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This is an interesting price drop. One of the key value proposition of Tesla is unique among car companies in terms of the premium it can charge. This has kep

This is an interesting price drop. One of the key value proposition of Tesla is unique among car companies in terms of the premium it can charge. This has kept $TLSA so high. This is why it has been so highly valued in comparison to say Toyota. If for some reason they need to start discounting their cars in order to move them, it means that they may be losing this premium, which could permanently affect their long-term stock price. The question is why would that premium now be dissipating? Why is Tesla just becoming another car company? Because of competition finally catching up? Because of the macro-economic factors? Because of Elon Musk's reputation hit because of the twitter mess? How much can we attribute to each factor?

ajross 4y ago
I think that's all needlessly complicated. This is just market economics 101. There was a huge boom in demand over the past two years (used Teslas were literally selling for more than new ones because they had "stock"!) and the price rose to catch up. Now the economy is cooling and inventories are rising, so the price is dropping. FWIW: the same Model Y configuration that I purchased in early 2021 is still $1000 more than the price I paid (actually quite a bit more if you buy FSD, which is $5k more than it was on mine). It's not like these are fire sale prices. They got very expensive very fast, and that's being unwound just as fast.
- bhouston 4y ago
  > Now the economy is cooling and inventories are rising, so the price is dropping. US car sales are not dropping across the board, it is specific to Tesla. New car sales volume in $ has been consistent since September 2021. https://ycharts.com/indicators/us_total_vehicle_sales https://ycharts.com/indicators/us_total_vehicle_sales > the same Model Y configuration that I purchased in early 2021 is still $1000 more than the price I paid That is lower than inflation for the car industry in general, which is somewhere around 7%. So Tesla prices are dropping relative to the car industry in general. This is interesting and reinforcing that something is going on.
  - ajross 4y ago
    Not sure that's responsive? Tesla production has been growing 40-50% per year, so flat sales would absolutely be expected to produce huge inventory shortfalls. In fact Tesla sales aren't flat, but the factories did for sure get ahead of sales. Again, you're reading tea leaves here. There's nothing weird about this at all. It's a high demand product in a volatile sales environment and it's modulating prices (in both directions) to try to keep demand and supply even. This happens everywhere, it's not special just because the CEO is a hate magnet.
    - bhouston 4y ago
      It is pretty clear what is happening: Tesla captured 72% of EV sales in 2021. But only 65% of EV sales in 2022, and it dropped to just 58% in Q2 of 2022. So Tesla's market share is dropping pretty rapidly in comparison to its EV competitors. https://www.barrons.com/articles/tesla-lost-market-share-in-q4-51673810443 https://www.barrons.com/articles/tesla-lost-market-share-in-... "Tesla grew 40% in 2022 — selling 1.3 million cars — falling short of the EV industry growth and below its 50% growth target." https://www.forbes.com/sites/petercohan/2023/01/15/how-elon-musk-is-trimming-tesla-margins-and-ceding-market-share-to-ford/?sh=5224285b3528 https://www.forbes.com/sites/petercohan/2023/01/15/how-elon-... Right now it is in the stage where the competitors take big shares out of the market at Tesla's expensive now that there are serious competitors to Tesla both in North America and in China. Not sure when we get to a new equilibrium here.
    - holy_eggplants 4y ago
      There is nothing weird about a car in the luxury space dropping its prices 20% overnight? Are there other examples of cars (in the same price range, volume levels) doing this? Is it that common? Are you implying all price fluctuations are uninteresting because they are all a matter of matching supply with demand?
      - ajross 4y ago
        Luxury car prices jump around like crazy. Go call five dealers and get quotes on the same BMW. Turn on your TV in the holiday season and try to dodge all the "Lexus Holiday Sales Event" ads. Yeah, this absolutely happens all the time. It just doesn't reinforce your priors when someone gets a deal on a Porsche.
- manmal 4y ago
  Assuming (naively) that you paid 50k for your configuration, and it’s now 1k higher, then the increase is 2%. That’s way below inflation.
holy_eggplants 4y ago
Another important factor for the premiums (both for car price and stock price) may be FSD. If we were guaranteed that FSD would never happen, the stock price would suffer more than the unit economics, but both would suffer. (I think!) But who knows, this is all armchair quarterbacking.

ajross 4y ago

I think that's all needlessly complicated. This is just market economics 101. There was a huge boom in demand over the past two years (used Teslas were literally selling for more than new ones because they had "stock"!) and the price rose to catch up. Now the economy is cooling and inventories are rising, so the price is dropping. FWIW: the same Model Y configuration that I purchased in early 2021 is still $1000 more than the price I paid (actually quite a bit more if you buy FSD, which is $5k more than it was on mine). It's not like these are fire sale prices. They got very expensive very fast, and that's being unwound just as fast.

bhouston 4y ago
> Now the economy is cooling and inventories are rising, so the price is dropping. US car sales are not dropping across the board, it is specific to Tesla. New car sales volume in $ has been consistent since September 2021. https://ycharts.com/indicators/us_total_vehicle_sales https://ycharts.com/indicators/us_total_vehicle_sales > the same Model Y configuration that I purchased in early 2021 is still $1000 more than the price I paid That is lower than inflation for the car industry in general, which is somewhere around 7%. So Tesla prices are dropping relative to the car industry in general. This is interesting and reinforcing that something is going on.
- ajross 4y ago
  Not sure that's responsive? Tesla production has been growing 40-50% per year, so flat sales would absolutely be expected to produce huge inventory shortfalls. In fact Tesla sales aren't flat, but the factories did for sure get ahead of sales. Again, you're reading tea leaves here. There's nothing weird about this at all. It's a high demand product in a volatile sales environment and it's modulating prices (in both directions) to try to keep demand and supply even. This happens everywhere, it's not special just because the CEO is a hate magnet.
  - bhouston 4y ago
    It is pretty clear what is happening: Tesla captured 72% of EV sales in 2021. But only 65% of EV sales in 2022, and it dropped to just 58% in Q2 of 2022. So Tesla's market share is dropping pretty rapidly in comparison to its EV competitors. https://www.barrons.com/articles/tesla-lost-market-share-in-q4-51673810443 https://www.barrons.com/articles/tesla-lost-market-share-in-... "Tesla grew 40% in 2022 — selling 1.3 million cars — falling short of the EV industry growth and below its 50% growth target." https://www.forbes.com/sites/petercohan/2023/01/15/how-elon-musk-is-trimming-tesla-margins-and-ceding-market-share-to-ford/?sh=5224285b3528 https://www.forbes.com/sites/petercohan/2023/01/15/how-elon-... Right now it is in the stage where the competitors take big shares out of the market at Tesla's expensive now that there are serious competitors to Tesla both in North America and in China. Not sure when we get to a new equilibrium here.
  - holy_eggplants 4y ago
    There is nothing weird about a car in the luxury space dropping its prices 20% overnight? Are there other examples of cars (in the same price range, volume levels) doing this? Is it that common? Are you implying all price fluctuations are uninteresting because they are all a matter of matching supply with demand?
    - ajross 4y ago
      Luxury car prices jump around like crazy. Go call five dealers and get quotes on the same BMW. Turn on your TV in the holiday season and try to dodge all the "Lexus Holiday Sales Event" ads. Yeah, this absolutely happens all the time. It just doesn't reinforce your priors when someone gets a deal on a Porsche.
manmal 4y ago
Assuming (naively) that you paid 50k for your configuration, and it’s now 1k higher, then the increase is 2%. That’s way below inflation.

holy_eggplants 4y ago

Another important factor for the premiums (both for car price and stock price) may be FSD. If we were guaranteed that FSD would never happen, the stock price would suffer more than the unit economics, but both would suffer. (I think!) But who knows, this is all armchair quarterbacking.