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Tesla’s EV Price War Is an ‘All-Out Game of Thrones Battle’

Falling EV prices will cut into auto maker profits in 2023. Tesla is pressuring rivals.

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Alex Wong/Getty Images

Prices for electric vehicles are going down, thanks to
That’s good for car buyers, but not so great for auto-maker profits, even if they’re secondary for now. Car makers need to protect market share.

(ticker: TSLA) got the ball rolling on price cuts early in January. Prices for its Model Y crossover vehicle, the most popular EV in the U.S., fell by as much as $13,000.
Ford Motor
(F) followed suit on Monday, cutting prices for its Mach-E by up to $4,900.

“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,” wrote Wedbush analyst Dan Ives in a Monday report following Ford’s cuts. “Ford and we believe GM will have to sacrifice margins to gain increased volumes at a crucial time. In a nutshell, they are not going to lose EV customers on price especially now with EV tax credits on the table and the 313 area code betting its future on EV growth.”

The 313 is the area code for Detroit.

General Motors
(GM) and Ford have big EV plans. Both want to be selling about 2 million EVs a year by the middle of the decade. Both plan to take overall market share from other auto makers while preserving their existing gasoline-powered-car business.

So far, GM isn’t cutting prices. Th company said Tuesday its EVs are priced appropriately, and demand remains strong. That makes some sense. GM also has some of the most affordable EVs already. A Chevy Bolt starts at about $27,000, while rival EVs Model Y and Mach-E start at about $53,000 and $46,000, respectively.

The auto makers that feel the most pressure to cut price might be those that don’t qualify for the $7,500 tax credit which was passed as part of the Inflation Reduction Act. That law requires the EVs to be assembled in North America, among other qualifying conditions. That excludes many EVs including some manufactured by
Hyundai Motor
Polestar Automotive
(PSNY) and Audi.

An Audi e-Tron starts at about $70,000—much more than a comparable Model Y.

Tesla is upping the ante on EV affordability again, recently offering Tesla owners $3,000 off or free supercharging for three years if they trade in their vehicles for a new Tesla, according to news outlet Teslarati.

Tesla didn’t respond to a request for comment about the incentive.

Elon Musk’s company can afford to pressure rivals because it makes more money selling EVs. Tesla generated an operating-profit margin of more than 16% in 2022. GM generated a 9.3% operating-profit margin in 2022. Ford’s margin is expected to be about 7% for 2022.

Ford reports fourth-quarter numbers on Thursday.

Investors have cheered the price cut by Tesla. The stock is up about 51% from Jan. 5 when it cut vehicle prices in China, while the
Nasdaq Composite
has gained about 11%.

Ford investors haven’t reacted as favorably. Shares dropped 2.8% on Monday after the price cuts were announced, but the market was weak that day, with the
S&P 500
falling 1.3%.

Ford stock is up 4% in Tuesday morning trading, possible buoyed by GM’s strong fourth-quarter earnings, while GM stock is up nearly 8%.

Write to Al Root at


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