief Executive Officer Elon Musk, announced the production of Model 3, but now expecting it to be as low as 25,000 depending on where you live. They plan to begin taking pre-orders with in the next month.
Musk believes that in some states the tax incentives to own an electric car can knock off almost $10,000 off the original price. This will drastically increase the size of the market for the Model 3. A $25,000 Tesla will change the U.S auto market allowing it to be adopted into the mass market. The incentives vary from state to state but Musk predicts that the base of the incentives will be $7,500 federal income state credit available for anyone that purchases a tesla in the country. But in other states come different additional incentives that will continue to decrease the price of the Tesla.
There are definitely some negative aspects of Tesla, one being there tendency to not remain on schedule. The company is known for year-long delays for new products. Telsa investors do not expect vehicles to hit the streets until late 2018 at least one year after Musk had predicted. Tesla is no longer the only company to produce electric cars which means competition amongst the market has increased. As they prepare to release their new model in the next two years so does Nissan and Chevrolet. The cost of electric cars will continue to decline and it is said by 2030 an electric vehicle that cost $22,500 would be relevant amongst 70% of car buyers

That being said Tesla initially targeted older professionals that were able to afford the high price of the car. In order to sustain prosperity, they would have to explore a new market. That market would target young professionals who tend to purchase entry level vehicles from luxury brands such as Mercedes, Audi, BMW. This creates a loyal relationship between the company and the consumer. Therefore, as competition rises this is the competitive advantage Tesla will need in order to remain ahead of the electric car market. Although there are negative aspects that Tesla has to work on, this is a major break through for their company and the electric car market Finding a more affordable way to produce pure electric cars is important for the consumers and the environment itself.


1 comment:

  1. Tesla has been taking major steps in the car industry as they attempt to make electric cars the predominant car of choice for new consumers. The change in price from $69,000 when Tesla first released their electric car, targeting older professionals able to afford this, to a predicted $25,000 price for the 2018 release of new cars is a major advantage for the company. Since people are becoming more conscious about their effect on the environment, the idea of electric cars is becoming far more popular. I think Tesla will have problems if they do not manufacture their new car soon enough because of the uprising competition from other car manufacturers who are also designing electric cars. In order to be successful in the electric car business, Tesla will have the best advantage since they are already in the industry, to release their car at this low price sooner than later because people know Tesla is a reliable car and will be forced to buy Tesla’s if they are the only electric car in the industry at the time. I think the tax incentives for owning an electric car will be a great bargaining tool that Tesla will have when negotiating deals to sell their cars. However, I think the recent drop in gas prices will cause consumers to be hesitant when buying electric cars because people like to stick to what they know and might not see the price tag on Tesla to be enough to convince them to buy an electric car.


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