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In the News

Tesla cuts prices as it focuses on sales maximisation

Graham Watson

1st March 2019

Tesla is seen as the market leader in the electric car market, and yet the company has seemed to lurch from minor hiccup to minor hiccup.

This article, however, might mark a change in its fortunes: the car company is changing the way that it operates in the hope of reducing its costs and increasing sales. The hope is that this will allow it to charge lower prices for the cars.

Thus, there's a lot to consider - whether the costs of a car showroom are fixed costs or variable costs, whether this signals that Tesla has changed its objectives, and is increasingly focused on sales maximisation, and the application of both price elasticity of demand - and the impact of a price cut on Tesla's revenues - and price elasticity of supply - whether Tesla is confident that it will be able to increase the quantity supplied to meet any uptick in demand.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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