19 ms·

Tesla cuts prices as Model 3 deliveries narrowly miss estimates

132 points by nopriorarrests 8y ago

hinkley 8y ago
The second line in the article: > Prices cut by $2,000 to partially offset shrinking tax credit. At that cost range I don’t know if I could ever know my customer well enough that I would be confident that a 3% price break would get more sales but what do I know. Also, this feels more like PR. What fraction of the cost of a Tesla is the battery pack? Weren’t those supposed to be getting cheaper due to all of the automation? When your costs decline you lower your prices, add more features or increase your margins.
- mikestew 8y ago
  At that cost range I don’t know if I could ever know my customer well enough that I would be confident that a 3% price break would get more sales but what do I know. Would I have purchased a Nissan Leaf eight years ago had it not been for the $7500 federal tax credit? Damned right, I would have. But since we're buying one anyway, I'm not turning down free money. My point is, I wonder if there ought to be a moratorium on tax credits for the first two years. The early adopters are going to buy one regardless, save the tax credits for those that are on the fence two years down the road. Of course the gaping hole in this plan is something, something Osborne Computers (in two years, it might not be better, but it'll be cheaper).
  - cjhopman 8y ago
    The tax credits aren't for the consumer, they're for the manufacturer. > The early adopters are going to buy one regardless, Some of them will. The idea that there's isn't a demand curve for early adopters is insane.
qroshan 8y ago
Tesla is definitely hitting the demand ceiling. It's a good thing Musk isn't producing 10000 M3 per week. The current rate of ~4500 per week is enough to meet demand. In fact, expect continuous price drops from Tesla as it struggles to drum up enthusiasm
- bryanlarsen 8y ago
  Demand ceiling for the US or for the world? I suspect they've hit the former, but that there's a lot of demand in the latter.
  - wnorris 8y ago
    The market for EVs is expanding. As Tesla starts shipping worldwide they will find the sweet spot for the US. Big takeaway here is they are very profitable producing at current rates. As they bring out new models they will continue to grow at 30-50% per year.
    - golfer 8y ago
      > "they are very profitable producing at current rates" You don't know that. They had one big, profitable, immaculate quarter in Q3 by pulling all demand forward and using every accounting trick in the book to show profit. There is no guarantee there will be another quarter like that. In fact, if Tesla's earnings history shows anything, it's that losses will be even bigger than before.
      - cjhopman 8y ago
        q3 was also helped by the fact that, despite increasing the total amount of tesla's sold by ~66%, they opened only 1.1% new service centers and only 3.2% new superchargers. The tesla experience is going to be incredibly degraded as time goes by.
      - qroshan 8y ago
        Bingo! Q3 and Q4 numbers should absolutely be taken with a grain of salt. It was a confluence of all positive points. a) Accounting b) Pent up demand for larger priced vehicles c) Peak Economy Going forward, a) Weakened Global Economy b) Everyone who is passionate about owning Tesla has bought one. Sustainable demand and profit will be clearer in 2019 Q2 and forward. I can make a public bet that it wouldn't be greater than $150 Million per quarter
wnorris 8y ago
The production and delivery numbers they came out with were very good and higher than most had expected. These numbers will allow them another profitable Q4 likely higher than their Q3 numbers. The price cuts are likely to impact margins, but is in line with what Tesla had done with the Model S and X as production efficiencies allow them to reduce manufacturing costs. The reaction looks like a big overreaction as the market is apt to do. Seems like there is a lot of Tesla hate on the internet for some odd reason these days.
- golfer 8y ago
  People are skeptical of Tesla because people are skeptical of Elon. His dozens of misleading statements and half-truths over the years have caught up with him.
  - sandworm101 8y ago
    The pot smoking and twitter insults also dont help.
    - Derek_MK 8y ago
      Neither does the SEC investigation that got him for fraud EDIT: SEO > SEC - Context switching is hard
    - mulmen 8y ago
      I don’t really see the problem with the pot smoking honestly, why is anyone wound up about that? Do you care if he drinks or smokes cigarettes? What about his workout routine? Twitter insults aren’t impressive.
      - dsfyu404ed 8y ago
        Regardless of how you feel about smoking pot the CEO of a publicly traded company is expected to be prudent enough to avoid doing things that are federally illegal on camera with the beforehand knowledge that the footage will be made public. I personally don't care what Elon, or anyone does in his spare time but smoking pot on TV (or podcast, basically the same thing since both are going to be broadcast to viewers) shows a willingness to take risks with the wrong amount of upsides relative to their downsides and wall street doesn't like that.
pkaye 8y ago
Another thing is the pre 2017 car-pool stickers for electric cars are expiring in the bay area. The newer stickers have income caps of $150k (single filing) or $300k (joint filing). I wonder what the impact will be on Tesla? The first change helps them but the second hurts them.
- saagarjha 8y ago
  Wait, what? I was not aware of this. I guess driving in the carpool lane today was not a great idea…
  - eclipxe 8y ago
    OP is incorrect.
    - saagarjha 8y ago
      Do you have more information about this change, or lack thereof?
      - popcorn49 8y ago
        https://www.mercurynews.com/2018/09/11/223654-solo-drivers-to-lose-carpool-stickers/ https://www.mercurynews.com/2018/09/11/223654-solo-drivers-t...
      - loosescrews 8y ago
        Green and white decals expired January 1st, 2019. Red decals, which were first issued in 2018, are still valid. Vehicles which were first issued decals in 2017 are eligible to upgrade to red decals. The current decals being issued are purple, but it is unclear if they are only for vehicles being issued decals for the first time or if they can be issued for upgrades requested now. https://www.dmv.ca.gov/portal/dmv/detail/vr/decal https://www.dmv.ca.gov/portal/dmv/detail/vr/decal
  - pkaye 8y ago
    Looks like my understanding was not entirely correct but there is an income cap for the rebate. And clean air vehicles older than 2017 will lose car pool lane access. They change the sticker color to help identify.
andrewtbham 8y ago
This actually a price increase because of a loss of the federal tax credit... the title is bogus and should be changed imho. "Moving beyond the success of Q4, we are taking steps to partially absorb the reduction of the federal EV tax credit (which, as of January 1st, dropped from $7,500 to $3,750). Starting today, we are reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000." http://ir.tesla.com/news-releases/news-release-details/tesla-q4-2018-vehicle-production-deliveries-also-announcing-2000 http://ir.tesla.com/news-releases/news-release-details/tesla... Edit: the mods changed the title. thank you!
- izacus 8y ago
  In what way is it a price increase, why did Tesla count tax credits when advertising price in the first place? Isn't that dishonest, since the cars price tag was higher and the government gave them money?
  - Operyl 8y ago
    It was pretty obviously stated on their quoting tools, imho.
  - Retric 8y ago
    Government did not give Tesla the money. Tesla also makes the actual amount you need to pay very clear before you buy a car. Their website is closer to the Cable companies landing pages that don’t include all the fees, before showing you the actual price at checkout.
  - jpollock 8y ago
    The purchaser factors the tax credit in, so the removal of the credit will have the same effect as an increase in price. The salesman will _definitely_ make the purchaser aware of the credit, in the same way that a mortgage broker makes you aware of the tax benefit on mortgage interest (in the US). That doesn't make them dishonest.
    - FireBeyond 8y ago
gok 8y ago
Seems like the bigger issue is that they once again missed their delivery targets, although only by a few percent this time.
- mks_cam 8y ago
  Is not the historical lesson thus far maybe that the market does not care about missing them as long as the general growth story is still there?
- gwbas1c 8y ago
  > few percent They missed by less than a percent. The miss isn't even statistically relevant.
adircasp 8y ago
just look at google trends, Model S/3/X still trending higher while I-pace pal plateaued
dmode 8y ago
"Automaker sold 63,150 Model 3 in the fourth quarter" - [and this is only in North America] What Tesla has achieved is truly unbelievable and it is kind of hilarious to see HN meltdown and Tesla bashing. To give you a perspective on how much of a gigantic scale this is, BMW only sold 99,000 3/4 series in the US in all on 2017 [1]. Tesla is a carmaker who only sold ~100 vehicles in 2011. It is amazing how much of Tesla's success is under-appreciated in this forum. [1] http://carsalesbase.com/us-car-sales-data/bmw/bmw-3-series-4-series/ http://carsalesbase.com/us-car-sales-data/bmw/bmw-3-series-4...
- iseeyoubydesign 8y ago
  "appreciated" ... its a company , its a business. I dont appreciate it because Im not a customer. I hope their customers do appreciate it, why buy their product otherwise. It seems like Tesla is either the inventor of the new wheel or an awful sweat shop for engineers. I happen to just think its a company that better make profit for its investors. And Elon is just another business man. How much more appreciation does Tesla deserve?
- juhanima 8y ago
  Nope, that's just the U.S. sales figures for BMW (says so in the link). You need to add the European sales of the 3-series (129,000) and 4-series (64,000) with the China figures (123,000) to get a bit closer to the global figure of 415,000 cars for both 3/4 series.
  - dmode 8y ago
    Yes, you are right. Edited post
    - juhanima 8y ago
      Thanks! Tesla's progress sure has been impressive even with the correct figures.
  - omarforgotpwd 8y ago
    Yes, but the Model 3 won't start selling in Europe and China until this quarter. Once that happens we can compare sales, but for now US is the only area where you can make a comparison.
adamqureshi 8y ago
Tesla is the ONLY player with a direct to consumer model. They are a native EV start up. All others right now are legacy car makers (non native) using the old franchise distribution model. Tesla OS is its bread and butter. They built the vehicle from scratch for EV. They effectively "PULLED" ever other car maker into the MIX. The legacy car makers had no other choice but to jump into the fray and take their chances.
- anthonybsd 8y ago
  >Tesla is the ONLY player with a direct to consumer model You are saying it like it's necessarily a good thing.
  - iso1337 8y ago
    Not sure why the gp is being downvoted so much specifically in regards to the DTC comment. There was just a decently-sized HN thread about how the current non-direct to customer model is not the best for either the car buyer or the manufacturer. https://news.ycombinator.com/item?id=18790480 https://news.ycombinator.com/item?id=18790480
    - adamqureshi 8y ago
      Yeah. What gives.
  - adamqureshi 8y ago
    A fundamental principle of competition is that consumers – not regulation – should determine what they buy and how they buy it. Consumers may benefit from the ability to buy cars directly from manufacturers – whether they are shopping for luxury cars or economy vehicles. The same competition principles should apply in either case. States should allow consumers to choose not only the cars they buy, but also how they buy them.
    - anthonybsd 8y ago
      First watch this: https://www.youtube.com/watch?v=H8ro6kpKlw0 https://www.youtube.com/watch?v=H8ro6kpKlw0 Choice quote from the discussion on reddit: https://www.reddit.com/r/RealTesla/comments/abkk12/what_did_you_do_with_my_tesla_elon/ed11wgz/ https://www.reddit.com/r/RealTesla/comments/abkk12/what_did_... "The takeaway from this video, if no one has gotten the message by now, is that Tesla only cares about the sale of new Teslas, which it doesn't do very well. It does not care about selling used Tesla, servicing existing customers, or supplying parts to customers. Tesla made a shittier dealership and calls it innovation. It's hilarious that it is simultaneously waging war on the dealership laws while doing the dealership thing so poorly that it's like exhibit A in why dealership laws maybe aren't that bad. If Tesla were this bad at being a car company pre-dealership laws it would have been the reason they came into being in the first place."

The second line in the article: > Prices cut by $2,000 to partially offset shrinking tax credit. At that cost range I don’t know if I could ever know my customer well enough that I would be confident that a 3% price break would get more sales but what do I know. Also, this feels more like PR. What fraction of the cost of a Tesla is the battery pack? Weren’t those supposed to be getting cheaper due to all of the automation? When your costs decline you lower your prices, add more features or increase your margins.

mikestew 8y ago
At that cost range I don’t know if I could ever know my customer well enough that I would be confident that a 3% price break would get more sales but what do I know. Would I have purchased a Nissan Leaf eight years ago had it not been for the $7500 federal tax credit? Damned right, I would have. But since we're buying one anyway, I'm not turning down free money. My point is, I wonder if there ought to be a moratorium on tax credits for the first two years. The early adopters are going to buy one regardless, save the tax credits for those that are on the fence two years down the road. Of course the gaping hole in this plan is something, something Osborne Computers (in two years, it might not be better, but it'll be cheaper).
- cjhopman 8y ago
  The tax credits aren't for the consumer, they're for the manufacturer. > The early adopters are going to buy one regardless, Some of them will. The idea that there's isn't a demand curve for early adopters is insane.

qroshan 8y ago

Tesla is definitely hitting the demand ceiling. It's a good thing Musk isn't producing 10000 M3 per week. The current rate of ~4500 per week is enough to meet demand. In fact, expect continuous price drops from Tesla as it struggles to drum up enthusiasm

bryanlarsen 8y ago
Demand ceiling for the US or for the world? I suspect they've hit the former, but that there's a lot of demand in the latter.
- wnorris 8y ago
  The market for EVs is expanding. As Tesla starts shipping worldwide they will find the sweet spot for the US. Big takeaway here is they are very profitable producing at current rates. As they bring out new models they will continue to grow at 30-50% per year.
  - golfer 8y ago
    > "they are very profitable producing at current rates" You don't know that. They had one big, profitable, immaculate quarter in Q3 by pulling all demand forward and using every accounting trick in the book to show profit. There is no guarantee there will be another quarter like that. In fact, if Tesla's earnings history shows anything, it's that losses will be even bigger than before.
    - cjhopman 8y ago
      q3 was also helped by the fact that, despite increasing the total amount of tesla's sold by ~66%, they opened only 1.1% new service centers and only 3.2% new superchargers. The tesla experience is going to be incredibly degraded as time goes by.
    - qroshan 8y ago
      Bingo! Q3 and Q4 numbers should absolutely be taken with a grain of salt. It was a confluence of all positive points. a) Accounting b) Pent up demand for larger priced vehicles c) Peak Economy Going forward, a) Weakened Global Economy b) Everyone who is passionate about owning Tesla has bought one. Sustainable demand and profit will be clearer in 2019 Q2 and forward. I can make a public bet that it wouldn't be greater than $150 Million per quarter

wnorris 8y ago

The production and delivery numbers they came out with were very good and higher than most had expected. These numbers will allow them another profitable Q4 likely higher than their Q3 numbers. The price cuts are likely to impact margins, but is in line with what Tesla had done with the Model S and X as production efficiencies allow them to reduce manufacturing costs. The reaction looks like a big overreaction as the market is apt to do. Seems like there is a lot of Tesla hate on the internet for some odd reason these days.

golfer 8y ago
People are skeptical of Tesla because people are skeptical of Elon. His dozens of misleading statements and half-truths over the years have caught up with him.
- sandworm101 8y ago
  The pot smoking and twitter insults also dont help.
  - Derek_MK 8y ago
    Neither does the SEC investigation that got him for fraud EDIT: SEO > SEC - Context switching is hard
  - mulmen 8y ago
    I don’t really see the problem with the pot smoking honestly, why is anyone wound up about that? Do you care if he drinks or smokes cigarettes? What about his workout routine? Twitter insults aren’t impressive.
    - dsfyu404ed 8y ago
      Regardless of how you feel about smoking pot the CEO of a publicly traded company is expected to be prudent enough to avoid doing things that are federally illegal on camera with the beforehand knowledge that the footage will be made public. I personally don't care what Elon, or anyone does in his spare time but smoking pot on TV (or podcast, basically the same thing since both are going to be broadcast to viewers) shows a willingness to take risks with the wrong amount of upsides relative to their downsides and wall street doesn't like that.

pkaye 8y ago

Another thing is the pre 2017 car-pool stickers for electric cars are expiring in the bay area. The newer stickers have income caps of $150k (single filing) or $300k (joint filing). I wonder what the impact will be on Tesla? The first change helps them but the second hurts them.

saagarjha 8y ago
Wait, what? I was not aware of this. I guess driving in the carpool lane today was not a great idea…
- eclipxe 8y ago
  OP is incorrect.
  - saagarjha 8y ago
    Do you have more information about this change, or lack thereof?
    - popcorn49 8y ago
      https://www.mercurynews.com/2018/09/11/223654-solo-drivers-to-lose-carpool-stickers/ https://www.mercurynews.com/2018/09/11/223654-solo-drivers-t...
    - loosescrews 8y ago
      Green and white decals expired January 1st, 2019. Red decals, which were first issued in 2018, are still valid. Vehicles which were first issued decals in 2017 are eligible to upgrade to red decals. The current decals being issued are purple, but it is unclear if they are only for vehicles being issued decals for the first time or if they can be issued for upgrades requested now. https://www.dmv.ca.gov/portal/dmv/detail/vr/decal https://www.dmv.ca.gov/portal/dmv/detail/vr/decal
- pkaye 8y ago
  Looks like my understanding was not entirely correct but there is an income cap for the rebate. And clean air vehicles older than 2017 will lose car pool lane access. They change the sticker color to help identify.

andrewtbham 8y ago

This actually a price increase because of a loss of the federal tax credit... the title is bogus and should be changed imho. "Moving beyond the success of Q4, we are taking steps to partially absorb the reduction of the federal EV tax credit (which, as of January 1st, dropped from $7,500 to $3,750). Starting today, we are reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000." http://ir.tesla.com/news-releases/news-release-details/tesla-q4-2018-vehicle-production-deliveries-also-announcing-2000 http://ir.tesla.com/news-releases/news-release-details/tesla... Edit: the mods changed the title. thank you!

izacus 8y ago
In what way is it a price increase, why did Tesla count tax credits when advertising price in the first place? Isn't that dishonest, since the cars price tag was higher and the government gave them money?
- Operyl 8y ago
  It was pretty obviously stated on their quoting tools, imho.
- Retric 8y ago
  Government did not give Tesla the money. Tesla also makes the actual amount you need to pay very clear before you buy a car. Their website is closer to the Cable companies landing pages that don’t include all the fees, before showing you the actual price at checkout.
- jpollock 8y ago
  The purchaser factors the tax credit in, so the removal of the credit will have the same effect as an increase in price. The salesman will _definitely_ make the purchaser aware of the credit, in the same way that a mortgage broker makes you aware of the tax benefit on mortgage interest (in the US). That doesn't make them dishonest.
  - FireBeyond 8y ago

gok 8y ago

Seems like the bigger issue is that they once again missed their delivery targets, although only by a few percent this time.

mks_cam 8y ago
Is not the historical lesson thus far maybe that the market does not care about missing them as long as the general growth story is still there?
gwbas1c 8y ago
> few percent They missed by less than a percent. The miss isn't even statistically relevant.

adircasp 8y ago

just look at google trends, Model S/3/X still trending higher while I-pace pal plateaued

dmode 8y ago

"Automaker sold 63,150 Model 3 in the fourth quarter" - [and this is only in North America] What Tesla has achieved is truly unbelievable and it is kind of hilarious to see HN meltdown and Tesla bashing. To give you a perspective on how much of a gigantic scale this is, BMW only sold 99,000 3/4 series in the US in all on 2017 [1]. Tesla is a carmaker who only sold ~100 vehicles in 2011. It is amazing how much of Tesla's success is under-appreciated in this forum. [1] http://carsalesbase.com/us-car-sales-data/bmw/bmw-3-series-4-series/ http://carsalesbase.com/us-car-sales-data/bmw/bmw-3-series-4...

iseeyoubydesign 8y ago
"appreciated" ... its a company , its a business. I dont appreciate it because Im not a customer. I hope their customers do appreciate it, why buy their product otherwise. It seems like Tesla is either the inventor of the new wheel or an awful sweat shop for engineers. I happen to just think its a company that better make profit for its investors. And Elon is just another business man. How much more appreciation does Tesla deserve?
juhanima 8y ago
Nope, that's just the U.S. sales figures for BMW (says so in the link). You need to add the European sales of the 3-series (129,000) and 4-series (64,000) with the China figures (123,000) to get a bit closer to the global figure of 415,000 cars for both 3/4 series.
- dmode 8y ago
  Yes, you are right. Edited post
  - juhanima 8y ago
    Thanks! Tesla's progress sure has been impressive even with the correct figures.
- omarforgotpwd 8y ago
  Yes, but the Model 3 won't start selling in Europe and China until this quarter. Once that happens we can compare sales, but for now US is the only area where you can make a comparison.

adamqureshi 8y ago

Tesla is the ONLY player with a direct to consumer model. They are a native EV start up. All others right now are legacy car makers (non native) using the old franchise distribution model. Tesla OS is its bread and butter. They built the vehicle from scratch for EV. They effectively "PULLED" ever other car maker into the MIX. The legacy car makers had no other choice but to jump into the fray and take their chances.

anthonybsd 8y ago
>Tesla is the ONLY player with a direct to consumer model You are saying it like it's necessarily a good thing.
- iso1337 8y ago
  Not sure why the gp is being downvoted so much specifically in regards to the DTC comment. There was just a decently-sized HN thread about how the current non-direct to customer model is not the best for either the car buyer or the manufacturer. https://news.ycombinator.com/item?id=18790480 https://news.ycombinator.com/item?id=18790480
  - adamqureshi 8y ago
    Yeah. What gives.
- adamqureshi 8y ago
  A fundamental principle of competition is that consumers – not regulation – should determine what they buy and how they buy it. Consumers may benefit from the ability to buy cars directly from manufacturers – whether they are shopping for luxury cars or economy vehicles. The same competition principles should apply in either case. States should allow consumers to choose not only the cars they buy, but also how they buy them.
  - anthonybsd 8y ago
    First watch this: https://www.youtube.com/watch?v=H8ro6kpKlw0 https://www.youtube.com/watch?v=H8ro6kpKlw0 Choice quote from the discussion on reddit: https://www.reddit.com/r/RealTesla/comments/abkk12/what_did_you_do_with_my_tesla_elon/ed11wgz/ https://www.reddit.com/r/RealTesla/comments/abkk12/what_did_... "The takeaway from this video, if no one has gotten the message by now, is that Tesla only cares about the sale of new Teslas, which it doesn't do very well. It does not care about selling used Tesla, servicing existing customers, or supplying parts to customers. Tesla made a shittier dealership and calls it innovation. It's hilarious that it is simultaneously waging war on the dealership laws while doing the dealership thing so poorly that it's like exhibit A in why dealership laws maybe aren't that bad. If Tesla were this bad at being a car company pre-dealership laws it would have been the reason they came into being in the first place."