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I'm skeptical that anyone can make 20m cars a year. It also doesnt surprise me that Teslas margins have shrank, I think the price of their vehicles is rendered
by Aloha 4y ago
I'm skeptical that anyone can make 20m cars a year. It also doesnt surprise me that Teslas margins have shrank, I think the price of their vehicles is rendered somewhat inelastic because of the preorder-purchase contract system they use. The vehicle price is more or less fixed at the time of order based on my understanding, and while they can retroactively increase prices, it will likely result in abandonment of the order.
- kbenson 4y ago> I'm skeptical that anyone can make 20m cars a year. There's just over 30m seconds in a year, that's a car every second and a half. That seems like it would take a lot of assembly lines to pull off ignoring other constraints. On the other hand, at 184.8″ for a model 3, that's like a stream of them bumper to bumper leaving a single assembly line at 6.65 Mph for the entire year. Viewed in that light, maybe it doesn't take that many assembly lines to reach a speed at which this would be achievable, ignoring other very important constraints. (Or maybe I made a mistake in my math.)
- Aloha 4y agoThe level of market displacement is pretty huge - its not clear to me that its possible for that to happen. The market for vehicles is pretty inelastic, like, you cant grow your way there in an organic way.
- kbenson 4y agoI agree, I was trying to examine how plausible it was from a very simplistic model, which is why I said "ignoring other very important constraints". It sounded implausible on the face of it, as it might require cars to be leaving the assembly line at freeway speeds, but it wasn't quite that bad in reality. There are plenty of other things which make it very unlikely/implausible though, such as market demand, as you note.