As the world slowly transitions away from petrol vehicles to EVs, Tesla has cut the price of its electric vehicles twice this year so far. But why?
Milford Asset Management portfolio manager Felix Fok told AM as people begin to make the move to EVs, companies like Tesla are looking to scale up their manufacturing.
"So Tesla if you take an example, one of the largest manufacturers of EVs at the moment, they made more than 1.3 million vehicles last year and looking to make 2 million this year."
But Fok says 2 million EVs produced by Tesla "pales" in comparison to larger existing manufacturers that are making between five to 10 million vehicles per year.
So as companies start to crank up their production lines, Fok says consumers will benefit from the economies of scale, and price cuts could continue if Tesla's manufacturing scale-up does too.
"If you wait long enough to (sic) the technology, something more mature is going to be cheaper."
He added the EV industry has reached a point where there are more competitors now and Tesla is "ramping up" its scale.
"We are getting to the point where, you know, the charging infrastructure, the confidence in the product and also the service aspect of after the sale, all those things along with government incentive schemes."
Tesla slashed the prices of its two most expensive vehicles earlier this month by between US$5000 and US$10,000.
The company's most recent price cut is the second of the year in the United States.
Watch the full interview above.
