"Tesla Inc. ( NASDAQ: TSLA) does not plan to cut its profit margins due to the end of the $7,500 federal electric vehicle (EV) tax credit. As a start, it will increase lease prices. Approximately 50% of EV drivers lease their cars, making the decision financially significant to the largest EV company in America. Reuters reports that monthly lease prices could rise by as much as 15%."
"Tesla is likely the only company in the United States that makes money on EVs. Large legacy car companies, led by GM and Ford, have invested tens of billions of dollars into EVs and have yet to recoup any of that. Tesla's price increase carries a significant risk. Based on several estimates, its U.S. market share dropped to 47% in the second quarter from a peak of 80% five years ago. Some of this decline has been attributed to more competition."
Tesla will not cut profit margins after the $7,500 federal EV tax credit ended and will raise lease prices, affecting roughly 50% of EV drivers who lease. Reuters reported monthly lease increases could reach 15%; Model Y leases rose from $479–$529 to $529–$599 and Model 3 ranges moved from $349–$699 to $429–$759. Tesla appears to be the only U.S. automaker generating profit on EVs while legacy manufacturers invested tens of billions without recouping those costs. Tesla's U.S. market share fell to about 47% from 80% five years ago amid stronger competition and reputation challenges. Broader EV headwinds include higher upfront costs, low gasoline prices, and range concerns around 300 miles.
Read at 24/7 Wall St.
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