When Tesla cut the prices in January, many critics quickly pointed out that this would affect Tesla more than the market. Still, later development showed that Tesla was right, and the ripples of that move caused both new and used EV prices to crash.
Tesla shocked the markets with its price cuts operated in January. Many criticized the move, saying it would affect the company margins and existing Tesla owners because of a drop in value. When the first-quarter results were in, Reuters was so quick to show the price cuts failed that it completely missed the numbers telling sales increased. Still, the sudden change in pricing strategy proved a good move, at least for Tesla. It was a bloodbath for everyone else, though, and the consequences still reverberate throughout the automotive markets.
The most obvious change was that all other carmakers were forced to cut prices. This was brutal, considering that no legacy carmaker was making a profit from selling EVs. Now, the loss accelerated, making it a bad business to produce electric vehicles. While GM decided to build as few EVs as possible to minimize losses, Ford was surprised to see that its electric cars piled up on dealers' lots until they no longer wanted to get new allocations. On the other hand, Volkswagen was forced to slash EV production significantly, blaming "customer reluctance" to buy EVs.
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