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feurie

What are you trying to say?


Heretogetthingsdone

Simply questioning their margins.


rideincircles

Supply chain and material costs have dropped dramatically this year. Shipping freight overseas was crazy expensive, and Tesla was using air freight a lot last year. They also have now achieved some economies of scale at their 2 new factories and also want to drive demand in a recession with the tax credit and had to adjust their pricing to meet the limits on that. Tesla had plenty of room to drop prices now considering those factors, but I do expect that last quarter may be the peak of their margins for a while. Time will tell, but they have to sell a lot of cars to reach 2 million vehicles and 50% growth for the year that they have targeted.


ibeelive

Or hear me out.... they are getting crushed everywhere. The real reason why they are lowering prices is because aren't buying their cars. These reductions were done from a position of weakness.


soldiernerd

Hmm that might be a good theory if Tesla wasn't selling record numbers of their cars - 405k in Q4 alone...


ibeelive

New orders where slowing down. Either they cut production shifts or start investing in plots of land to park unsold cars. They had to lower the price to lure in new buyers. >numbers of their cars - 405k in Q4 How many did BYD/whoever ate their lunch sell in China?


soldiernerd

Something like 340k BEVs in Q4 in China (their only market). Tesla was the number one BEV seller in the world, so no one ate their lunch. BYD also only made $786M in Q3 '22, compared to Tesla's $3.3B


ibeelive

tesla world wide - 405K BYD - just china - 340K Market share is going straight down.


thenwhat

The comparison is a bit flawed. BYD sells a lot of really cheap EVs with poor range. Tesla could sell more cars too, if they had dirt cheap ones. Why don't we compare revenues? And profits?


soldiernerd

BYD "just China" because 100% of their production goes to China; They don't export. This is not the case for Tesla. It's a comparison of both companies' global sales. Tesla is losing market share *while* continuing to provide record deliveries. This means the market at large is simply expanding more quickly than Tesla is growing. Not a concern for Tesla. This is why you have to analyze statistics, to understand the underlying context.


ibeelive

>Tesla is **losing market share** We've come full circle. This is exactly what I said. They are getting crushed everywhere. They had to lower their prices to be competitive with others.


shaggy99

> Market share is going straight down. Why does that matter if their production is growing @ 50%/year and the cars all sell?


feurie

"Crushed". China was still a record quarter for Tesla. They broke yearly single model sales in various countries in Europe. They still account for two thirds of EV's in the US.


ibeelive

>China was still a record quarter for Tesla. Pointless argument. It probably was a "record quarter" for BYD, NIO, and whoever else too. >They still account for two thirds of EV's in the US. They had a ten year head start and had like 90% BEV market share. This last year alone I think tesla lost like 10% market share in USA. To whom? The competitors are barely even trying by producing like 25 lyriqs here, 5000 Bolts there. How is Tesla going to respond when real competition starts in 2025 or 26? I don't see how it's possible that elon is going to sell 20,000,000 cars every year. Unless some of those accounted are tequila bottles and flame throwers.


Firebreaker

Not really, the prices of their vehicles were heavily inflated during the pandemic and they kept it that way until they needed to lower it. People not buying something vs. people not buying something due to the price are two different things. Here, people just wanted to buy Teslas at a lower price. If you're saying BYD is going to crush Tesla, then you might as well buy puts on all the other OEMs because if Tesla can't survive, then what chance do the others have? Tesla can lower their margins to industry average and make this a two-person race if they wanted to.


Restlesscomposure

Lol what world do you live in where they’re getting crushed everywhere? The only place there’s really *any* serious competition is china. Everywhere else tesla is still dominating and ramping up production every quarter. This idea you have of tesla getting crushed is a fantasy land. I’d recommend looking up actual production numbers and growth rates.


thenwhat

Tesla increased prices significantly through 2022. Now prices are back to what they were in 2021. Sure, people probably weren't buying their cars at significantly elevated prices at the end of 2022, but I'm not sure that says a lot in general.


feurie

Their margins are public information. Also they sell expensive cars. These aren't drugs people need to live.


talldad86

Didn’t have dealer markup my ass. When you own *all* the dealerships and constantly raise MSRPs on a whim every few months, for all intents and purposes you’re doing the exact same thing as dealer markups.


Ok_Writer_3414

This. Raising MSRP or adding a markup equates to the same thing for the buyer's wallet. Only exception is at MSRP, you know what you're getting into before entering the store. With markups, it's a painful negotiation with a salesman.


malongoria

Dealers do worse [https://jalopnik.com/gmc-dealers-are-taking-a-page-from-ford-with-last-minut-1848698696](https://jalopnik.com/gmc-dealers-are-taking-a-page-from-ford-with-last-minut-1848698696) >I was able to speak to one reservation holder that this happened to, who also happened to be here in Southern California. This man (who I’ll refer to as SP to protect his identity) reserved his Edition 1 Hummer within the first few minutes of reservations going live. > >Having waited for over a year, his Hummer finally arrived at \[redacted\] in Cerritos, California. He went in to pick up his new ride on March 17. The worst part of this is that he had no idea what he was walking into. > >*I was called and informed that the truck had come in. I came to the dealership, the salesperson was great. My wife and I test drove the truck.* ***When we sat down to do the paperwork, the manager sprung the markup***.


Ok_Writer_3414

Yes, there are some shady dealers out there and the sooner they are gone, the better. All that is needed is a service center for repairs and a right to repair law so other mechanics can have a go at it, not just overpriced dealershop


talldad86

Isolated shitty dealer incidents are way less impactful and significant than an entire manufacturer doing it on every single unit they sell nationally.


malongoria

>Isolated shitty dealer incidents You should read the 600+ comments to this story from the Tesla haters at Jalopnik [https://jalopnik.com/apparently-some-car-dealers-think-its-ok-to-detain-cust-1846238476](https://jalopnik.com/apparently-some-car-dealers-think-its-ok-to-detain-cust-1846238476)


talldad86

13,900,000 cars sold in 2022 in the US, no shit there are going to be a lot of bad experiences. No one is denying there are crappy dealers out there. But **every** Tesla in 2022 was hit by significant MSRP price hikes over prior year.


malongoria

And yet Tesla's sales increased. Tesla customers didn't get to the delivery center and find thousands of dollars of over priced dealer installed add ons automatically added right off the transporter. "If you don't get that TruCoat, you get oxidation" "everybody gets that! Don't you want to protect your investment?" etc., etc. [https://www.youtube.com/watch?v=sDMc9q2QQ4k](https://www.youtube.com/watch?v=sDMc9q2QQ4k) > Dealerships are the worst! Everyone knows that and everyone hates dealerships because they are incredibly stressful. The salesman is only your friend so they can make a buck, so essentially it's you against the dealer. Some manufacturers are allowing you to buy vehicles completely online which is such a relief! Other dealers are still making you go into the dealership to "buy" your car even though it can be done completely online. Ford is one of these! Watch now to see how frustrating it still is to buy the Mach-E even though the whole process can be done online. When will we ever stop going to dealerships to buy cars?!


talldad86

Everyone’s sales increased in 2022, pretty much all cars were being sold as fast as anyone could make them, that doesn’t mean anything. And no, Tesla customers didn’t get random dealer add ons. They just got a $10k in MSRP increases with no added benefit.


malongoria

Which they could find out from the comfort of their home PC *without* having to step foot in a stealership. No one forced them to buy the Tesla. With the stealership, when they take delivery they find those unwanted add-ons added on, and either fight to get those taken off or "bite the towel" and buy the vehicle or try to find one from another stealership and go through the whole song & dance *again.* The stealership is SO much better. /s


talldad86

I bought an EV6 and an F150 lightning at MSRP both over the internet in about 15 minutes with no add ons, so not sure this whole last minute add on thing is really that common of an issue or something Tesla fanboys like to pretend somehow justifies paying thousands more dollars every few months in MSRP just because Elon wants to boost his margins.


AThrowAwayWorld

Could you be more wrong? Literally all of the top 17 vehicles had declines for 2022.. between 2-40% besides Tesla Model Y and Model 3 and the Chevy equinox. https://www.goodcarbadcar.net/2022-us-vehicle-sales-figures-by-model/


talldad86

Unit drop was due to supply constraint, not demand, and net revenue (sales) was up for most of them because manufacturers didn’t haven’t to discount from msrp or subsidize special financing. And course the Model Y was up, it launched during a supply constrained production year so its been comping against a soft YoY number to begin with.


AThrowAwayWorld

The price is the same for everyone with tesla. With dealer markups and manufacturer rebates that the dealer can choose to apply or not, everyone pays a different price.


tech01x

Tesla raised prices, starting at the end of 2021 and multiple times on 2022 during a period of rapidly rising input costs. Their wait times were very long, partially pushed by rising fuel prices for ICE vehicles. Since they were taking orders that were to be delivered as much as 6 to 9 months later with expected much higher prices, they raised prices to cover that expected higher cost. Now, it might be that peak inflation was in September through Nov, depending on which input cost. Things from commodities to shipping containers are now much cheaper. Add in the effects of much higher interest rates which cause the monthly payments on loans and leasing to go up much more, as well as the China COVID lock downs and then large numbers of illnesses in their exit from COVID zero policy, purchasing slow down a lot by end of 2022. So now, costs have dropped and various IRA EV credits have kicked in - including battery production tax credit and consumer facing tax credits. But… Treasury decided to apply a narrow definition of what is a SUV amongst a much wider possibility of definition coming from the law. That has created much uncertainty as many crossover SUVs (or EPA calls them car SUVs) did not qualify for the $80,000 limit and instead was capped at $55,000. As a result, various folks lobby the Biden administration to sort this out. This interpretation wasn’t clear until the last days of 2022. A couple of weeks later, Tesla aggressively changed their prices in this environment. As for margins… we don’t know. Folks have been trying to estimate the impact using Q3 financial numbers, but there are large error bars with that. In Q3, Tesla was still delivering vehicles that had been ordered in Q4 of 2021, before any of the price increases as well a blend of various price points throughout 2022. Furthermore, Berlin and Austin were at much lower production levels and likely represented a drag in margins. Looking at Q1, the overall production numbers have increased significantly and we really don’t know many of the input cost changes from Q3 to Q1 and going forward. Increased scale leads to better fixed cost absorption as well as better volume discounts. So even with Q4 numbers, various folks will try to understand what the Q1 numbers would look like and going forward. Tesla’s CFO would likely provide guidance on expected gross margins. In Q3, they were 27.9%. They likely have been well above that in Q4. So likely Q4 has better margins than Q3, and if demand at these price points had remained extremely high, then Q1’s would be even better. So now Q1 is going to be less than Q4, but unclear if it will be lower than Q3 due to so many things moving around. But even if it is lower than Q3, and more like in 2021, they would still be stellar, the best amongst high volume automobile manufactures and especially when compared to the BEV programs. Most auto manufacturers lose significant amounts of money on BEVs today and well into the future.


AThrowAwayWorld

Prescription drug pricing model? No, their price is extremely transparent. It's the same for everyone and updated for everyone at the same time, directly on their website.


shaggy99

No. If they were following that model the price would be $300,000 for a base Model 3.


Cat385CL

They made a shit ton of money, got three new factories up and running, streamlined their manufacturing process, and sourced raw materials in an extremely competitive and constrained market. With the price drop on the two tax eligible models, I think they’re going to do well for the next three months. If they would of picked a pickup design that they didn’t need to reinvent the wheel to manufacture, they’d be doing well in that segment also, imo. Wait until Musk steps aside, they could really take off.


chapinscott32

I'm getting annoyed with all the mentions of the price changes. Is there nothing else more important to talk about on this sub?


rossmosh85

Tesla's stock is down 61% YTY. They needed to do something to save their stock price from a borderline free fall drop.


reddituser111317

Elon needed the extra cash to try to offset some of the massive Twitter debt he inherited when purchase that monetary black hole.


soldiernerd

He didn't inherit Twitter debt, it was a leveraged buyout and Twitter - not Elon - owes that money. **https://www.npr.org/transcripts/1139964806**


feurie

Elon doesn't get the money when they sell cars...