The investment bank Goldman Sachs has presented a report pointing out that Tesla is preparing to deal another blow to the market with a new price drop for its vehicles. This report indicates that Tesla will reduce its profit margin to expand production, and thereby further strengthen its economy of scale.
The result will be a new price drop that they estimate will occur in 2024, once production of the new Model 3 has been scaled, and that of the Model Y has been expanded in Texas and Berlin. Goldman Sachs forecasts Tesla’s earnings per share for the remainder of 2023 and 2024 will be $2.9 and $4.15, respectively, up from $3 and $4.25 previously.
A reduction linked precisely to Tesla’s goal of increasing production will affect gross margins before taking into account state incentives and tax credits from the Inflation Reduction Act.
Tesla price drops
At the moment there are no indications of how far Tesla will be able to extend this price drop, but without a doubt, its mere possibility could cause panic among European groups.
The Tesla Model 3 starts in its Standard version at $40,240, or $47,240 for the Long Range Dual Motor. Already very competitive figures that if they experience a drop, will leave their rivals very affected, both electric and especially combustion ones.
And with a 5% reduction, the Model 3 could see its price before aid reaches around $40,000. A figure that we can compare with the $41,200 of the cheapest Audi A4, the Advanced 35 TFSI 110kW (150CV) version, or the $44,500 of the entry-level BMW 3 Series, the 318d. This was before public aid that allowed the price of electricity to be reduced even further.
It would also expose local electric cars, such as the new Peugeot e-208, which will start in Europe at 38,500 euros, or a segment rival such as the Hyundai IONIQ 6, which in its most economical version, 53kWh 111kW Light RWD, starts at $41,600. 30% more than the possible new price of the Model 3.