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

[cvalue13]

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).

Understanding all of the above, I'm left thinking it ignores the possible timeline of strategy.

Telsa can reasonably plan for the CT to be an affordable market-disruptor, with that plan entailing that initially it will be higher cost but latter be lower cost.

See, e.g., existing model price archs.

For the CT to be an affordable market-disruptor, it does not necessarily entail that the launch pricing reflect that at launch?

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[cvalue13]

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.

In a way, the underlying reason Tesla raised then lowered pricing is irrelevant to the fact that's what they've ~done (oversimplifying).

Why have the crashed pricing the way they have of late? Obviously a raging debate around that. Some suggest (and Musk seems to have reiterated) that it's reflective of demand.

Supply-side of that demand is a synonym for production ramp.

But at the end of the day, you're right of course that to the extent supply-demand is motivating MSRP (and changes thereto), it suggests that Tesla can start with prices 'high' with a plan to bring them 'low' - all consistent with a plan to achieve market-disruptive scale/pricing.

I'm not saying that is what they are doing. I'm just saying that possibility seems to cut against those saying basically, "price cant be high at release if Tesla plans to achieve market-disruptive scale/pricing."

 

[Coolbreeze704]

I can see the hyper bears screaming if the CT comes out at base price of 69k and people start cancelling orders.

I really do not want to give GJ any leverage with his ridiculous 24 dollar stock value case.

 

[FutureBoy]

I can see the hyper bears screaming if the CT comes out at base price of 69k and people start cancelling orders.

I really do not want to give GJ any leverage with his ridiculous 24 dollar stock value case.

If someone follows GJ’s advice, they are too dumb to keep their own money.

 

[Coolbreeze704]

If someone follows GJ’s advice, they are too dumb to keep their own money.

What you talking bout? Just look at those results!

Gordon Johnson
GLJ Research

Wall Street Analyst

#7,711 out of 8,566 Wall Street Analysts
#26,833 out of 34,982 experts

Has a half star rating to boot.

 

[FutureBoy]

What you talking bout? Just look at those results!

Gordon Johnson
GLJ Research

Wall Street Analyst

#7,711 out of 8,566 Wall Street Analysts
#26,833 out of 34,982 experts

Has a half star rating to boot.

He gets so much airtime though. It makes me wonder about who the others are below or even around his rating. What do they do? How do they feed their families?

 

[Coolbreeze704]

If someone follows GJ’s advice, they are too dumb to keep their own money.

To your point, it shows just how little anyone should take Yahoo finance and other that put GJ on their shows knowing anything he says has no credibility and is damaging the listener thinking this finance program is providing expert advise to develop their positions.

It is just for entertainment purposes it seems.

 

[Crissa]

It is not illegal to sell a product at a loss.

It's illegal to attempt to destabilize a market.

These are two different things.

-Crissa

 

[SlegMD]

Many neurons have died attempting to fuel the speculative nature of this thread.

Many good points by the way. Overall the price of the CT is going to align with their (Tesla) preset goals, which we are not privy toward at this time.

I would say it’s difficult to nail down the price as Teslas ability for production has been improving significantly over recent years, and past trends for pricing may not reflect pricing for the CT.

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