So you don’t think it’s possible that Tesla decided to:
Increase production for long term growth plans.
Reduce price, but generate higher total profits from the increase in sales volume (now that they have the production capacity).
Take advantage of the federal tax credit to increase market share, at the expense of margins, because it will give them a significant competitive advantage in the long run.
Your only conclusion is they stupidly increased production because they didn’t properly predict demand?
They would ideally not decrease the price at all. Ideally they would make all the cars in the world and sell them for max price. They are reducing the prices because they are forced to.
I think they misinterpreted how much demand there was and expanded too much. This also relates to macro tailwinds of last couple years with massive liquidity which are now becoming headwinds.
Obviously they want to grow. You’re making a false dichotomy of keep production same or roll out as they have. They cared too much about making more factories to pump out cars instead of improving their product, refreshing models, releasing new models and actually making fsd work.
Explain the math to me. They’re making 9.5k on average per car. Their best selling model , they just cut prices 13k on. The profit margin for that is somewhere around the average likely , give or take a few thousand. So how much volume exactly are they gonna move to make up for these potentially negative margins on their most popular model?
You have clearly demonstrated that there is no point in explaining anything to you. You will just ignore the explanations. Just take a minute and consider the possibility that strategic decisions aren’t driven by short term P/L. Mind blown, right?
You just proved the point again. I’ve provided several responses (just scroll up) but you totally ignore them and pretend that I’m only responding with memes.
If you’re truthful, you will not respond because you have put me on mute and will not see this message.
This article answers most of your questions. Sales growth estimated at 53% post price cuts, up from 17%. Pushes revenue estimate to $100bill in 2023, up 18% from prior model.
“Tesla looks poised to make 10% to 20% less per car sale, and the bank forecasted that additional incremental cuts could follow over the next two years.”
I will point out this ignores the increased volume leading to more revenue from supercharging fees, subscription services, Tesla insurance. Tesla Energy is also poised to massively increase revenue from Lathrop Megafactory ramp up. Megapack order backlog is over 2 years. Oh and their solar business. Tesla isn’t just a vehicle company. The entire grid upgrade coming for this EV push with be done via energy storage, Tesla and CATL will be the two biggest players in that space.
One analysts opinion, who can be right or wrong. I would contend it’s pretty mathematically impossible when they are slashing prices 15% for profits to only go down 10-20%. As a proportion of total net profits these cuts are far greater. Sure there are some network benefits of higher volume, spreading out fixed costs, reducing per unit costs as well. There are plenty of other analysts who think the relative losses in margin will be more.
One viewpoint does not make something right or wrong, something you guys don’t seem to understand. This also obviously holds true for my opinions.
@M3WC As was said by many others, I’m not a Tesla fan boy, but you hit this right on the money. People are myopically looking at only the price increase. Elon is looking at the whole revenue ecosystem when making these changes.
Tesla seems to be a love or hate car, as do EVs in general. Musk is maybe on the side of a More Hate than Not status. Price cuts will not really change this altogether due to people like me.
I almost bought a Tesla and then I drove it. I almost bought an ID4 and then I drove it. I almost bought an MB and an Audi EV, and then I saw the MSRP and ADM. I almost thought i wanted an EV and then I didn’t.
I really wanted a 2022 1T Ram Limited with the Aisin and HO, and a 2023 RS3 because I knew that getting 37 MPG average combined between the two meant that I was going to get what I wanted/needed for driving and towing/hauling.
I bought the 1T Ram and RS3 knowing that in just a few short years I would be “forced” to buy an EV car and likely an EV truck as well. I did not pay ADM and received “relatively” insane money on trades that were fat with equity from early, early pandemic beatdown buys at fire sale, doors are closing prices paid down with free money interest at 1.49 and below.
I like knowing that I own and drive two of the maybe last gen (for their class) great HP, power and overall shit-eating grin experiences (in a car and truck) that were out there before they were gone.
Price cuts alone only mean so much to some people, unless you are prone to buying off the endcap b/c of the price and placement.
They are pulling forward the demand due to price cuts. They are not expanding the charging network and improving services at the same rate. i believe short term gain and possibly long term dissatisfaction.
I agree. I’m also not a fan boy but I think it’s difficult to judge the pricing decision in a vacuum. Tesla produced 1.4M cars last year, Toyota close to 10M. Tesla is increasing production capacity to be a major competitor for the future…when EVs represent a larger share of the market. As they are building more factories, what else are they supposed to do but make more of the current vehicle lineup? When they are making more cars than the current demand (even if demand is increasing), they drop prices. As I previously stated, the tax credit was clearly a major consideration as you see much larger price drops on the Y compared to other models where price changes didn’t impact tax credit status.
I’m currently a shareholder of TSLA though I’ve also been short on the stock in the past. I think it’s too early to tell if it the massive price drop on the Y was the right move. When you consider the strategic implications such as i) the long term need for additional production capacity, ii) current impact on other EV competitors, iii) leveraging the sales benefit of a $20k discount (after tax credit) for a $13k cost, and iv) benefits of increasing market share (customer loyalty, s/w upgrades, cross sells, etc.), I’m more positive than negative on the decision at the moment.
