Tesla Inc (TSLA)

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"it’s a better product than Tesla"

How some dealerships are handling Tesla’s price cuts

Many U.S. automotive dealerships are still grappling with electric vehicle prices and inventory, following market leader Tesla’s many price reductions throughout the year. As Tesla continues to offer more affordable vehicles — most recently including its cheaper Model S and Model X “Standard Range” options — some dealers are struggling to keep prices low enough to be competitive in the eyes of consumers.

A number of dealerships recently told Automotive News about how Tesla’s pricing strategy has affected their businesses. One such dealer included Sonic Automotive, whose head executive recently said price cuts at Tesla have been tangible for both its franchised dealerships offering used Teslas and its new-vehicle business, including EVs from Mercedes-Benz, BMW, Audi, Lexus, and Toyota.

“It’s certainly playing a role against electric vehicles from a new-car perspective because [automakers are] having to get more aggressive in terms of their pricing,” said Sonic President Jeff Dyke.

“They’re just producing an amazing product,” Dyke said of the aforementioned brands, which are those offered by the dealership. “And it’s a better product than Tesla. And as the pricing gets right, the inventory levels come up, you’re gonna see a higher mix of electric vehicle sales.”

Throughout 2023, Tesla has cut its prices by roughly 12 percent, as Kelley Blue Book data for early August shows. Additionally, Tesla’s new Model S and Model X “Standard Range” trims each come with $10,000 price cuts, at the cost of reduced driving ranges and acceleration. At this point, Dyke says it’s too early to know if buyers are becoming interested in traditional automakers’ EV contributions, but the public is at least getting used to the idea of EVs at large.

“I think we’ve got another six months to a year of sort of crossing some new boundaries with the electric vehicle,” Dyke added. “If the manufacturer[s] could get the pricing right and they keep their day supply in line, which are two big questions that they really need to focus on, then I think they can do very, very well. But if they’re going to launch vehicles that are $112,000 when the counterpart combustion engine vehicle is $20,000 and $30,000 cheaper, they’re gonna have a problem.”

That's a used Tesla dealer saying Mercedes-Benz, BMW, Audi, Lexus, and Toyota are better than Tesla.