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The beauty of this (for them!) is that this seems to take away all the negotiation about pricing, terms and taking used cars in. But aren't they leaving money

The beauty of this (for them!) is that this seems to take away all the negotiation about pricing, terms and taking used cars in. But aren't they leaving money on the table with such a long wait list? (Granted - creating artificial shortages can work if you have a monopoly)

jonknee 11y ago
> The beauty of this (for them!) is that this seems to take away all the negotiation about pricing, terms and taking used cars in. This is because they don't have a dealer network. If you don't like their price you can't go down the block and make an offer to the next dealer. Probably necessary because dealers normally make their money on maintenance and there just isn't much to do for Tesla vehicles.
- keehun 11y ago
  > there just isn't much to do for Tesla vehicles I'm all for Tesla, but I don't think this is true.[0] [0]: http://www.consumerreports.org/cars/tesla-reliability-doesnt-match-its-high-performance/ http://www.consumerreports.org/cars/tesla-reliability-doesnt... [1]: http://www.greencarreports.com/news/1100598_tesla-reliability-take-two-are-newer-owners-less-tolerant http://www.greencarreports.com/news/1100598_tesla-reliabilit... [2]: http://www.caranddriver.com/reviews/2015-tesla-model-s-p85d-10000-mile-update-review http://www.caranddriver.com/reviews/2015-tesla-model-s-p85d-... etc
  - jonknee 11y ago
    Some warranty work to replace defects for new cars isn't the same as a reliable maintenance schedule for ICE vehicles.
mikeash 11y ago
What artificial shortages?
- mathattack 11y ago
  Producing less than the market clearing amount. Examples: - Nike selling less shoes than would sell in the market. - Nintendo selling less of the latest game console. The shortage (as defined by needing a waiting list) is artificial if the seller can either raise the price or increase the amount provided. (Tesla is probably more the former than the latter)
  - mikeash 11y ago
    I know what artificial shortages are in general, but I don't understand how it could apply to Tesla. They've been building as many cars as they can as fast as they can for years now, and there's no sign they're going to stop any time soon.
    - robotresearcher 11y ago
      You missed the previous poster's first option: raise the price until demand equals supply.
      - mikeash 11y ago
        They plan to ramp up production to meet demand, and they think their pricing is at the correct point for that. What should they do, start out with a higher price for early orders, then bring it down? I don't think people would like that behavior at all, and it sure doesn't seem to me like an "artificial shortage" to keep the price at the level where you think it should be in the long term.
        robotresearcher 11y ago
        If their pricing decision creates a shortage, that meets the technical definition of an artificial shortage. The term doesn't necessarily have a negative connotation. In the steady state a market 'naturally' balances supply and demand through pricing. If you choose not to do that, the effects you create are 'artificial'.

jonknee 11y ago

> The beauty of this (for them!) is that this seems to take away all the negotiation about pricing, terms and taking used cars in. This is because they don't have a dealer network. If you don't like their price you can't go down the block and make an offer to the next dealer. Probably necessary because dealers normally make their money on maintenance and there just isn't much to do for Tesla vehicles.

keehun 11y ago
> there just isn't much to do for Tesla vehicles I'm all for Tesla, but I don't think this is true.[0] [0]: http://www.consumerreports.org/cars/tesla-reliability-doesnt-match-its-high-performance/ http://www.consumerreports.org/cars/tesla-reliability-doesnt... [1]: http://www.greencarreports.com/news/1100598_tesla-reliability-take-two-are-newer-owners-less-tolerant http://www.greencarreports.com/news/1100598_tesla-reliabilit... [2]: http://www.caranddriver.com/reviews/2015-tesla-model-s-p85d-10000-mile-update-review http://www.caranddriver.com/reviews/2015-tesla-model-s-p85d-... etc
- jonknee 11y ago
  Some warranty work to replace defects for new cars isn't the same as a reliable maintenance schedule for ICE vehicles.

mikeash 11y ago

What artificial shortages?

mathattack 11y ago
Producing less than the market clearing amount. Examples: - Nike selling less shoes than would sell in the market. - Nintendo selling less of the latest game console. The shortage (as defined by needing a waiting list) is artificial if the seller can either raise the price or increase the amount provided. (Tesla is probably more the former than the latter)
- mikeash 11y ago
  I know what artificial shortages are in general, but I don't understand how it could apply to Tesla. They've been building as many cars as they can as fast as they can for years now, and there's no sign they're going to stop any time soon.
  - robotresearcher 11y ago
    You missed the previous poster's first option: raise the price until demand equals supply.
    - mikeash 11y ago
      They plan to ramp up production to meet demand, and they think their pricing is at the correct point for that. What should they do, start out with a higher price for early orders, then bring it down? I don't think people would like that behavior at all, and it sure doesn't seem to me like an "artificial shortage" to keep the price at the level where you think it should be in the long term.
      - robotresearcher 11y ago
        If their pricing decision creates a shortage, that meets the technical definition of an artificial shortage. The term doesn't necessarily have a negative connotation. In the steady state a market 'naturally' balances supply and demand through pricing. If you choose not to do that, the effects you create are 'artificial'.