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I wrote earlier today about US electric car sales increasing 20% year over year in July. I noted in that article that Tesla’s average transaction price (ATP) was down by more than $5,000 in July 2025 versus July 2024. However, I didn’t notice something else about that until I looked more closely at the Kelley Blue Book data tables on automakers’ average transaction prices (ATP).
One of the data tables shows the average transaction prices of each automaker (auto group) in July 2025, June 2025, and July 2024. It also shows the resulting month-over-month and year-over-year percentage changes in those prices. Another data table shows the same things by auto brand.
The thing that didn’t strike me earlier but I’ve noticed since is that only two automakers had a year-over-year reduction in their ATP — Tesla and Stellantis. Every other automaker had increases in their average selling prices. The average transaction price for Stellantis dropped 6.8%, while the average transaction price for Tesla dropped 9.1%.
Month over month — from June 2025 to July 2025 — six automakers had decreases in their average transaction prices. Geely Group’s prices were down 0.2%, Mercedes-Benz Group’s were down 0.3%, GM’s were down 1.7%, Tesla’s were down 2.4%, Volkswagen Group’s were down 2.6%, and Stellantis’ were down 2.9%.
There are different reasons prices can be down. It could be that the company lowered its manufacturing costs, leading to drops in prices. This could be part of the explanation with Tesla. It could also be that more buyers are buying the company’s cheaper models now than they were before (compared to the company’s more expensive models). Again, this could be part of what’s at play, with more customers buying the lower-cost Model 3 and Model Y trims and fewer customers buying the Tesla Cybertruck, Tesla Model X, Tesla Model S, and performance versions of the Model 3 and Model Y, for example.
Then there’s a third possible cause. It could be that the automaker is having a hard time selling as many cars as it had expected to sell and has to lower prices in order to move the automobiles out of the factory, off the lot, and into customers’ hands. Looking at Tesla sales trends, I think you have to assume that this is one of the factors — and probably the biggest factor — with Tesla. Tesla has not been reaching its sales targets for more than a year, and it’s offered more and more incentives. Perhaps it is also selling more and more units cheaply from inventory. Recall that Tesla’s gross profit margin has also dropped a ton in the past couple of years.
Overall, while it’s great for consumers when prices drop, and great for reaching more EV sales, I think there’s genuinely serious concern for Tesla that it is facing more and more difficulty finding buyers, leading to thinner and thinner margins. As long as the company is still making quarterly profits and there’s all kinds of hype around future products (or improvements to existing products), that may fly under the radar and be fine. However, if trends continue … well, you can only reduce prices, reduce margins, and see declining sales for so long until you start to get into negative financial territory.
It will be very interesting to see what happens with Tesla’s sales and finances in the 3rd and 4th quarter of this year.
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