How Tesla's price cuts could spur an EV pricing war

Key Points

• Tesla vehicles in the U.S. are seeing significant price cuts.
• The decision makes the vehicles more affordable and likely eligible for federal tax credits but tanks the resale values of cars for current owners.
• Analysts say the price cuts suggest Tesla is prioritizing sales over profits and that it could spur a price war in electric vehicles.

In this article

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A Tesla showroom is seen in the City Center shopping center on January 17, 2023 in Washington, DC.

Anna Moneymaker | Getty Images

DETROIT Tesla vehicles in the U.S. are seeing significant price cuts, and that's proving to be a double-edged sword for the electric carmaker and the greater automotive industry.

Tesla earlier this month slashed prices of its new cars by as much as 20%, making the vehicles more affordable and likely eligible for federal tax credits. But it also tanks the resale values of cars for current owners and is sending ripple effects through the auto industry.