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I do not follow tesla that closely, but do they not work hard on lowering the manufacturing price (fewer parts, creating batteri themselves) do that they can s

by sisve 3y ago

I do not follow tesla that closely, but do they not work hard on lowering the manufacturing price (fewer parts, creating batteri themselves) do that they can sell at a lower price, and if they can sell and still make money but the competitors have to either sell with a loss or have highere prices?

dkrich 3y ago
I think their strategy is to charge the highest prices they can, early adopters pay up, demand gets exhausted and they have to keep the illusion alive that supply is the growth constraint, not demand. Demand falling is a death knell for them so that is one thing they absolutely must avoid at all costs. They want people to believe that the demand is a foregone conclusion and they need to build more factories to satisfy it. But clearly they are trying to maximize the profit. Of course they would like to lower their costs in pursuit of that but it’s not to charge the least they can, otherwise they’d have led with a compact EV instead of an $80k luxury sedan.
- kortilla 3y ago
  I’m struggling to understand what insight you think you are providing. Tesla had a very explicit plan for a long time to make high margin luxury cars and keep scaling up production to make cheaper and cheaper cars to make electric cars dominate. Lowering prices isn’t some sign of “struggling to hold on”.
  - Retric 3y ago
    Lowering prices for same product is very different from lowering prices of a new product. This is why Luxury brands are normally split off into different sales channels.
  - solarkraft 3y ago
    The insight is that they may intentionally be propagating the "supply limited" story despite it not being true. I believed it (while thinking "but why? the chinese seem to have none of these problems").
  - dkrich 3y ago
    They are lowering prices because demand is falling off. And it's not just one price reduction. They have done multiple at this point. It's one of the worst positions for a company to be in.
    - sisve 3y ago
      Lowering their cost makes Tesla in a position to lower they prices if they want to. Lowering prices because the demand is low is OK if you have better margin then you competitors and as far as I can tell they are making more money per car. Its natural that they decrease prices to sell more. But as long as they are making money on each car and is taking more and more market share I think they are happy.
numpad0 3y ago
Toyota has a 3000M/year across-company cost reduction target. It's Tesla who has to keep up with that, normalized by production figures. Not the other way around. Else bZ4X will start making more sense(or RAV4 for that matter) and they'll be out of market.
- sisve 3y ago
  Not sure I understand you argument here. Toyota is way bigger then tesla. A quick Google search [1] shows that tesla makes 8x of what Toyota is making pr car. (Des 2022) [1] https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-times-more-per-car-than-Toyota-earnings-show https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-t...
jwestbury 3y ago
Without any real substantive changes to the vehicles, Tesla's prices rose as much as 50% (for the Model X) from 2021-2023. Even the Model 3 has increased by about 25%. You can make inflation arguments, but it's pretty hard to claim that Tesla is driving prices down. (Prices have come down in 2023, but it's too early to know if this change is sticky. The reality is, most observers think Tesla uses price to regulate demand - so dropping price could just well mean less people want Teslas than before.)
- sisve 3y ago
  Your right, maybe my formulation was a bit clumsy. I'm not arguing that Tesla is driving the price down for consumers (more then necessary). I agree that they use price to regulate demand. But they want to sell as much as they can. So if the price is too high they will not sell out all cars. And they can afford to lower prices more then many of their competitors because they earn more per unit sold then the rest of the field [source: https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-times-more-per-car-than-Toyota-earnings-show https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-t... ]

by sisve 3y ago

dkrich 3y ago

I think their strategy is to charge the highest prices they can, early adopters pay up, demand gets exhausted and they have to keep the illusion alive that supply is the growth constraint, not demand. Demand falling is a death knell for them so that is one thing they absolutely must avoid at all costs. They want people to believe that the demand is a foregone conclusion and they need to build more factories to satisfy it. But clearly they are trying to maximize the profit. Of course they would like to lower their costs in pursuit of that but it’s not to charge the least they can, otherwise they’d have led with a compact EV instead of an $80k luxury sedan.

kortilla 3y ago
I’m struggling to understand what insight you think you are providing. Tesla had a very explicit plan for a long time to make high margin luxury cars and keep scaling up production to make cheaper and cheaper cars to make electric cars dominate. Lowering prices isn’t some sign of “struggling to hold on”.
- Retric 3y ago
  Lowering prices for same product is very different from lowering prices of a new product. This is why Luxury brands are normally split off into different sales channels.
- solarkraft 3y ago
  The insight is that they may intentionally be propagating the "supply limited" story despite it not being true. I believed it (while thinking "but why? the chinese seem to have none of these problems").
- dkrich 3y ago
  They are lowering prices because demand is falling off. And it's not just one price reduction. They have done multiple at this point. It's one of the worst positions for a company to be in.
  - sisve 3y ago
    Lowering their cost makes Tesla in a position to lower they prices if they want to. Lowering prices because the demand is low is OK if you have better margin then you competitors and as far as I can tell they are making more money per car. Its natural that they decrease prices to sell more. But as long as they are making money on each car and is taking more and more market share I think they are happy.

numpad0 3y ago

Toyota has a 3000M/year across-company cost reduction target. It's Tesla who has to keep up with that, normalized by production figures. Not the other way around. Else bZ4X will start making more sense(or RAV4 for that matter) and they'll be out of market.

sisve 3y ago
Not sure I understand you argument here. Toyota is way bigger then tesla. A quick Google search [1] shows that tesla makes 8x of what Toyota is making pr car. (Des 2022) [1] https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-times-more-per-car-than-Toyota-earnings-show https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-t...

jwestbury 3y ago

Without any real substantive changes to the vehicles, Tesla's prices rose as much as 50% (for the Model X) from 2021-2023. Even the Model 3 has increased by about 25%. You can make inflation arguments, but it's pretty hard to claim that Tesla is driving prices down. (Prices have come down in 2023, but it's too early to know if this change is sticky. The reality is, most observers think Tesla uses price to regulate demand - so dropping price could just well mean less people want Teslas than before.)

sisve 3y ago
Your right, maybe my formulation was a bit clumsy. I'm not arguing that Tesla is driving the price down for consumers (more then necessary). I agree that they use price to regulate demand. But they want to sell as much as they can. So if the price is too high they will not sell out all cars. And they can afford to lower prices more then many of their competitors because they earn more per unit sold then the rest of the field [source: https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-times-more-per-car-than-Toyota-earnings-show https://asia.nikkei.com/Business/Automobiles/Tesla-earns-5-t... ]