Tesla's Price Cuts Impacting Suppliers, Price War May Amplify Concerns via insideevs.com
Top Videos:, during Tesla's recent Q4 2022 earnings call, company executives noted that the company will be working to cut costs from every angle. It's expected that as Tesla reduces costs, demand soars, and it sells many more cars, it will likely turn to suppliers as one way to reduce costs.
“It is never good for suppliers when cut vehicle prices because that pressure rolls downhill. I never like it, because I know eventually they’re going to try to get it out of one of us."An unnamed Tesla supplier recently shared that the US EV maker was focused more on its deliveries than its prices or costs during the COVID-19 pandemic. This suggests Tesla would pay high-dollar prices for some parts if it meant it could get them more quickly and produce and deliver more cars.
Tesla also enjoyed exceptional margins during the last few years. However, as some suppliers get locked in on pricing, they may not have seen such success, and now brands like Tesla are hoping to cut costs further going forward. Interestingly, Teslarati mentions a Michigan-based supplier that considers Tesla its largest account, and while the EV producer prospered, the supplier filed for bankruptcy.
There is some hope for suppliers, however. Even though Tesla and some of its peers may push for lower prices, volume is expected to increase notably. With the lower prices across the EV segment, demand is rising, and brands are selling more cars. As suppliers may have to settle for price cuts, they could make up for it in volume.
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