More Tesla price cuts === cheaper Cybertruck (6 oct)

[Gurule92]

Teslas pricing has never been about achieving a certain margin… It is set by market value. Which is why it starts high then gets progressively lowered to increase demand when supply can accommodate.

It’s in the master plan. Start high then bring price down with efficiencies of scale.

The reason Tesla price is so high is because that is the market clearing price for the demand they can supply at that price.

Margin is inconsequential to the decision process for Tesla currently. Margins are merely a consequence of their pricing decisions not a driver of them. They could halve their profit margins if necessary to drive demand.

Why don’t they have lower prices? What is the issue with a long waitlist?

Idk what most of this was responding too. Feels like you are agreeing with me in an argument form?

In case you are talking about something else, I will try to respond? lol

The meat of my post was saying that tesla wasnt lowering prices due to demand issues. And that they dont entirely base their prices on demand. Example of model 3 production hell was provided. Huge demand, low supply, normal prices.

But the problem with a long wait list is, the longer people wait the less likely they are to commit to the purchase.

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[Deleted member 3316]

Thanks TBONO for another excellent post.

For example many people spending $50,000 on the EV are coming from a $35,000 ice car and will pay the difference (as TCO makes it similar) so that market is much bigger

For those of you not following this is the representation of a market clearing pricing strategy highlighting the market value of a superior value proposition. Tesla is aiming to price at $35k but they don’t….

Why? (Hint: It has nothing to do with margins.)

 

[Deleted member 3316]

Idk what most of this was responding too. Feels like you are agreeing with me in an argument form?

In case you are talking about something else, I will try to respond? lol

Yes, you and I agree on many points. It just that I’m abrasive in my phrasing and annoyed at my inability articulate.

There is nuance in my disagreement and I don’t adequately acknowledge the validity of others posts. Trying to be better at it but it does make the posts even longer.

The meat of my post was saying that tesla wasnt lowering prices due to demand issues. And that they dont entirely base their prices on demand. Example of model 3 production hell was provided. Huge demand, low supply, normal prices.

Whilst this is correct in the sense Tesla does not have any issue with desire of their products, demand is a function of a customer’s ability to afford it. Tesla is addressing demand problems at certain price thresholds. (That’s just basic economics, not a reflection on Tesla)

But the problem with a long wait list is, the longer people wait the less likely they are to commit to the purchase.

There is someone else in line to soak up their supply. Why is it a problem for Tesla if someone doesn’t commit to the purchase?

Commitment to the purchase is not the issue keeping prices higher.

 

[Gurule92]

There is someone else in line to soak up their supply. Why is it a problem for Tesla if someone doesn’t commit to the purchase?

Commitment to the purchase is not the issue keeping prices higher.

There is no way Tesla is happy when the line gets huge. Part of being a company is getting customers your products. I wasn't saying commitment to purchase was keeping prices high though. I was saying that the increase in production output is what is keeping the line short because someone else said we can Guage demand by the length of the wait to get a car.

 

[Crissa]

I am in the first 1400 units that will ever ship and will pay for whatever is available and whatever they offer at whatever price. I’m sure I am not alone and I imagine Tesla will not be offering me a $50,000 option : it’ll likely be in $80,000 plus option until supply builds.

You're right, supply will be limited - but raising the price won't change immediate demand. Demand is baked into the reservation list.

But if they do massively raise the price, that list will erode, the expectation will be set in public view that the Cybertruck is too expensive, and that will damage future demand. Massively.

-Crissa

 

[Deleted member 3316]

There is no way Tesla is happy when the line gets huge. Part of being a company is getting customers your products. I wasn't saying commitment to purchase was keeping prices high though. I was saying that the increase in production output is what is keeping the line short because someone else said we can Guage demand by the length of the wait to get a car.

Ok, we’re almost there.

Demand is essentially infinite for Tesla because they can just lower the price. Their margins are huge.

Why is the line a problem for Tesla?
What does it indicate?
What are the compounding consequences in the 2nd hand market and an overly long line?

 

[Gurule92]

Ok, we’re almost there.

Demand is essentially infinite for Tesla because they can just lower the price. Their margins are huge.

Tesla doesnt have infinite demand because of their ability to lower prices.

Why is the line a problem for Tesla?
What does it indicate?
What are the compounding consequences in the 2nd hand market and an overly long line?

A super long line is a problem because for every person that buys a non-tesla ev and gets out of line because of the wait may never come back. Losing a customer is losing a customer, no matter how many are ready to take that spot.

You're trying to pull me away from the actual conversation that my comment was about lol. I was telling someone that the line is not a good indicator of demand when production is increasing.

The compounding consequences on the EV market as a whole are more people looking elsewhere, like the people on here who bought rivians and lightnings. There are for sure some people (not the ones here) who will not get a CT because theyre happy with those vehicles. I'm sure the same has happened during waits for other Teslas.

If you're trying to get me to say that longer wait means higher 2nd hand market prices, it's a possibility but I think it's more likely going to get people on other brands.

 

[SparkChaser]

They are also buying 3s,Ys and even Xs. Take a walk into the Tesla showroom, I was in one at the mall, there was also a Lucid showroom, just not very busy. If I really needed a vehicle and know it would be 3-4 years to get a CT I would totally buy a 3 or Y.

 

[Deleted member 3316]

Tesla doesnt have infinite demand because of their ability to lower prices.

Elon disagrees with you.

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"demand for our existing vehicles in terms of the desire to own them might as well be infinite. It's indistinguishable from infinite at this point. Affordability is what matters, as you get the car more affordable, demand will go crazy - basically."​

​

A super long line is a problem because for every person that buys a non-tesla ev and gets out of line because of the wait may never come back. Losing a customer is losing a customer, no matter how many are ready to take that spot.

Elon disagrees with you in this also.

​

“If somebody makes better cars than we do, then-- and they then sell more cars than we do, I think that's totally fine. Our intent with Tesla was always that we would serve as an example to the car industry and that-- and hope that they also make electric cars so that we can accelerate the transition to sustainable energy.”​

You're trying to pull me away from the actual conversation that my comment was about lol. I was telling someone that the line is not a good indicator of demand when production is increasing.

Correct, the line is an indicator the price is set too far below market clearance. I’m trying to direct you to the logical consequences of a long line.

If you're trying to get me to say that longer wait means higher 2nd hand market prices, it's a possibility but I think it's more likely going to get people on other brands.

I’m trying to illicit an understanding of the mechanism that 2nd hand prices attract higher prices if Tesla sets MSRP below market clearance.

The competition is not coming in a volume that would reduce 2nd hand market for Teslas if their prices were set well below market clearance. Teslas products are more compelling at the price the competition can sell at.

 

[cvalue13]

 

[firsttruck]

....
But if they do massively raise the price, that list will erode, the expectation will be set in public view that the Cybertruck is too expensive, and that will damage future demand. Massively.

-Crissa

I agree 1,000 percent

 

[Deleted member 3316]

You're right, supply will be limited - but raising the price won't change immediate demand. Demand is baked into the reservation list.

Absolutely, Demand is baked into the reservation list…. At reveal prices… The market clearing price for late reservation holders and those without a reservation is likely much higher.

But if they do massively raise the price, that list will erode, the expectation will be set in public view that the Cybertruck is too expensive, and that will damage future demand. Massively.

Demand is always a product of the market value and the MSRP.

A couple thousand pissed off reservation holders is inconsequential in a 4-5million per year market. Tesla will just do the rest of the automotive market a favour and give them up. Especially if Tesla is aiming at less than 25% of the pickup truck market.

 

[Deleted member 3316]

Tesla is in a completely different position to Ford.
Ford raised prices because of it’s negative margins, not the market clearance price.

The stealers dealers were merely bumping up the price for the disparity in early MSRP and early adopter clearance price.

Lots of Lightning F-150 in dealer lots because it’s not as compelling product at the price they are asking.

All of these problems have a solution that I’ve been banging on about for quite a long time and yet everyone just gets stuck on arguing whether scalping is going to be a problem or not.

 

[Crissa]

Demand is always a product of the market value and the MSRP.

A couple thousand pissed off reservation holders is inconsequential in a 4-5million per year market. Tesla will just do the rest of the automotive market a favour and give them up. Especially if Tesla is aiming at less than 25% of the pickup truck market.

This is not true.

Demand is a fluctuating mix of desire, knowledge, need... price sensitivity is only a part of it.

First impressions stick. If the first impression is that it's an unaffordable toy, that is going to seriously bite into the pool of demand.

-Crissa

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