Autonomy Inc., a start-up founded by automotive entrepreneur Scott Painter, faced a dire situation due to Tesla’s price cuts and an excess of inventory. Painter, known for his involvement in various automotive ventures like Fair, TrueCar, and CarsDirect, had envisioned Autonomy as a platform offering subscription-based models for electric vehicles (EVs) from Tesla, General Motors, and Volkswagen, with a total value of $1.2 billion.
According to a report from Automotive News, Autonomy planned to provide customers with options ranging from short-term rentals to multi-year leases or loans, featuring popular EVs like the Tesla Model 3 and Chevrolet Bolt EV. However, Tesla’s global reduction in prices initiated a price war that rattled markets worldwide, particularly in China, and severely impacted Autonomy’s fleet value.
In an interview, Painter expressed the sudden drop in Autonomy’s fleet value, stating, “Instead of having an $85 million fleet, we suddenly had a, say, $56M to $57M fleet in one day.” This setback forced the start-up to enter a forbearance process while Painter sought solutions to salvage the company. With a $12 million capital injection, Autonomy had to implement cost-cutting measures, including downsizing its workforce from 120 employees to just 45.
Moreover, the start-up had to reevaluate its business strategy. Initially, Autonomy aimed to acquire 23,000 EVs from 17 different automakers. However, the company had to adjust its goals and currently possesses approximately 1,300 cars. Painter estimated that around 3,000 models would be necessary to recover costs.
Recent reports indicate that the supply of EVs surpasses current demand, leading to bloated inventory levels among US car dealers. In the second quarter of 2023, dealers had an average weekly inventory of 90,000 EVs, reflecting a staggering 342 percent increase compared to the same period in 2022.
Tesla’s price reductions also played a significant role in stimulating sales. For instance, the starting price of a 2023 Tesla Model 3 rear-wheel drive decreased from $43,000 to $40,240, with tax breaks further reducing the effective price to $34,380. On July 12, 2023, a base RWD model with 18-inch wheels from available inventory had a sticker price of $39,180. As a result, Tesla achieved record-breaking delivery numbers in two consecutive quarters this year, driven by these enticing discounts.
