Electric Car Price War: Coming Soon in France?

Tesla has initiated a price war on electric cars. But will it spread to other brands or countries, and is it sustainable?

On January 13, 2023, Tesla delivered a striking blow by reducing the prices of its two flagship electric vehicles. Overnight, the Model 3 and Model Y lost several thousand euros, with some versions now qualifying for eco-bonus under €47,000.

Yes, we could revert to early 2022 prices, which were even lower. Indeed, the base Tesla Model 3 then cost only €43,690 before last year’s dramatic price increase. But the Model Y did not follow suit, resulting in a significant and genuine price drop.

Especially, this occurs amidst a context of inflation, as other automakers have also increased their electric vehicle prices. The cheapest Dacia Spring, launched at €16,990 at the end of 2021, shot up to €20,800 by late 2022! This reduction might seem minor if it hadn’t caused ripples beyond Tesla’s sphere.

All except Volkswagen and Renault?

This threat is perceived strongly by competitors. It started in China in late December and spread to rivals. Xpeng applied a more than 10% discount on its G3i and P7 electric models in mid-January, and Ford has just followed in the United States. On its home turf, the oval brand reduced the price of its Ford Mustang Mach-E by nearly $6,000 this week.

However, not everyone is following this trend. Volkswagen has stated it will not apply such discounts, with its subsidiary Porsche even increasing prices by 6%. CEO Oliver Blume told Frankfurter Allgemeine Sonntagszeitung that the company has “a clear pricing strategy and focuses on reliability.” As for Renault, its director Fabrice Cambolive explained to Automobilwoche that a rapid price cut “affects residual value and impacts current customers.” But he adds that electric car prices will be “closely examined.”

A temporary decrease? And in France?

Is this price war sustainable? Or is it just a fleeting caprice from Tesla that will only cause waves for a few weeks? CEO Elon Musk already commented on this at the end of January, stating that “demand exceeds production”, and that we should soon see price increases. If Tesla can afford such discounts, it’s thanks to its huge profits derived from high profitability, and partly for advertising purposes.

For now, outside Tesla, prices in France are not decreasing. On the contrary, they are continuously rising month after month, according to our regular study of electric car prices. But who knows, perhaps February 1st could bring some surprises.

Expensive to buy, these cars are increasingly leased through LLD or LOA schemes. That’s why we’ve decided to guide you with selections of models and offers under €200 or €300 per month.

Also read: What electric cars are available under €300/month in LLD?