Analysis-Tesla uses its profits as a weapon in an EV price war

By Paul Lienert and Joseph White DETROIT (Reuters) - Tesla Inc earns more money for every vehicle it sells than any of its global rivals. Now, Chief Executive Elon Musk

is using that superior profitability as a weapon in the EV price war he started. Tesla, once one of the auto industry's biggest money losers, has over the past year built a

commanding lead over most major rivals in profit per vehicle, a Reuters analysis of industry data shows. Tesla earned $15,653 in gross profit per vehicle in the third

quarter of 2022 - more than twice as much as Volkswagen AG, four times the comparable figure at Toyota Motor Corp and five times more than Ford Motor Co, according to a Reuters

analysis. For most of this year, Tesla joined rivals in aggressively raising prices on its most popular vehicles, such as the Model Y SUV. Shortages of semiconductors and

other materials kept auto industry production down, allowing companies across the industry to focus on higher-margin models and book strong profits, even as sales volumes

fell. Tesla's decision to reverse course and spend its production-cost advantage on price cuts now challenges the profit-over-volume strategies established automakers such

as GM have pursued since the 2008 financial crisis, and doubled down on during the pandemic. To control production costs, Tesla has invested heavily in new manufacturing

technology - such as the use of large castings to replace small metal parts. Tesla brought battery manufacturing and other parts of its supply chain in-house, and standardized

vehicle designs to improve economies of scale.