US electric-car specialist Tesla has been accused using the huge profit margins on its vehicles to start a price war among its rivals – in the process delivering big savings for buyers.

Tesla has cut the price of its electric cars across the globe by up to 20 per cent.

The move saw sales spike by up to 500 per cent in one month in parts of China following a 13 per cent price reduction in that market, Car News China reports.

While the price of the Tesla Model 3 sedan was lowered by ¥36,000 ($AU7530) in China, in the UK the Tesla Model Y SUV dropped by £8000 ($AU14,000).

Germany saw the greatest price reduction, with Motor1 reporting the Tesla Model Y SUV was slashed by €9100 ($AU14,060).

On top of the price discount, Elektrek reports the Tesla Model Y now qualifies for a further €6750 ($AU10,430) subsidy from the German Government, effectively discounting the electric SUV by almost $AU25,000.

In the US, prices dropped by as much as 20 per cent, allowing some models to qualify for a $US7500 ($AU10,660) federal tax credit.

In Australia, Tesla cut prices by between $AU1600 and $AU1800 – with the exception of the Tesla Model Y Rear Wheel Drive, which was reduced by $3400.

According to news outlet Reuters, Tesla pocketed between $US11,442 and $US15,653 ($AU16,240-22,250) for each car sold in 2022 – and the electric car company is now able to comfortably cut into those profits to help bolster sales as the competition heats up.

The US car-maker enjoys more than double the average profit margin of vehicles sold by Volkswagen, four times the profit found on each model sold by Toyota – the world’s largest car company by volume – and more than five times the profit for each Ford sold, Reuters analysis shows.

Only Chinese newcomer BYD can boast profits close to that of Tesla’s, walking away with as much as $US14,921 ($AU21,180) on each car sold.

High demand and parts supply constraints over the past three years have meant manufacturers have been raising the prices of their models – including Tesla.

Now, with an influx of battery-powered models from other brands, Tesla has reversed direction and cut prices across its range – providing greater incentive for potential buyers, while also increasing pressure on its rivals.

“These price cuts are likely to make business even more difficult, just as they are attempting to ramp production of EV offerings,” Bank of America analyst John Murphy told The Wall Street Journal.

Despite the increasing competition, almost 59 per cent of electric cars sold in Australia in 2022 were from Tesla – with data research firm Motor Intelligence showing Tesla accounted for 65 per cent of electric-car sales in the US in the same year.

Extracted in full form: Tesla is ‘weaponising’ its profits as electric car battle heats up – report – Drive