Teslas are 25% cheaper to make as Elon Musk emerges price war winner even without tax credits

Tesla can apparently sustain its vehicle price war forever, as Bank of America analysis found that its cost per vehicle is way lower than both electric and legacy cars.

Teslas cost just under $30,000 to make on average, while electric cars from the likes of Ford or GM are $17,000 more in bill of materials alone.

Legacy vehicles with internal combustion engine cost less to put together, about $40,000, but they are still 25% more expensive for their manufacturers than Tesla cars.

This means that Tesla can maintain its lower prices much longer than Ford, GM, and other EV divisions can stay solvent, as they are now heavily subsidized by the companies' ICE business.

Another recent analysis of Tesla's business model found that it earned the whopping $7,000 per vehicle in the 2023 fiscal year, despite the EV market downdraft.

This is more than premium car makers like Mercedes or BMW, and more than the juggernaut Toyota, even though the Japanese logged the highest profit margin growth rate.

Tesla's unsurpassed production cost controls allow it to meet market downturns and emerge a winner, as it can toy around with frequent promotions and price cuts whenever it needs to save the quarter's delivery numbers.

Right now, for instance, it is giving up to $2,280 discount on demo Model 3 Performance units, a vehicle that it made eligible for the federal tax credit. The low production costs are what makes it able to offer inventory discounts on a new trim like the Performance, or a0.99% APR interest rate on the Model Y.

Even without the government's largesse, however, Tesla's relentless cost optimization process allows it to maintain 25% lower production expenses than any competitor save for the Chinese automakers that are now facing 100% tariffs in the US, and up to 38% in Europe.

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