Yahoo Finance Electric car price war looms as Renault plots reductions
Renault has admitted it may have to reduce the cost of its electric cars to “stay in the game” after Tesla triggered a price war in the sector.
The French carmaker is set to join Ford in bowing to pressure to lower prices, in spite of Renault's chief executive vowing to hold the line just months ago.
Fabrice Cambolive, the chief executive of the Renault brand, on Monday said the company would remain competitive, after Tesla cut prices in the US and Europe at the start of 2023.
Mr Cambolive said: “We will analyse country by country, market by market, which level of competitiveness we need to have to stay in the game.”
Tesla has cut the price of its cars in Britain twice already this year in an effort to boost demand.
The price of a basic Model Y has been reduced by 6pc to £44,320, while the lowest-spec Model 3 has had its price tag reduced by 6pc to £40,470.
Elon Musk’s company has been dropping prices around the world in order to boost sales, recently enacting its fifth round of discounting in the US.
As well as chasing sales, Tesla has been cutting prices to fend off competition from incoming Chinese rivals.
Dozens of Chinese companies with access to battery components, a cheaper workforce and without the looming cost of shutting down their combustion engine businesses have indicated that they wish to start selling in Europe and the UK.
Tesla’s cuts have prompted other Western manufacturers to follow suit. Ford reduced its ticket price weeks after the first round of reductions at Tesla.
Initially, European car manufacturers resisted reductions. Renault boss Luca de Meo said in February that lowering prices destroyed value for customers and undermined confidence in the vehicles.
Mr Cambolive’s comments suggest the company has now had a change of heart.
Manufacturers are reluctant to lower prices as battery-powered vehicles are more expensive to make than petrol and diesel models since they require rare minerals such as lithium for their large batteries.
As well as competition from cheaper Chinese brands driving down prices, manufacturers such as Renault are facing a glut of supply.
After years of disruption to the availability of crucial parts such as computer chips, factories have now returned to normal and more and more cars are rolling off assembly lines.
Analysts at UBS believe companies may end up making more cars than can be sold this year, which should make cars cheaper.
