Price war? Tesla drops the Model Y starting price below the average U.S. vehicle cost

Tesla Inc. is now charging less for the cheapest version of the Model Y sport utility vehicle than what the typical new vehicle sells for in the U.S., a threshold Elon Musk crossed in blazing fashion.

Click here to read the story at latimes.com.

Discussion Questions:

1. What is competition?
2. What is the difference between direct competition and indirect competition?
3. Name three brands that represent direct competition to Tesla.
4. Name three brands that represent indirect competition to Tesla.
5. What is market share?
6. How is market share an indication of how well a business is performing against competition within a particular industry?
7. Why is market share important to Tesla?
8. What is price?
9. Why is pricing an important function of marketing?
10. According to this story, Tesla has lowered the Model Y starting price by 24%, the biggest drop of any of its vehicles. No carmaker has made such a dramatic a reduction to a high-volume vehicle in the modern age of the automobile.  Why do you think Tesla is taking such drastic measures in how it is pricing the Model Y?
11. How might the competition respond to the price drop?
12. How might that impact Tesla’s market share?
13. What is profit?
14. How is profit determined?
15. Why are profits important to a company like Tesla?
16. What is profit margin?
17. How is profit margin determined?
18. Lowering prices on its vehicles will likely result in lower profit margins for Tesla. Do you think that is a concern for the automaker? Why or why not?