4 ms·

Not sure why this is a surprise - they cut margin (by reducing prices) to maintain share.

mvdtnz 3y ago
I searched the article and the comment section for "surprise" and couldn't find anything. What makes you think anyone was surprised by this?
- ksherlock 3y ago
  If you search the headline you'll find the word "expected".
cantaloupe 3y ago
I’m far from a financial analyst myself, but I’m pretty sure the people who come up with the “expected” numbers are financial analysts who would be well aware of Tesla’s public pricing changes. So a better way of looking at is that people with a vested interest in correctly estimating earnings based on all available knowledge were surprised to the downside.
- DoesntMatter22 3y ago
  That basically sums it up. Year over year their sales are way up but people who guessed (overoptimistically) what the number is are disappointed. Overall the company is doing great but interest rates really are killing any sort of purchase like this right now.
  - pclmulqdq 3y ago
    If you take an ensemble average of the estimates over all companies and all quarters, they do a pretty good job. Tesla just underperformed the market.
FireBeyond 3y ago
Generally the goal there is to equal out by increasing volume. Decreasing prices and not making up for it is kinda an oops. And "less than expected" - I mean, people are not unaware of the price reductions, so that says there was some failure along the way.
- wolverine876 3y ago
  > Generally the goal there is to equal out by increasing volume. The economics are a bit trickier: For any good or service, the demand curve is curved; it's not x * y = R, where R is some fixed revenue number. If you think about it, of course you can affect revenue by changing the price. Otherwise Tesla could charge $1 or $1,000,000 per car and bring in the same revenue and profit. On the curve there's an optimal point where volume * price = maximum marginal profit. The Tesla VP of sales chose the best point that they thought was possible, and it turned out to not work. Now they have shifted to a less potentially profitable point. To sum up: Tesla probably is less profitable at this price point than they planned on for the former price point.

I searched the article and the comment section for "surprise" and couldn't find anything. What makes you think anyone was surprised by this?

ksherlock 3y ago
If you search the headline you'll find the word "expected".

cantaloupe 3y ago

I’m far from a financial analyst myself, but I’m pretty sure the people who come up with the “expected” numbers are financial analysts who would be well aware of Tesla’s public pricing changes. So a better way of looking at is that people with a vested interest in correctly estimating earnings based on all available knowledge were surprised to the downside.

DoesntMatter22 3y ago
That basically sums it up. Year over year their sales are way up but people who guessed (overoptimistically) what the number is are disappointed. Overall the company is doing great but interest rates really are killing any sort of purchase like this right now.
- pclmulqdq 3y ago
  If you take an ensemble average of the estimates over all companies and all quarters, they do a pretty good job. Tesla just underperformed the market.

FireBeyond 3y ago

Generally the goal there is to equal out by increasing volume. Decreasing prices and not making up for it is kinda an oops. And "less than expected" - I mean, people are not unaware of the price reductions, so that says there was some failure along the way.

wolverine876 3y ago
> Generally the goal there is to equal out by increasing volume. The economics are a bit trickier: For any good or service, the demand curve is curved; it's not x * y = R, where R is some fixed revenue number. If you think about it, of course you can affect revenue by changing the price. Otherwise Tesla could charge $1 or $1,000,000 per car and bring in the same revenue and profit. On the curve there's an optimal point where volume * price = maximum marginal profit. The Tesla VP of sales chose the best point that they thought was possible, and it turned out to not work. Now they have shifted to a less potentially profitable point. To sum up: Tesla probably is less profitable at this price point than they planned on for the former price point.