Musk responds to Cybertruck pricing and specs announcement question (8/23/23)

[FutureBoy]

Antitrust lawsuits are in Tesla's future, I just don't know when. Remember cybertruck is going after the stronghold of OEM's profitability.

If they purposely sold their product at a loss with the intention of driving competition out of business, that would be illegal. Look up predatory pricing. Early ramp is normally considered an exception but the government could try to claim fully ramped costs will never be profitable at the low price point.

Um... Have you been researching the current ICE vs EV and Tesla vs Legacy EV stats? I'm not saying that Tesla will never have an antitrust lawsuit (on the current trajectory they look to be headed for the vast majority of market share in the US). But the way things are right now, Tesla is the only company producing EVs at a profit (and a considerably large one at that). They have plenty of room to lower their prices before they ever get to your described "predatory pricing" state.

And if you are saying that the ramped costs from before a line is profitable are an exception, then all the legacy makers could just be considered to be in the ramping stage for years to come as they try to get profitable on their vehicles. So they would not be comparable to a fully ramped line like Tesla has. At this point the true race is happening at the legacy auto side where they need to increase their margins faster than they burn through their savings so they can get to a point of profitability at all. Personally, I think most (all?) of them in the current iteration will lose that race. They continue to get government bailouts of one form or another but ultimately if they can't get their costs down and demand for their vehicles up it really won't matter to the ultimate outcome.

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[Jhodgesatmb]

Help me understand where you get 10% of customers and a 10% per unit profit estimate? In the first year or two, long term?

When demand is far exceeding supply, this does not matter. I'm not saying this will be the price but I'm just showing that Ford thinks customers are willing to pay this for a truck (with far less features), but its an ICE 37gal 700 mile range.

If you factor the cost of ownership, cybertruck will beat the ICE F150 by >$10k in the first couple of years. Tesla will have to consider what customers will demand for range. If range is 300 mile like at unveil, no one would buy it at $69k.

If its range is 350, 400, 500, 600+ miles... at what point is $69k justified?

If its range is 300 miles, would you buy it at $59k?



Antitrust lawsuits are in Tesla's future, I just don't know when. Remember cybertruck is going after the stronghold of OEM's profitability.

If they purposely sold their product at a loss with the intention of driving competition out of business, that would be illegal. Look up predatory pricing. Early ramp is normally considered an exception but the government could try to claim fully ramped costs will never be profitable at the low price point.



I agree that Tesla is not driven solely by the accumulation of wealth. The company's mission is to accelerate the world's transition to sustainable energy, and it believes that making profits is necessary to achieve this mission. Tesla reinvests a significant portion of its profits back into research and development, and it has also made significant contributions to the development of renewable energy infrastructure.

However, I also believe that Tesla's wealth is a reflection of its success in achieving its mission. Tesla has made electric cars more popular and affordable, and it has helped to create a market for sustainable energy. As a result, Tesla has created value for society, and it is entitled to the profits that it has earned.

I believe that there is a balance to be struck between the need for businesses to make profits and the need for them to serve the public good. Tesla is a good example of a company that is trying to strike this balance. It is a profitable company that is also making a positive impact on the world.


Ok, maybe you could stick to your Model Y until pricing comes down. They already have you as a on the EV convert list. What if the price was down to $59k in 18-24 months? Is a 20% markup ok? Maybe you are just part of the "10%" Crissa was talking about. Maybe Elon's final internal pricing decision was too low and that's why Zach the CFO left?


Maybe a model 3 or y is a better fit for your financial situation. Tesla does have other products in their lineup that have huge rebates available.


This was kind of me playing devils avocet. I do see a business case for it in the short run though. Once they get less supply constrained, prices will come down from whatever is stated at the delivery event. If they produce the tri/quad with 500+ miles early on, this will put less pressure on the dual motor variant. 4680 energy density, production rate and costs are the big mysteries.

But you said that they will charge what they can get. That is not "a company that is trying to strike a balance". That is a greedy company. I do not believe that Tesla is a greedy company. You agreed that Tesla "is not driven solely by the accumulation of wealth" (quoting my statement) but then you turned around and said that Tesla "is a good example of a company that is trying to strike a balance". In fact, Tesla's profit margins are so good that it could probably charge what they originally quoted us and still make a profit (maybe not the same as their current margins). They certainly don't have to raise the prices.

You reply to @Crissa asking about 10% rise in price but losing 10% of the customers and wonder where those numbers come from. From @Crissa's head of course! It is just an example. There is no question that if you raise the price by N% you will lose M% of the customers. We do not know what N or M are because it changes with every product for a myriad of reasons (you mentioned range as one possible - and valid - reason), but we know that it is real. Nit picking when someone is making a valid point doesn't make your reasoning more sound.

You talk about range and price as though they are causally related. Maybe for some, but not in the way you think. I believe that everyone here has their heads tied to the original quote from Elon: Single motor = 250 miles and $40K, Dual motor = 350 miles and $50K, and Tri motor = 500 miles and $70K. If Tesla doesn't meet or beat its original range and price estimates then it will see people waiting [noisily] in the wings until they do but I suspect that many will consider the range as less negotiable than price or number of motors. I will not give up my reservation but I will not compromise my range requirement. If Tesla offers me a Dual with 500 miles I will take it. If they offer me a Tri with 350 I will not take it but will wait for a Tri with 500 miles.

 

[newwave1331]

They have plenty of room to lower their prices before they ever get to your described "predatory pricing" state.

Predatory pricing was mostly addressing @PilotPete hypothetical pricing at a known loss for market share.

 

[newwave1331]

But you said that they will charge what they can get. That is not "a company that is trying to strike a balance". That is a greedy company. I do not believe that Tesla is a greedy company. You agreed that Tesla "is not driven solely by the accumulation of wealth" (quoting my statement) but then you turned around and said that Tesla "is a good example of a company that is trying to strike a balance". In fact, Tesla's profit margins are so good that it could probably charge what they originally quoted us and still make a profit (maybe not the same as their current margins). They certainly don't have to raise the prices.

You reply to @Crissa asking about 10% rise in price but losing 10% of the customers and wonder where those numbers come from. From @Crissa's head of course! It is just an example. There is no question that if you raise the price by N% you will lose M% of the customers. We do not know what N or M are because it changes with every product for a myriad of reasons (you mentioned range as one possible - and valid - reason), but we know that it is real. Nit picking when someone is making a valid point doesn't make your reasoning more sound.

You talk about range and price as though they are causally related. Maybe for some, but not in the way you think. I believe that everyone here has their heads tied to the original quote from Elon: Single motor = 250 miles and $40K, Dual motor = 350 miles and $50K, and Tri motor = 500 miles and $70K. If Tesla doesn't meet or beat its original range and price estimates then it will see people waiting [noisily] in the wings until they do but I suspect that many will consider the range as less negotiable than price or number of motors. I will not give up my reservation but I will not compromise my range requirement. If Tesla offers me a Dual with 500 miles I will take it. If they offer me a Tri with 350 I will not take it but will wait for a Tri with 500 miles.

Greed would be share buybacks or paying dividends to stockholders. Cashflow is the lifeblood of companies. If they want to grow volume faster and invest more in R&D, the money needs to come from somewhere.

Limited supply and inelastic demand means higher prices will not effect initial units sold. Someone will get the profit of that product’s value in the marketplace. You’re just making it harder for Tesla to expand by that profit going to someone else. You are basically want them to go against most of the laws of economics.

Dual motor was announced as 300+ at unveil, not 350. You just took a increase of 16.7% of greedy range! How dare you!

 

[PilotPete]

Antitrust lawsuits are in Tesla's future, I just don't know when. Remember cybertruck is going after the stronghold of OEM's profitability.

If they purposely sold their product at a loss with the intention of driving competition out of business, that would be illegal. Look up predatory pricing. Early ramp is normally considered an exception but the government could try to claim fully ramped costs will never be profitable at the low price point.

Anti-trust prosecution? Are you serious? There is NO way you can successfully prosecute a company with LESS than 50% market share for a Sherman violation. They have not monopolized, attempted to monopolize, or committed an act of conspiracy to monopolize any market. They have not committed any unfair or deceptive act or method of competition. And there is not merger or acquisition proposed or pending. Even selling a new product at a loss (See: Ford, Rivian, GM,) is not in and of itself "predatory pricing". And they will make money on the CT, just as they do everything else.

As cool as the CT is to some, there are those that hate it. I don't see a date on the horizon where the CT holds a significantly dominant market share. Absent that, there could be no attempt of prosecution of a fair trade violation. (no, that's not what the acts say, but you ain't a monopoly at less than 50%)

Reread my post that you quoted, I said "I believe Tesla's goal with each new vehicle is not only to make a profit, but there are differing corporate goals (i.e. market share," Making a profit AND gaining market share. I didn't say "market monopolization": or "elimination of the competition" or "world domination" or "Sharks with lasers" or anything crazy like that. And as for selling at a loss to get customers, it's legally done all the time. Costco loses money on their $4.99 roasted chicken, but it gets shoppers in the door. Products like the are called "loss leaders". Tesla could sell the CT at an initial loss (just like the competition) in order to gain market share and advertising of their product. And again, they WILL make bank on the CT. My point was they are not driven by making every last dollar they can out of every sale at the expense of future sales.

 

[SpaceYooper]

What minimum range would you accept for a $69k (+FSD) dual motor truck?

500 miles.

The ICE competition has more range and a better infrastructure supporting that range.

 

[kbolt]

Ok, maybe you could stick to your Model Y until pricing comes down. They already have you as a on the EV convert list. What if the price was down to $59k in 18-24 months? Is a 20% markup ok? Maybe you are just part of the "10%" Crissa was talking about. Maybe Elon's final internal pricing decision was too low and that's why Zach the CFO left?

I believe this to be flawed thinking. I personally have a model Y and they have converted me, true. But there are other people who have the same train of thought that are not converted and they won't buy. Somehow Tesla would need to convince people that at the time of reveal they were making 18% margins, announced a dual motor at $49k, and since then prices of all vehicles went down, but they are going to charge 40% more. So how can they convince someone like me who is not already converted that they should be making 58% margins on a car?

 

[newwave1331]

500 miles.

It's ICE competition has more range and a better infrastructure supporting that range.

Thank you for playing along with my hypothetical price. Based off your vehicles listed, you are someone they need to convince to convert to an EV.

What price would you buy a 300 mile dual motor?

 

[SpaceYooper]

Thank you for playing along with my hypothetical price. Based off your vehicles listed, you are someone they need to convince to convert to an EV.

What price would you buy a 300 mile dual motor?

$0

300 miles is a non-starter for me and a truck.
For me, there is no conversation unless the truck gets an EPA 500 miles. This has been my stance since day 1. I barely paid attention at all to Rivian, Canoo and all the others because of this. The CT got my attention with the 500+ in lights. I'm still watching to see what RAM does because of the promises they are making.

 

[cvalue13]

Let's see how pricing for that other Tesla revealed in 2019, the MY, has evolved:

Version	2019 Price	2019 Range	2023 Price	2023 Range
Standard	$39,000	230	N/A	N/A
LR RWD	$47,000	300	N/A	N/A
SR AWD	N/A	N/A	$47,000	280
LR AWD	$51,400	280	$50,490	330
Performance	$60,000	280	$54,490	303

If Model Y is a guide, more range, less cost at the high end but low cost models fall away. That is actually the same story on the Model S & X and on the Model 3. The low end of the line has just disappeared but the high end is more capable and cheaper.

as ever I want to say first that I am clueless as to what MSRPs Tesla might announce. I spectate and the various arguments for and against, and occasionally weigh in only regarding a particular line of argument that I don't understand or find confusing.

Here, this line of argument - and many like it - i find a bit confusing.

The argument, in short, appears to be "other Tesla models are now cheaper, so why would the CT be more expensive." I get it.

But isn't the more relative comparison Tesla's historical price arch of other models, as relates to the possible price arch of the CT?

And at a cartoon level, haven't those prices started at X, increased to Y, and only recently reduced to <X? And those reductions to <X appear to result from some combination of having scaled production, as well as demand-side reduction?

If so, then wouldn't the CT need to live out its own price arch before, say 4-5 years from now, it's then-current MSRP is less than it's release MSRP?

 

[newwave1331]

I believe this to be flawed thinking. I personally have a model Y and they have converted me, true. But there are other people who have the same train of thought that are not converted and they won't buy. Somehow Tesla would need to convince people that at the time of reveal they were making 18% margins, announced a dual motor at $49k, and since then prices of all vehicles went down, but they are going to charge 40% more. So how can they convince someone like me who is not already converted that they should be making 58% margins on a car?

What if their cost estimate at unveil was totally off? What if it cost them $65k to build and charged $69k? Who buys cars based of margins?

 

[FutureBoy]

as ever I want to say first that I am clueless as to what MSRPs Tesla might announce. I spectate and the various arguments for and against, and occasionally weigh in only regarding a particular line of argument that I don't understand or find confusing.

Here, this line of argument - and many like it - i find a bit confusing.

The argument, in short, appears to be "other Tesla models are now cheaper, so why would the CT be more expensive." I get it.

But isn't the more relative comparison Tesla's historical price arch of other models, as relates to the possible price arch of the CT?

And at a cartoon level, haven't those prices started at X, increased to Y, and only recently reduced to <X? And those reductions to <X appear to result from some combination of having scaled production, as well as demand-side reduction?

If so, then wouldn't the CT need to live out its own price arch before, say 4-5 years from now, it's then-current MSRP is less than it's release MSRP?

What do you attribute the price rise part of that arch to? If you are saying that price falling at the end of the arch is because of having scaled production, do you believe that the price increase part was due to scaling production? That doesn't follow to me because the most expensive part of the scaling timeline is at the beginning, not after production has started. In fact, the very most expensive part of scaling is actually before production even starts. Just think of all the sunk costs of gigapress, the building itself, and all the other tooling. Most of that is sunk cost up front without any production (other than possibly RC builds).

So if you are expecting the initial cost announcement to be 1 price and then the price to start rising as production is ramping, because of the ramp, I'd have to question why.

Or maybe you have some other explanation for the observed price rise that is also applicable to the CT.

 

[Jhodgesatmb]

Thank you for playing along with my hypothetical price. Based off your vehicles listed, you are someone they need to convince to convert to an EV.

What price would you buy a 300 mile dual motor?

You need to ask the dual-motor crowd this question as it is unlikely the tri-motor crowd will go for the lower range at just about any price. Ask me what I would be willing to pay for 600+ miles on a tri-motor and we can have a discussion…

 

[BayouCityBob]

as ever I want to say first that I am clueless as to what MSRPs Tesla might announce. I spectate and the various arguments for and against, and occasionally weigh in only regarding a particular line of argument that I don't understand or find confusing.

Here, this line of argument - and many like it - i find a bit confusing.

The argument, in short, appears to be "other Tesla models are now cheaper, so why would the CT be more expensive." I get it.

But isn't the more relative comparison Tesla's historical price arch of other models, as relates to the possible price arch of the CT?

And at a cartoon level, haven't those prices started at X, increased to Y, and only recently reduced to <X? And those reductions to <X appear to result from some combination of having scaled production, as well as demand-side reduction?

If so, then wouldn't the CT need to live out its own price arch before, say 4-5 years from now, it's then-current MSRP is less than it's release MSRP?

It seems to me that this is a strategic pricing question more than anything Tesla has done with vehicle launches in the past which have all been about balancing short-term and longer-term total gross margin to drive profitability. Simple (in concept) equation. This is much more strategically important as a new product launch.

• If the objective is to make CT a nice niche product in the Tesla portfolio then profit maximization on the CT is the right plan so start high and drop prices in 2025+
• If the higher priority is to seize market share in the N.A. pickup market and force the segment to transition, then push the cost advantage and grab share.
  • Tesla should have the economics to do this and it will create huge economic pain for GM / Ford and Stellantis and threaten their only profitable product... but it might lead one or more to conclude that they cannot compete in the EV market anytime soon
  • This in turn could provoke the unintended response of causing one of more of them to launch an anti-EV campaign (both marketing and political) that would be bad for Tesla and EVs in order to protect their last remaining competitive segment
• If Tesla plans to use the core platform for low-volume vehicle segments (e.g. a class 4-6 box trucks, police fleet vehicles) then price the consumer product for profitability to subsidize lower priced uses of the platform (c.f. Ford / GM)
• And there is a question of how wide the vehicle range should be (crazy GM $39k - $105k Silverado or a narrower band), Etc.

Of course there is a big unanswered question about whether the demand will really materialize. The industry is notorious for vehicles with huge interest and lots of buzz pre-launch that never turn into sales successes. Look at the Hummer as an example the H1 and H2 both had huge buzz but fell flat. So has the Hummer EV. And the Jeep Gladiator had tremendous enthusiasm only to be a modest seller (1/3 of the Tacoma).

 

[newwave1331]

You need to ask the dual-motor crowd this question as it is unlikely the tri-motor crowd will go for the lower range at just about any price. Ask me what I would be willing to pay for 600+ miles on a tri-motor and we can have a discussion…

I don’t think there is a defined “dual motor crowd”. There is a $50-59k crowd based of financial situations. I believe a lot of tri motor reservation holders did it for the 500 mile range, not the power.

What would you pay for a tri motor with 600+ mile range? What do you need 600 miles for?

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