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Tesla’s primary weapon in the EV price war is its commanding lead in profits

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2 years ago

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Tesla was battered and bruised last year by a series of headwinds, from Giga Shanghai’s shutdowns to CEO Elon Musk’s TSLA stock sales to fund his Twitter acquisition. It was then no surprise that the EV maker started 2023 on a much different stance. Just a few days and weeks into the year, Tesla started a price war. 

Tesla’s aggressive price cuts to its lineup of vehicles are not just a warning shot in the electric vehicle sector. It is also a power play of sorts, as it shows that the company has what it takes to significantly reduce the prices of its vehicles and possibly still be profitable. It’s a move that other automakers may follow at their own risk. 

A Reuters analysis estimated that Tesla earned $15,653 in gross profit per vehicle during Q3 2022. That amount is over twice as much as Volkswagen and five times as much as Ford. This is a notable development for Tesla, considering that the company was once one of the auto industry’s biggest money losers. 

Tesla’s transformation into an automaker with a commanding lead over rivals in terms of profit per vehicle is quite incredible. It involved a lot of difficult choices, such as using technologies like Giga Presses to create mega casts that would then reduce production costs. Tesla is not done either, as the company is still busy with other projects, such as its in-house battery production ramp. 

Bill Russo of Automobility, an industry consultancy in Shanghai, noted that Tesla’s aggressive price cuts could give a notable blow to the company’s rivals, some of whom are operating on thin margins. “Tesla has taken the nuclear option to bully the weaker, thin-margin players off the table. Big pie, fewer slices, more to eat for those that remain,” Russo noted. 

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In China, such a scenario seems to be playing out. Following Tesla’s aggressive price cuts, Chinese EV maker Xpeng also decided to cut its vehicles’ prices. However, Reuters data estimates that Xpeng is already at a net loss of $11,735 per vehicle, which would make its price-cut strategy a risky move. The same is true for Vietnamese EV startup VinFast, which is trying to enter the US market. In recent comments, the company stated that it would be using price promotions to fight back against Tesla. 

Perhaps the company best positioned to stand against Tesla’s price war would be BYD, which is already beating the American EV maker’s volumes in China. BYD has so far not initiated price cuts of its own, but its $5,456 per vehicle gross margins do provide the automaker more headroom to compete in Tesla’s price war. 

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

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Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

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Elon Musk

Tesla owners across the globe prepare for Robotaxi launch with this neat customization

Tesla will eventually have Robotaxis worldwide. Some owners are already preparing.

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34 minutes ago

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June 12, 2025

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Credit: @HanChulYong | X

Tesla owners are already preparing for the company’s launch of the Robotaxi platform with a new, neat customization that is appearing around the world.

On Tuesday, the first Tesla Robotaxi test mule was spotted in Austin, where the company will launch the first driverless rides of this ride-hailing service. At first, it will be a limited rollout, reserved for a select few. CEO Elon Musk said public rides could occur as soon as June 22.

First Tesla driverless robotaxi spotted in the wild in Austin, TX

However, the Tesla Robotaxi platform is not one that will be confined to cities and geofenced to certain areas.

Eventually, Tesla will gain enough confidence to roll the Full Self-Driving software straight to every car in the customer fleet that paid for it. Owners will be able to generate income for themselves while they sleep, as the cars will operate as ride-hailing vehicles for people to use for transportation.

In an effort to prepare for the launch of Robotaxi, Tesla owners across the globe are installing Tesla’s ‘Robotaxi’ word art on their cars.

Here’s one in South Korea:

Here’s another in the U.S.:

Obviously, this is more of a symbol of support for the Robotaxi launch, but many owners are recognizing that Tesla’s Full Self-Driving software will extend to them the ability to use their personal cars as ride-hailing vehicles, becoming a part of the global fleet of self-driving chauffeurs.

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Elon Musk

Tesla sues former Optimus engineer for stealing trade secrets

Tesla is suing a former engineer who worked on Optimus after he left and immediately started a robotics company that achieved quick development of a hand.

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8 hours ago

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June 12, 2025

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Credit: Elon Musk | X

Tesla is suing former Optimus engineer Jay Li in federal court after accusing him of stealing trade secrets and using them to enable a startup he founded after he left.

Li is accused of stealing confidential files and using them to help get his company, “Proception,” off to a rocking start. Tesla says the files Li took helped his new startup “shortcut the typical development process” for robot hands, something that took Tesla years to develop and evolve.

The company said in the complaint (via Reuters):

“Through Li’s pilfering, Defendant Proception purportedly achieved in a matter of months what it has taken Tesla over four years, hundreds of employees, and billions of dollars to achieve.”

Li was an employee at Tesla for several years, working on the Optimus sensor team from 2022 to 2024. The company says it utilized and devoted “extraordinary resources” to the development of Optimus, which has come a long way since its unveiling several years ago.

Tesla Optimus to receive hands with 22 degrees of freedom later this year

Li allegedly downloaded confidential files related to Optimus’ robotic hand movement research before departing the company. He did not work on the hands at the time. However, he left and swiftly started Proception, as the suit states the company was founded just six days after he left Tesla.

Proception was gloating about its ability to build robotic hands just five months after the company was founded. Tesla says the hands have “striking similarities” to its own design for Optimus.

The company is looking for monetary damages and a court order that would block Proception from misusing the secrets it accuses Li of taking.

This is not the first suit Tesla has filed over trade secrets and confidential information theft. Recently, it accused German-Canadian dual citizen Klaus Pflugbeil of stealing battery-related secrets. He was arrested and sentenced to two years in prison.

Men accused of selling Tesla battery secrets arrested in undercover sting

The U.S. Department of Justice used an undercover sting to arrest Pflugbeil.

Tesla is being represented by Josh Krevitt, Orin Snyder, and Angelique Kaounis of Gibson Dunn & Crutcher.

The case is Tesla Inc. v. Perception Inc., U.S. District Court for the Northern District of California, No. 5:25-cv-04963.

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Tesla teases new Model Y seating option potentially coming soon

Tesla appears to be ready to launch the new Model Y seating option in the coming weeks.

Published

9 hours ago

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June 12, 2025

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Credit: Tesla

Tesla teased a new Model Y seating option earlier this week in a promotional email, potentially hinting that it could introduce an arrangement offered on the legacy version of the vehicle.

Back in 2021, Tesla started offering a seven-seat configuration of the Model Y, and there was a lot of speculation about its orientation and the space it would provide. The two additional seats were truly a tight fit for anyone, even kids, as the space for a third row was extremely limited in the Model Y.

Tesla Model Y third-row seats first impressions shared by EV owner

Eventually, Tesla started building the seven-seater with forward-facing seats and very tight legroom dimensions. It was beneficial for some, but many still considered the arrangement to be too confined for their needs.

The company confirmed earlier this year in an interview with Jay Leno that the car would get other configurations, including Rear-Wheel-Drive, which has already launched, a Performance trim, which has been spotted with bumper covers several times this year, and a seven-seat version:

The new seven-seater could be coming soon as well, according to a recent email Tesla sent to customers and fans. In it, Tesla writes:

“Ready for anything with long range seating for up to seven and enough room for everyone’s gear.”

Tesla did have a mysterious Model Y roaming around the Fremont Factory’s test track recently with covered bumpers and what appeared to be strange dimensions.

We thought it might be the compact, affordable model that is set to launch in the first half of the year, but now it seems that the car could have either been the Model Y seven-seater or the Model Y Performance configuration, as they are both expected soon.

We are interested to see if Tesla can squeak out a few more inches of legroom in the new seven-seater, but we’re not holding our breath. Nevertheless, the new Model Y came with quite a few improvements, including suspension changes, acoustic-lined glass for a better cabin experience, and a front and rear bumper redesign, among other things.

There is no doubt it will be a better car than the legacy version.

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