Shares of Tesla TSLA have been struggling since the electric vehicle leader posted weaker-than-expected third-quarter results in October. The ongoing EV price war, whose results featured strongly both in Tesla's report and conference call, represented the biggest point of concern for many investors.
In an apparent effort to combat high interest rates (and eat up market share in China), Tesla CEO Elon Musk has been engaged in a fierce price war for months. Average Tesla prices are down around 25% year-over-year, according to data from Kelly Blue Book. This dip, according to Cox Automotive, has forced market-wide price declines across both the EV and luxury vehicle sectors in 2023.
"That is really the thing that must be solved is to make the car affordable for the average person," Musk said.
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It's an environment that seems likely to continue, with Musk leaving the door open for even more price cuts into next year, something some of his most ardent supporters have been having a hard time agreeing with.
And while Musk's price war has left legacy automakers in the U.S. postponing EV investments as they figure out ways to compete with Tesla without sacrificing profitability, some European manufacturers remain unconcerned.
"We have no interest in sinking prices to gain market share. That's not our strategy," BMW BMWYY CEO Oliver Zipse said during the company's third-quarter earnings call. "And as you can see, we are managing to grow substantially even with very acceptable prices."
Zipse added that enforcing prices comes down to having "attractive and competitive products," two boxes he thinks BMW's vehicles check.
"We are in a very favorable situation," he said. "In Q3, for example, for fully electric vehicles, we were able to see a very strong increase in new orders. So, I can only confirm that we will retain our price discipline."
The German automaker reported earlier in October that group sales of its fully electric vehicles surged by nearly 80% year-over-year to 93,931 units. Tesla, by contrast, sold 435,000 vehicles for the same quarter, below Street expectations of 455,000.
In its third-quarter report, BMW said fully electric sales made up 15.1% of the company's total sales for the quarter. Company executives added during the call that BMW's order book is full through the first few months of 2024.
Group revenue, up 3.4%, came in above analyst expectations, despite a 7.7% decrease in net profit. Forecasting a strong fourth quarter, the company noted that supply chain issues have eased.
"BMW has a very strong position on the market that cannot really be put under price pressure," Zipse said, adding that he is confident BMW's status and continuing success gives the automaker strength within the market.
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He did note, however, that "we do make price adjustments wherever it's necessary."
The tone, specifically as it relates to EVs, is markedly different than that of many other automakers. Ford F and GM GM have been pulling back their EV plans, and Tesla has noted plenty of concern about macroeconomic headwinds and the impact of inflation on sales.
"As far as China's concerned," Zipse said, "demand is stronger than the entire market."
Shares of BMW rose roughly 2% following the strong third-quarter results.
Priced at the higher end of the market, BMW's cheapest fully electric car, the i4, starts at $52,200 and boasts a range of at least 252 miles and 536 horsepower.
The company's more luxurious i7 starts, in its cheapest iteration, at $105,700.
In a statement, BMW noted "solid sales growth worldwide" for the quarter.
Related: Top analysts break down the 'meltdown' of the global electric vehicle market
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