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I've heard some auto analysts suggesting that Tesla's trick to drop their car prices was not necessarily an act of desperation, as much as an action of opportun

I've heard some auto analysts suggesting that Tesla's trick to drop their car prices was not necessarily an act of desperation, as much as an action of opportunity. While all other car manufacturers are upping prices and increasing lead times, Tesla is taking advantage of this by having vehicles available and lowering prices in order to gain market-share in a time when other manufacturers are expecting and preparing for slower sales. If that was the strategy, then it looks like it is working exactly as planned.

miohtama 3y ago
Also Ford, And likely others, are selling their EVs for loss https://www.thestreet.com/technology/ford-loses-nearly-60000-for-every-electric-vehicle-sold https://www.thestreet.com/technology/ford-loses-nearly-60000... Of course this may change with the economics of scale, but looks like the scale is not there yet.
gnicholas 3y ago
To the extent that EVs last longer with very low maintenance costs, people will likely keep them even longer than they would keep other cars. And if Tesla can accelerate purchases of people who are considering getting an EV, they can drain the pool of potential EV buyers before other manufacturers are fully up and running. As a result, other manufacturers will have to anticipate lower sales numbers, which means they would set higher prices (because much of the cost is in tooling and other fixed costs of production). It could create a nasty situation for other manufacturers, especially those that are not large enough spread the costs of EV manufacturing across other successful product lines.
- op00to 3y ago
  Why would EVs last longer?
  - gnicholas 3y ago
    People would keep them longer if they don't have to do fairly expensive preventative maintenance on belts, transmission, etc. There is of course the battery to worry about, and it remains to be seen how this will play out over decades.
    - Grazester 3y ago
      Expensive maintenance in belts and transmissions? As in changing a belt and fluid? That should cost $300 tops for both. One done every 100k miles the other 50-100(Toyota recommends changing the fluid at that 90k intervals but it's preventative for me). Depending on the car(my Toyota) you can do both yourself on a Saturday evening for about $100
      - qup 3y ago
        Maybe the people are just too lazy to maintenance their vehicles. I'm going to be honest, I know maybe 500 people that I see regularly and know by name, and I bet about 9 of them have ever changed or thought about changing their transmission fluid. I know ~6 mechanics.
      - argiopetech 3y ago
        That's because you drive a nice, sensible car. Volkswagen (particularly diesel) timing belts are a royal pain and run closer to $1500 at a dealer. More if you do the water pump while you're in there (and it's typically the reason you're doing the job in the first place).
- jacurtis 3y ago
  Whether EVs last longer is yet to be seen. The batteries are a huge flaw in their ability to last long term. Replacing the batteries are likely a $10k+ cost, meaning that as cars get older it may not be worth doing. Imagine having a car worth $8k because it is 10 years old and needing to spend $10k on it to update the batteries. Would it make sense? Or would you just buy a car worth $18k instead? People willing to drop that on a "repair" would probably rather buy upmarket instead. Which leaves a lot of older EVs driving around with potentially really poor ranges and clogging up charger networks. We will have to see how it plays out. But they are lower maintenance.
  - gnicholas 3y ago
    I imagine people will use cars with lower range as second vehicles. You’re not going to take it on a road trip, but it’s still good enough for driving around town.
  - bryanlarsen 3y ago
    There are now Tesla's driving around with 300,000 miles on their original battery. You should be fairly confident of getting 200,000 miles out of a Tesla battery, which is about as much as you can expect from any car. You can hope for more, but you can't expect more. If you are really concerned about battery life, get a vehicle with an LFP battery. Those are estimated to have a 750,000 mile life.
    - theturtletalks 3y ago
      That’s not exactly a fair comparison. My car can have 200K miles, but when I fill it up, I still get the same mileage. A worn down battery loses capacity with each charge and I’d be curious to see the milage per charge past a certain amount of cycles.
      - bryanlarsen 3y ago
        > but when I fill it up, I still get the same mileage. Really? I've never seen a 200,000 mile car with the same power or mileage as a brand new car -- the tolerances are not as tight. The loss might not be as dramatic as seen on a battery, but it's usually >5%.
kitsunesoba 3y ago
That would make a lot of sense to me. I'm not quite ready to commit yet, but I've been looking into leasing an EV on and off for a while and availability is spotty for the more interesting models, and that's to say nothing of dealer markup. Competing EVs have several things that depending on the driver make them more compelling than the options offered by Tesla, but I'd bet that a lot of people are willing to compromise if it means getting a car with the price and specs closer to what they're looking for now instead of weeks or months out.
tempfortwitt90 3y ago
My gf wanted to buy a hybrid Toyota RAV4. Hard to find, little choice of incoming units, and they want $5k over MSRP. She was very hesitant to get a full EV. But now seeing how dealers want over MSRP on the RAV4... She's 95% sold on the Model 3.
- websap 3y ago
  Its not even a comparison when it comes to driving experience. I dislike how minimalist the interiors of Teslas are, but they are so fun to drive. The Model 3 especially!
  - tempfortwitt90 3y ago
    She just wants a decent commuter that's safe and looks upmarket enough for her.
7e 3y ago
Then why did Tesla jack up prices so much over the last few years? All part of the plan to gain market share? Tesla inventory is at an all-time high. This seems a demand issue.
- bryanlarsen 3y ago
  Does anybody sell more than 2 million >$70,000 vehicles a year? Tesla wants to sell 2 million cars this year and 3 million next year. The total market size for premium vehicles is only so big.
- symbolicAGI 3y ago
  Tesla raised prices in order to reduce the time between order and delivery when customer demand got too hot. Raising prices also improved profit margins during a time of rapid capital spending. Now customer demand has cooled with the international economic slowdown, and lowering prices increases the time between order and delivery as more customers are enticed to order.
  - 93po 3y ago
    Also to add, Elon/Tesla is 100% transparent about pricing strategies, and it's exactly this. Other manufacturers obscure this behind dealership models, Tesla does it out in the open.
thechao 3y ago
When my Kia went tits up I called every dealer I could (except Tesla) to try to get a car immediately. They all had months-long lead times. Tesla? I downloaded the app and bought the car as an in app purchase; 7 days later I picked up the car from the lot & left. If I'd been willing to settle for a white 7-seater, I'd've been able to pick it up same day. What's the point of being a car dealer if you can't sell me a car!?
- itsoktocry 3y ago
  Interesting anecdote, but, uh, there were points where people were waiting for months to get their Tesla.
  - ranguna 3y ago
    Interesting observation, but, uh, now they don't. Not to mention that you still have to wait months for the majority of other car dealers.
- twelve40 3y ago
  I hate dealers as much as anyone else, but isn't that a supply problem, not a dealers problem? Also varying with time depending on supply and demand?
itsoktocry 3y ago
>While all other car manufacturers are upping prices and increasing lead times, Tesla is taking advantage of this by having vehicles available and lowering prices in order to gain market-share in a time when other manufacturers are expecting and preparing for slower sales. Why does everyone think that everything Elon does is 4D chess? Read the above back to yourself: The legacy autos are choosing to raise prices and lengthen lead times, while Tesla is choosing to lower prices and shorten lead times. It's that simple! Do you think there's more to it than "choosing" to do these things?

miohtama 3y ago

Also Ford, And likely others, are selling their EVs for loss https://www.thestreet.com/technology/ford-loses-nearly-60000-for-every-electric-vehicle-sold https://www.thestreet.com/technology/ford-loses-nearly-60000... Of course this may change with the economics of scale, but looks like the scale is not there yet.

gnicholas 3y ago

To the extent that EVs last longer with very low maintenance costs, people will likely keep them even longer than they would keep other cars. And if Tesla can accelerate purchases of people who are considering getting an EV, they can drain the pool of potential EV buyers before other manufacturers are fully up and running. As a result, other manufacturers will have to anticipate lower sales numbers, which means they would set higher prices (because much of the cost is in tooling and other fixed costs of production). It could create a nasty situation for other manufacturers, especially those that are not large enough spread the costs of EV manufacturing across other successful product lines.

op00to 3y ago
Why would EVs last longer?
- gnicholas 3y ago
  People would keep them longer if they don't have to do fairly expensive preventative maintenance on belts, transmission, etc. There is of course the battery to worry about, and it remains to be seen how this will play out over decades.
  - Grazester 3y ago
    Expensive maintenance in belts and transmissions? As in changing a belt and fluid? That should cost $300 tops for both. One done every 100k miles the other 50-100(Toyota recommends changing the fluid at that 90k intervals but it's preventative for me). Depending on the car(my Toyota) you can do both yourself on a Saturday evening for about $100
    - qup 3y ago
      Maybe the people are just too lazy to maintenance their vehicles. I'm going to be honest, I know maybe 500 people that I see regularly and know by name, and I bet about 9 of them have ever changed or thought about changing their transmission fluid. I know ~6 mechanics.
    - argiopetech 3y ago
      That's because you drive a nice, sensible car. Volkswagen (particularly diesel) timing belts are a royal pain and run closer to $1500 at a dealer. More if you do the water pump while you're in there (and it's typically the reason you're doing the job in the first place).
jacurtis 3y ago
Whether EVs last longer is yet to be seen. The batteries are a huge flaw in their ability to last long term. Replacing the batteries are likely a $10k+ cost, meaning that as cars get older it may not be worth doing. Imagine having a car worth $8k because it is 10 years old and needing to spend $10k on it to update the batteries. Would it make sense? Or would you just buy a car worth $18k instead? People willing to drop that on a "repair" would probably rather buy upmarket instead. Which leaves a lot of older EVs driving around with potentially really poor ranges and clogging up charger networks. We will have to see how it plays out. But they are lower maintenance.
- gnicholas 3y ago
  I imagine people will use cars with lower range as second vehicles. You’re not going to take it on a road trip, but it’s still good enough for driving around town.
- bryanlarsen 3y ago
  There are now Tesla's driving around with 300,000 miles on their original battery. You should be fairly confident of getting 200,000 miles out of a Tesla battery, which is about as much as you can expect from any car. You can hope for more, but you can't expect more. If you are really concerned about battery life, get a vehicle with an LFP battery. Those are estimated to have a 750,000 mile life.
  - theturtletalks 3y ago
    That’s not exactly a fair comparison. My car can have 200K miles, but when I fill it up, I still get the same mileage. A worn down battery loses capacity with each charge and I’d be curious to see the milage per charge past a certain amount of cycles.
    - bryanlarsen 3y ago
      > but when I fill it up, I still get the same mileage. Really? I've never seen a 200,000 mile car with the same power or mileage as a brand new car -- the tolerances are not as tight. The loss might not be as dramatic as seen on a battery, but it's usually >5%.

kitsunesoba 3y ago

That would make a lot of sense to me. I'm not quite ready to commit yet, but I've been looking into leasing an EV on and off for a while and availability is spotty for the more interesting models, and that's to say nothing of dealer markup. Competing EVs have several things that depending on the driver make them more compelling than the options offered by Tesla, but I'd bet that a lot of people are willing to compromise if it means getting a car with the price and specs closer to what they're looking for now instead of weeks or months out.

tempfortwitt90 3y ago

My gf wanted to buy a hybrid Toyota RAV4. Hard to find, little choice of incoming units, and they want $5k over MSRP. She was very hesitant to get a full EV. But now seeing how dealers want over MSRP on the RAV4... She's 95% sold on the Model 3.

websap 3y ago
Its not even a comparison when it comes to driving experience. I dislike how minimalist the interiors of Teslas are, but they are so fun to drive. The Model 3 especially!
- tempfortwitt90 3y ago
  She just wants a decent commuter that's safe and looks upmarket enough for her.

7e 3y ago

Then why did Tesla jack up prices so much over the last few years? All part of the plan to gain market share? Tesla inventory is at an all-time high. This seems a demand issue.

bryanlarsen 3y ago
Does anybody sell more than 2 million >$70,000 vehicles a year? Tesla wants to sell 2 million cars this year and 3 million next year. The total market size for premium vehicles is only so big.
symbolicAGI 3y ago
Tesla raised prices in order to reduce the time between order and delivery when customer demand got too hot. Raising prices also improved profit margins during a time of rapid capital spending. Now customer demand has cooled with the international economic slowdown, and lowering prices increases the time between order and delivery as more customers are enticed to order.
- 93po 3y ago
  Also to add, Elon/Tesla is 100% transparent about pricing strategies, and it's exactly this. Other manufacturers obscure this behind dealership models, Tesla does it out in the open.

thechao 3y ago

When my Kia went tits up I called every dealer I could (except Tesla) to try to get a car immediately. They all had months-long lead times. Tesla? I downloaded the app and bought the car as an in app purchase; 7 days later I picked up the car from the lot & left. If I'd been willing to settle for a white 7-seater, I'd've been able to pick it up same day. What's the point of being a car dealer if you can't sell me a car!?

itsoktocry 3y ago
Interesting anecdote, but, uh, there were points where people were waiting for months to get their Tesla.
- ranguna 3y ago
  Interesting observation, but, uh, now they don't. Not to mention that you still have to wait months for the majority of other car dealers.
twelve40 3y ago
I hate dealers as much as anyone else, but isn't that a supply problem, not a dealers problem? Also varying with time depending on supply and demand?

itsoktocry 3y ago

>While all other car manufacturers are upping prices and increasing lead times, Tesla is taking advantage of this by having vehicles available and lowering prices in order to gain market-share in a time when other manufacturers are expecting and preparing for slower sales. Why does everyone think that everything Elon does is 4D chess? Read the above back to yourself: The legacy autos are choosing to raise prices and lengthen lead times, while Tesla is choosing to lower prices and shorten lead times. It's that simple! Do you think there's more to it than "choosing" to do these things?