In a recent interview with The Fully Charged Podcast, Ford Motor Co CEO F Jim Farley reflected on the history of Henry Ford and shared insights that could be valuable for Elon Musk-led Tesla Inc TSLA.
What Happened: “I think this really one of Tesla’s most challenging moments,” Jim Farley said in an interview with The Fully Charged Podcast published on the YouTube channel Everything Electric Show on Monday.
Tesla is now relying on heavy discounts to stimulate demand. But it is a “sugar high,” Farley said while adding that it would instead reduce elasticity. “Less and less people are signing up as you cut the price.”
Farley drew parallels to Henry Ford’s experience with the Model T, emphasizing the danger of commoditizing a product solely based on price.
He recounted how Ford significantly reduced the Model T’s price to encourage farmers to choose cars over horses, but this nearly drove the company into bankruptcy.
Why It Matters: Tesla commenced price cuts in the U.S. in January with price cuts of up to 19.7%. The slew of price cuts enabled better first-quarter deliveries for the EV giant and added pressure on rival EV makers to cut costs to battle competition.
Though there have been intermittent price hikes, Tesla vehicles are still priced considerably lower than at the beginning of the year.
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Read More: Tesla’s UK Registrations Skyrocket 13,600% In May As Model Y Frenzy Takes Over
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