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Originally Posted by chad86tsi
Yep, some of these prices are near the release prices pre-covid, so back to normal'ish. Also an indication of the benefits of being your own dealer : when the market shifts upward, tesla was able to capture that extra profit for themselves, and then also able to pivot to a lower price when the market retracted without going bankrupt.
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Quote:
Originally Posted by M3WC
This puts a lot of heat on rivals, so much for market penetration by other brands.
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All of your points are yet to be seen - maybe! - but there's a good argument they're wrong:
$TSLA's price cuts are big gamble due to what might be "inelastic demand".
That is, customers *used* to place a premium on $TSLA products, thus when prices went up, demand growth remained steady. That's pricing power!
But the downside is, when prices come down, customers no longer place (as much of) a premium on the product so demand remains mostly unchanged, even though prices fell / are falling.
Dominos pizza had this during the lockdown: lots of demand, lots of pricing power! But once lockdown was over, customers realized they're tired of eat-in pizza and since there are other options now, they went back to once a week even though Dominos lowered prices!
It's not that Dominos has a bad product, but consumers realized they had better options.
There's some recent data supporting Tesla's inelastic demand; the latest Morning Consult survey for the US shows the # of consumers planning to purchase a BEV this year fell from 22% in 2022 to 17% this year. When you combine this with Edmunds 2022 trade-in data which shows that 50% of people trading in a Tesla buy an ICE vehicle (incl PHEVs), it doesn't bode well.
On the positive side, the survey data also said that 66% of people not planning on buying a BEV listed the top reason as price - so that could be a good sign.
That said, I've been slinging product for a few decades and Tesla products look to me like once hot products now fading, and price cuts won't do much to help due to inelastic demand.
My hunch is, without new products Tesla sales will get a bump here, but then continue on their same trajectory, which will mean they're stuck in inelastic demand hell.
On the flip side,
the legacies are just releasing their products so they could wind up still commanding a premium.
And speaking of that premium, the benefit of a dealer network is a professional sales team to move buyers from ICE to BEV and a service department to back it up.
Back in the 1930s Ford lost its leadership position to GM and never recovered it; the reason was stale product.
(And Ford tried lowering prices, but it didn't work)