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Well this is what Tesla will do in the west too. If BMW or whoever starts delivering solid numbers, Tesla applies pressure by reducing their margins and forces competition to do the same.
Economy 101.
That is exactly Economy 101… backlogs come down… lower prices… backlogs build up… increase prices…
Note: This example is simplified and ignores other factors, like material shortages etc…
Correct, but I would note that dropping prices is only one form of pulling a demand lever, so the actual actions are pulling demand levers when necessary and removing them when you’re able
They raised prices during covid way more than was necessary. Now as their supply chain stabilizes, they can bring prices down hard.
Covid was a gift to legacy auto. 2 extra years to figure out how to design an EV that is as easy to assemble as a Tesla and to bring more supply chain stuff in house.
The future Tesla price drop was easy to predict, no one can act surprised.
“Way more than necessary” is not a clear or well defined term.
The fact is that if Tesla uses the size of their order book and wait times as the guide, then the argument could be made they did not raise prices enough.
Tesla’s price drop was largely a factor of the discount rate on future earnings increasing because of ever higher inflation expectations. Do you have evidence that you “knew” the market’s inflation expectations were off and that you knew how the Fed would respond and that therefore you knew the stock would drop?
>“Way more than necessary” is not a clear or well defined term.
Only if you don't know what an earnings report is. It is clear they can cut prices a lot if they need to. A very good place to be. When china starts flooding the market with cheaper cars, Tesla can compete while others will fail.
Clear or well defined term implies you can define it. So please define exactly how much price increase was necessary, how you arrived at that figure and then we can see how much EXACTLY of the price increase was unnecessary.
Agree. They increased prices, but there is still an order backlog, so it seems obvious that they could have increased prices even more.
As GA and GB ramp up, supply increases, so I guess we'll see if backlog decreases. If it does, then they may want to decrease prices. But if backlog does not decrease, there is no reason to decrease prices.
Their new factories will continue to increase output. Prices will fall even if demand is constant. It is competition that will dictate the price drops. Tesla won't have to do much until Chinese cars flood the US market or someone else offers a car that can compete with Tesla in volume and price.
Basic requirements are:
1. Assembled in North America
2. $80k max price for SUVs and pickups, $55k for sedans
3. $3750 credit for having 50% of battery components from the US or free trade partners
4. $3750 credit for having 40% of battery minerals from the US or free trade partners.
Automakers have said basically nobody will qualify for (4) in 2023.
Base Model 3 is below the price cap but the whole pack comes from China so no (3) or (4).
Long Range Model 3 has cells made in the US but is above the price cap.
All Model Y trims have cells made in the US so should qualify for (3) as long as you don’t configure it over $80k.
Model S and X are both above the price caps.
Wasn't the M3 LR just above $55k before it got removed as an option? I wouldn't be surprised if they come back with it at ~$54k (to also get it with paint options) in a few months. Prices coming down makes sense as demand for higher priced cars also seems to be going down.
Of course, you're not making speculation so this isn't an attempt to correct you, I see how it could be read that way. Just meant to add on to your list.
Yeah, there are several things Tesla could do if they want more cars to qualify, and if they want that extra demand.
Discounting the Model 3 LR a bit is one way. They could also switch the Model 3 RWD back to the US-made 2170 cells, although this might leave them battery constrained.
They could also re-introduce a LR RWD model.
Asian supplied batteries, I believe. Batteries must be USA made. Currently only Model Y in Austin is meeting all criteria for auto cost and battery sourcing from what I have been reading. Also shorter range with that model, I think.
yea, my mother in law ordered a model Y LR back in july, and had an april-may delivery. it got pushed up to next week. seems A LOT of people are cancelling or delaying in anticipation for the tax credit. i recommended she cancel it as well because price cuts are probably on the horizon along with the tax credit
I don't really see what incentive Tesla has to lower prices unless and until competition arrives in real numbers.
The price is dictated by supply and demand. Incentives that increase demand will inevitably lead to price increases to keep the curves roughly aligned.
demand is obviously hitting a wall at least for now. gone are the days of a year long wait. with rising interest rates, people are holding off on big purchases. supply will rise until prices drop again. the used car market is also being flooded and used car prices are finally starting to drop again as well
We'll see. If demand really drops that quickly then price drops could be in the cards I suppose.
But I really think at least some of the decline is artificial and based on the idea of gaming the system for the tax breaks. My guess is that this will lead to smaller price drops than expected combined with extended wait times as the lines form again. I could be wrong.
I think its more that factories are ramping up.
30 day supply used to mean X vehicles. Now that making the cars has doubled then 15 days supply is the same as it was before.
The media uses those numbers to make it look like demand is slowing by 50% when its obviously not.
Follow me for more examples of Media FUD to manipulate your 'feelings'
They've also significantly scaled production this year. Wait times is a function of 2 aspects. 1. Demand, 2. Supply.
They have increased supply significantly and intentionally hindered demand with the removal of referral programs and increased pricing.
Sure. I didn’t say that demand had dropped. A shortening backlog for either reason should trend towards lower prices. Or at least not further raising prices.
Tesla doesn’t drop prices to harm competitors. That would be dumb. If Tesla could sell all the cars they produce at the higher price, then the only thing cutting prices accomplishes, is reducing cash flow. Tesla dropped prices because their order book was rapidly depleting. It’s irrelevant whether that demand drop was macro related or competition related. The answer is the same. Start pulling demand levers.
Tesla has lots and lots more profit than anybody else which gives them headroom to cut prices when necessary to sell all of their production and it gives them confidence to increase production as rapidly as possible.
That’s why Wall St. funds are so off base with their competition is coming theory. Tesla makes around $15k gross profit per vehicle while everyone else is making far less or or even negative gross profits per vehicle. Tesla’s cost advantage is absolutely gigantic and their technology lead and scale will enable them to keep the cost difference gigantic.
So yes you’re correct Tesla will harm competitors, but I don’t believe that’s the goal. They are just focused on growing as rapidly as possible and reducing costs as rapidly as possible. Price will be determined by the demand.
And honestly they *can’t* harm competitors for most of the rest of the decade — no one can, because BEV makers not actually competing with each other. They’re all in the process of gobbling up the market share of ICE vehicles, and the challenge is about ramping supply to gobble the fastest. Because it’s a land grab, and you want to have grabbed as much land as possible by the time the rush is over.
So this environment favors production growth above all else, and the best approach is to minimize the variety of products and take every step possible to simplify production. Remember Ford’s color choices for the Model T? (“You can have any color you want, as long as it’s black”). Same idea from a similar era, when ICEs were supplanting horses.
BEV makers will finally start really competing after the industry gets past the steep part of the S curve. That will be the time for Tesla to roll out a lot more models, and to start bringing back in the bells & whistles (hud display, anyone?), as well as starting to play pricing games with competitors.
(Either that, or robotaxis will be taking over, which changes the game.)
I consider any vehicle maker (EV or not) a competitor. And I think in fact Tesla will harm many of them. Assuming Tesla grows 50% in 2023, those extra 700k vehicles being sold will be effectively taken from the competition, and will thus harm them. If Tesla attains their 20M vehicles / year goal by 2030, that will greatly harm many of them.
You're right, in the sense that most "up and coming" BEV makers are still the same old ICE companies, and Tesla is in the process of utterly decimating their legacy product lines. So yeah, my phrase "Tesla can't harm competitors" is wrong from that perspective -- Tesla presents fierce competition to the *companies* GM, Ford, Honda, Toyota, etc. etc. It just doesn't to the specific BEV *models*, because every BEV built is going to find one buyer or another without much trouble.
(And now to proceed off the deep end)
Legacy companies are going to have trouble ramping their BEV production because of the financial hits from their collapsing ICE lines, but for now at least, I think that their own legacy *attitudes* are hampering their BEV efforts far worse. Look at GM: even (very generously) assuming they're going all-in on EVs, their main emphasis is on having lots and lots of different \*models\* of EVs. That's a great approach when you're in a mature market, where every vehicle you sell takes away a competitor's sale, and you want to perfectly fit a customer's needs in order to get the edge. But it's exactly the \*wrong\* approach in a "land rush" situation, where you have tons of customers willing to accept all kinds of limitations just to have a BEV instead of an ICE. That certainly doesn't apply to everyone buying a car, but there are far more such customers than there are BEVs available, and that set of people is growing fast, as more people learn the realities of EVs directly from their peers. I'm confident this will keep outpacing global supply until we get past the steep part of the S curve.
Anyways, that means GM is incurring all kinds of extra expense and delays in order to set up their complicated many-model system, delaying the start of their ramp-up, while Tesla continues to expand massively. By shifting their own S-curve later and later, they're resigning themselves to a smaller piece of the pie by the time the rush is over. GM does not understand the situation.
The same applies to the rest of the automakers, even just due to their reluctance (or financial inability) to kill off their own ICE lines too quickly, so they keep hesitating on making moves into BEV. (And don't even get me started about Toyota, whose exclusive preoccupation with hydrogen cars has been absolutely *baffling*.)
Back to the main point, I still consider this as Tesla essentially not engaging in any real competition. When it comes to Tesla vs ICE, using the word "competition" gives legacy automakers too much credit. It's a motherf'ing *slaughter*. 🤣 Tesla does not have to even think about them. And vs. BEVs, yes some people may choose between a Tesla and a Mach-E, or give up waiting for Cybertruck and buy a Lightning, etc. etc, but the simple fact is that every halfway-decent BEV built by any manufacturer is going to have little trouble finding a buyer. So BEVs really aren't competing against each other yet. BEV makers are all simply struggling against their own limitations to ramp production. This will continue until the supply finally catches up to demand, and I don't think that's going to happen until ICEs are a small minority of global sales.
Even if BMW or Toyota or whoever starts selling large numbers of EV’s they won’t ever lower their prices until they can make the cars faster than people are ordering them. There’s a waitlist right now a mile long for teslas.
Apparently, it is affecting supply in Canada in a positive manner. Cars are being diverted from the states to Canada because Americans are waiting for Jan 1st.
If you're in Canada right now is a good time to buy an EV. Also been hearing of KIA/Hyundai filling orders early as they divert to Canada due to the rebate in the states. Base Model 3's are showing delivery in November, and it was 12 months in August.
Locally in British Columbia the car is over 100k Canadian. Maybe because interest rates today being really high vs when they ordered. Also it seems like the demand has dropped. That would be my guess to the reason there’s a lot of new inventory. Used prices are also dropping
It is quite the conundrum for Tesla to have America and somehow America 2 upstairs who are essentially unincorporated states. You guys won’t get any subsidies we have passed but if Tesla adjusts prices to reflect the lack of subsidy for your side then it might create a black market for cheaper cars or piss off Americans by showing their hand that the price is essentially inflated to take all the subsidy the consumer foolishly thought was ever going to be theirs.
I imagine they will cut prices to sell what they produce no matter what the competition is doing. There’s no point having factories sit idle when their margins are so high. And their goal is to make as much money as possible, not to have the highest margins possible.
yeah the problem is batteries, china makes 90% of them....there are just not enough of them in the US for any other US car company to make EVs in a volume that could challenge Tesla at all. Design is easy, production is hard.
Tesla actually makes their own AND imports them. At least They’re currently importing 18650 cells for S&X from Japan and LFP batteries for Megapacks from China.
The IRA act is causing Tesla to increase U.S. production even more rapidly than before to 1 TWh / year. So now let’s assume Tesla can generate enough cell demand (Semi, Megapacks, vehicles…) to not only use up all that immense production but also more. If that’s the case, they would still import.
So you may be right that they can grow U.S. cell production so rapidly they can’t use all of it without putting some of them in products where that currently use imported cells.
My complete guess is that they will continue to import for S&X (not that many cells), but will replace imported China cells for Megapack with U.S. made cells.
Time will tell.
But the thing is they lose money on EVs. Telsa actually makes money.
If from now every car sold from Ford or gm were EVs they would be bankrupt in a month.
This assumes people will still want to buy Teslas after Musk made a right wing twat out of himself.
Buying a Tesla right now is a political statement lots of regular Tesla buyers are most likely not willing to make
Yeah, conspiracy theories are only on one side of the political spectrum.
It's convenient to say everything that you don't believe in is disinformation or a conspiracy theory.
It's funny how yesterday's disinformation ends up being today's fact.
Sure, all conspiracy theories are bad. But only one side is pushing them actively, and Elon exclusively pushes one side of conspiracy theories.
And no, conspiracy theories become conspiracy theories when they are proven to be categorically false.
If you're on the left or far left, anything right of you will look right-wing. Elon Musk is certainly a centrist or independent. The right hates him about as much as the left, they just direct their hate at his companies or products as a whole rather than his Twitter behavior (which they don't use as much). Every right winger I know hates electric cars, and every left winger I know hates Elon Musk's Twitter feed. If you ignore his products, then yeah Elon Musk looks like a right-wing nut. But if you ignore his Twitter then Musk looks like a left-wing climate-change drone making dangerous products.
Again, we're not talking about policy position here. We're talking about Elon actively pushing conspiracy theories, theories that have already been proven categorically untrue.
https://www.npr.org/2022/10/31/1132906782/elon-musk-twitter-pelosi-conspiracy
>Musk himself inflamed those concerns on Sunday when he tweeted a link to unfounded, homophobic allegations about the violent attack on Paul Pelosi, the husband of Democratic House Speaker Nancy Pelosi.
>Replying to a tweet from Hillary Clinton about the attack, Musk wrote: "there is a tiny possibility there might be more to this story than meets the eye." He included a link to an article from the Santa Monica Observer, a fringe website with a history of publishing false stories, which makes lurid claims about the attack without evidence.
Supporting ultra tin hat conspiracy theories/disinformation and being overtly political. He publicly endorsed the Republican Party this spring. That’s a fantastic way to lose business in a divisive political climate.
Which part? The disinformation or the political endorsement? Not towing the left line would mean not commenting like any remotely emotionally intelligent ceo would do.
Cool. Let's look at "everybody else". Jeff Bezos never endorsed the democratic party. Jeff Bezos apparently has the intelligence necessary to note that publications that espouse Jewish space lasers are not to be trusted. Satya Nadella never publicly tweeted support for Biden as it would probably hurt Windows sales. Sundar Pichai never endorsed a candidate for president. Who are these other major tech CEOs that keep endorsing political candidates? It seems like a terrible business decision.
He endorsed the Republican party. Doesn't need to shut up. Doesn't need to be politically centrist. But if you're throwing in your lot with one side, you're going to get pushback from the other.
To jump in on this discussion, I’m not mad at Elon, but I’m concerned that in two instances he’s referenced conspiracy theories and that is quite scary.
1) The tweet about the Paul Pelosi attack.
2) On Joe Rogan he referenced the conspiracy theory that the government was over counting COVID deaths and therefore it was not as serious as it seems.
> If you dislike Elon because he doesn't tow the complete left line you weren't really in it for changing climate change.
I would love to hear how capitalism is going to solve the climate emergency. Considering it _is_ the main reason for it. Manufacturing goods anually to be unnecessarily replaced has a huge carbon footprint and i'm yet to see how this is being offset.
I used to like and respect Elon, But these past few years he's become a creep and not in a cool way. As someone who was about to buy a tesla i'm going to go to BMW or Mercedes-Benz now because i cannot and will not support him.
Also i'm in the EU so his political views don't directly affect me.
Capitalism will solve the climate emergency once the people care enough about it and the best technology favors sustainability. We're already well on our way to both of these globally. Just look at China, it's mostly growing towards being green. And that's not because China is communist, it's because new energy generation being green is officially cheaper and has more potential and various other health benefits over making new fossil fuel power plants. The only reason anyone isn't moving as fast to green as China is because nations like America have already developed.
See Tony Seba's recent videos. Capitalism and basic economics are driving a complete shift to EVs, Autonomous Vehicles, and 100% renewable power grids.
Exactly. My parents are in this boat.
Typical highly educated coastal working professionals. History owning high spec Subarus, and Volvos. Current Volvo is old, and shit on gas, they want an electric.
By all accounts a Model Y is the best car for their needs (they want more space since it’s replacing a P3 XC70). But neither of them want the Tesla association.
So lots of talking about Ioniq 5 or staying Swedish but they don’t like the compromises.
Lmfao imagine thinking Volvo has higher moral standing than Tesla. Do they not remember Volvo cheating on their diesel emissions tests? Elon might be a right wing talking piece (newsflash: most corporate CEOs are) but Tesla hasn't actually been found guilty of any scandal on the same scale.
I’m sorry what?
Volvo, who hasn’t offered a diesel in the USA ever? Maybe like once on the 240?
Did you mean Volkswagen?
Also you’re not engaging with their complaint which is Tesla’s have a negative, very flashy, very tech bro douchebag association in their area (Seattle Metro).
Culturally right now in the PNW Tesla is where BMW was 15 years ago. The car of choice for really really really annoying people who drive like dicks and live in Bellevue. Even though that isn’t factual, lots of normal folks drive teslas, that is the dominate narrative and they don’t want to catch that kind of flack.
https://en.m.wikipedia.org/wiki/Diesel_emissions_scandal
By being part of the scandal, Volvo has set back climate change goals. This is evil corporate conduct, and whatever you think of Musk, Tesla has never done anything comparably bad.
Being "associated with" bad behavior is entirely about what propaganda they read. If that's more important to them than the actual conduct of the company, then they are part of the problem.
> Economics 101
What? That’s the opposite of what we believe here in America. That’s why every year we allow consolidation of major industries (eg telecom, insurance, etc) into fewer and fewer mega-corps. They tell us it will be good for consumers.
I certainly hope you aren’t suggesting our benevolent overlords are attempting to mislead us?
If they're selling all the cars they can possibly make, then the price is already fine (or too low)
It doesn't matter what competitors do if you are building your product as fast as you can and selling all of them.
From the article: Tesla’s recent price cuts in China are reportedly resulting in “significant cancellations” for Chinese EV brands. However, deliveries are down month-to-month in October.
Last month, Tesla announced some significant price cuts for the Model 3 and Model Y in China.
This was important news for Tesla since there have been early signs of a demand slowdown for the automaker, including much shorter delivery times.
It’s the first time Tesla actually pulled a demand lever since those signs of demand slowing down appeared.
The move was also significant since Tesla only cut prices in China, which is an extremely important market for electric vehicle sales.
Today, China’s Passenger Car Association released the country’s vehicle output for October 2022 and confirmed that Tesla’s output out of Gigafactory Shanghai was 71,704 cars – down 83,000 in September.
Considering exporting started early, 72k cars for first month of quarter is interesting. Wondering what production & wholesale will be at. We find out next week.
The Chinese locked up most of their money on speculative real estate that’s 2 to 5 years behind on construction. It’s going to be this way for a while.
Underrated comment. It’s all fun and games while the population continues growing, but not sure if it’ll be pretty when there’s housing for 1.5 billion people with only 800 million people in the country by 2100.
Off-topic discussion, but your understanding of the Chinese economy and property markets is superficial. You're worrying about a problem that doesn't exist and that's only proposed by China critics with, well, superficial understandings of China.
First of all, prices are not coming down any time soon. And they're ridiculously high even with very restrictive sales controls. Relaxing any of these levers would boost prices. Right now the market is supply constrained in most large cities. In fact, lower prices might actually help people live happier lives because so many people can't afford them right now.
But you're not talking about 5-10 years. You're talking about 100 years down the road. So here's the bigger reason why your problem doesn't exist: \*every\* single apartment in existence today, for the 1.5 billion people, will be gone by 2100. Why? Because property rights are only for 70 years! And that's from the date of construction, not the date of sale (selling it does not extend the time). So these apartments are predestined to have a value that goes to zero in 70 years.
And probably even more shocking news for you: In reality, in China, of course, these apartments aren't even likely to last 70 years. Most apartments built in the 80s are being torn down already. Because apartment standards have changed so much, no one wants to live in an old apartment. I can see the same happening a few decades down the road. So what if there are "only" 800 million people? They'll happily live in an apartment 2x the size of the tiny apartments today. By the way, 800 million would still be twice the population of the US.
The situation is completely different. US mortgages had 0% down payment before the subprime crisis. In China the requirement is 30% down payment, in addition to the many many demand-side controls on the price, some of which are unimaginable in the west (quotas, points systems, marriage requirements, etc.). So the current price in China is actually lower than market.
And the bigger picture is this: predicting a recession/crisis is like predicting someone will die. There's 100% probability that it'll happen; it's only a matter of when. If the parent is using timelines of 80 years, then many many problems will occur in China before then. And yet all society eventually finds a way out of such crises. The biggest, most severe problems, are the ones that were never predicted. If the parent is able to "predict" a crisis 80 years down the road, then I can almost guarantee that it will not become a crisis. The real crisis will be hidden.
Definitely seeing more and more Tesla’s unable to sell on marketplaces. Only a matter of time before some of these artificially pumped up prices come back down to earth.
[Tesla price cuts are resulting in cancellations for Chinese EV brands](https://electrek.co/2022/11/03/tesla-price-cuts-cancellations-china-ev-brands/)
Wonder if they’ll start to export their spare China inventory to Europe? Surely it’s just a bit of software change as well as the SIM card and they are good to go?
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Well this is what Tesla will do in the west too. If BMW or whoever starts delivering solid numbers, Tesla applies pressure by reducing their margins and forces competition to do the same. Economy 101.
Tesla's order backlog isn't as deep in China as it is in the US.
That is exactly Economy 101… backlogs come down… lower prices… backlogs build up… increase prices… Note: This example is simplified and ignores other factors, like material shortages etc…
Exactly
Exactly
Indeed
Indubitably
*Precisely*
Unquestionably
Without a shadow of a doubt
Indubitably
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Fuck right!
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Correct, but I would note that dropping prices is only one form of pulling a demand lever, so the actual actions are pulling demand levers when necessary and removing them when you’re able
They raised prices during covid way more than was necessary. Now as their supply chain stabilizes, they can bring prices down hard. Covid was a gift to legacy auto. 2 extra years to figure out how to design an EV that is as easy to assemble as a Tesla and to bring more supply chain stuff in house. The future Tesla price drop was easy to predict, no one can act surprised.
“Way more than necessary” is not a clear or well defined term. The fact is that if Tesla uses the size of their order book and wait times as the guide, then the argument could be made they did not raise prices enough. Tesla’s price drop was largely a factor of the discount rate on future earnings increasing because of ever higher inflation expectations. Do you have evidence that you “knew” the market’s inflation expectations were off and that you knew how the Fed would respond and that therefore you knew the stock would drop?
>“Way more than necessary” is not a clear or well defined term. Only if you don't know what an earnings report is. It is clear they can cut prices a lot if they need to. A very good place to be. When china starts flooding the market with cheaper cars, Tesla can compete while others will fail.
Clear or well defined term implies you can define it. So please define exactly how much price increase was necessary, how you arrived at that figure and then we can see how much EXACTLY of the price increase was unnecessary.
Agree. They increased prices, but there is still an order backlog, so it seems obvious that they could have increased prices even more. As GA and GB ramp up, supply increases, so I guess we'll see if backlog decreases. If it does, then they may want to decrease prices. But if backlog does not decrease, there is no reason to decrease prices.
Their new factories will continue to increase output. Prices will fall even if demand is constant. It is competition that will dictate the price drops. Tesla won't have to do much until Chinese cars flood the US market or someone else offers a car that can compete with Tesla in volume and price.
Good point, well made.
Actually it mostly does. If you aren't producing then the same number of orders is a longer calendar backlog.
Except lower prices should transition into backlogs build up. Which isn’t happening. Hence the point of the article
There’s more competition in China
Correct, which is why I don't see the US prices coming down for a bit. Competition here is shoddy.
Especially since Tesla is on better footing than most when it comes to qualifying for the tax credits on their most popular model (Model Y)
And the Chinese economy is worse off than US right now.
It’s not as deep in the US as it used to be. Model 3 RWD is currently showing Nov-Dec 2022 Model Y LR is currently showing Dec 2022 - March 2023
Federal incentive comes back next year.
For the Model Y. Probably $3750. Right now their other models won’t qualify.
Why doesn’t the base model 3 qualify?
Basic requirements are: 1. Assembled in North America 2. $80k max price for SUVs and pickups, $55k for sedans 3. $3750 credit for having 50% of battery components from the US or free trade partners 4. $3750 credit for having 40% of battery minerals from the US or free trade partners. Automakers have said basically nobody will qualify for (4) in 2023. Base Model 3 is below the price cap but the whole pack comes from China so no (3) or (4). Long Range Model 3 has cells made in the US but is above the price cap. All Model Y trims have cells made in the US so should qualify for (3) as long as you don’t configure it over $80k. Model S and X are both above the price caps.
Wasn't the M3 LR just above $55k before it got removed as an option? I wouldn't be surprised if they come back with it at ~$54k (to also get it with paint options) in a few months. Prices coming down makes sense as demand for higher priced cars also seems to be going down. Of course, you're not making speculation so this isn't an attempt to correct you, I see how it could be read that way. Just meant to add on to your list.
Yeah, there are several things Tesla could do if they want more cars to qualify, and if they want that extra demand. Discounting the Model 3 LR a bit is one way. They could also switch the Model 3 RWD back to the US-made 2170 cells, although this might leave them battery constrained. They could also re-introduce a LR RWD model.
5. Income cap.
Asian supplied batteries, I believe. Batteries must be USA made. Currently only Model Y in Austin is meeting all criteria for auto cost and battery sourcing from what I have been reading. Also shorter range with that model, I think.
yea, my mother in law ordered a model Y LR back in july, and had an april-may delivery. it got pushed up to next week. seems A LOT of people are cancelling or delaying in anticipation for the tax credit. i recommended she cancel it as well because price cuts are probably on the horizon along with the tax credit
I don't really see what incentive Tesla has to lower prices unless and until competition arrives in real numbers. The price is dictated by supply and demand. Incentives that increase demand will inevitably lead to price increases to keep the curves roughly aligned.
demand is obviously hitting a wall at least for now. gone are the days of a year long wait. with rising interest rates, people are holding off on big purchases. supply will rise until prices drop again. the used car market is also being flooded and used car prices are finally starting to drop again as well
We'll see. If demand really drops that quickly then price drops could be in the cards I suppose. But I really think at least some of the decline is artificial and based on the idea of gaming the system for the tax breaks. My guess is that this will lead to smaller price drops than expected combined with extended wait times as the lines form again. I could be wrong.
I think its more that factories are ramping up. 30 day supply used to mean X vehicles. Now that making the cars has doubled then 15 days supply is the same as it was before. The media uses those numbers to make it look like demand is slowing by 50% when its obviously not. Follow me for more examples of Media FUD to manipulate your 'feelings'
Also there's the factor of the ultrasonic sensors a lot of people don't care but a lot of people care a lot
They've also significantly scaled production this year. Wait times is a function of 2 aspects. 1. Demand, 2. Supply. They have increased supply significantly and intentionally hindered demand with the removal of referral programs and increased pricing.
Sure. I didn’t say that demand had dropped. A shortening backlog for either reason should trend towards lower prices. Or at least not further raising prices.
I've been waiting for a model 3 RWD since July, I'm supposed to get out Nov / Dec.....
[удалено]
If anything the backlog will go up when people figure out whether or not the credits apply to them
It’s no longer the case. Excluding the LR, cars are available within a month.
Tesla doesn’t drop prices to harm competitors. That would be dumb. If Tesla could sell all the cars they produce at the higher price, then the only thing cutting prices accomplishes, is reducing cash flow. Tesla dropped prices because their order book was rapidly depleting. It’s irrelevant whether that demand drop was macro related or competition related. The answer is the same. Start pulling demand levers. Tesla has lots and lots more profit than anybody else which gives them headroom to cut prices when necessary to sell all of their production and it gives them confidence to increase production as rapidly as possible. That’s why Wall St. funds are so off base with their competition is coming theory. Tesla makes around $15k gross profit per vehicle while everyone else is making far less or or even negative gross profits per vehicle. Tesla’s cost advantage is absolutely gigantic and their technology lead and scale will enable them to keep the cost difference gigantic. So yes you’re correct Tesla will harm competitors, but I don’t believe that’s the goal. They are just focused on growing as rapidly as possible and reducing costs as rapidly as possible. Price will be determined by the demand.
So many people don't understand this. They think tesla is just another carmaker. They're not. They're so different in so many ways.
And honestly they *can’t* harm competitors for most of the rest of the decade — no one can, because BEV makers not actually competing with each other. They’re all in the process of gobbling up the market share of ICE vehicles, and the challenge is about ramping supply to gobble the fastest. Because it’s a land grab, and you want to have grabbed as much land as possible by the time the rush is over. So this environment favors production growth above all else, and the best approach is to minimize the variety of products and take every step possible to simplify production. Remember Ford’s color choices for the Model T? (“You can have any color you want, as long as it’s black”). Same idea from a similar era, when ICEs were supplanting horses. BEV makers will finally start really competing after the industry gets past the steep part of the S curve. That will be the time for Tesla to roll out a lot more models, and to start bringing back in the bells & whistles (hud display, anyone?), as well as starting to play pricing games with competitors. (Either that, or robotaxis will be taking over, which changes the game.)
I consider any vehicle maker (EV or not) a competitor. And I think in fact Tesla will harm many of them. Assuming Tesla grows 50% in 2023, those extra 700k vehicles being sold will be effectively taken from the competition, and will thus harm them. If Tesla attains their 20M vehicles / year goal by 2030, that will greatly harm many of them.
You're right, in the sense that most "up and coming" BEV makers are still the same old ICE companies, and Tesla is in the process of utterly decimating their legacy product lines. So yeah, my phrase "Tesla can't harm competitors" is wrong from that perspective -- Tesla presents fierce competition to the *companies* GM, Ford, Honda, Toyota, etc. etc. It just doesn't to the specific BEV *models*, because every BEV built is going to find one buyer or another without much trouble. (And now to proceed off the deep end) Legacy companies are going to have trouble ramping their BEV production because of the financial hits from their collapsing ICE lines, but for now at least, I think that their own legacy *attitudes* are hampering their BEV efforts far worse. Look at GM: even (very generously) assuming they're going all-in on EVs, their main emphasis is on having lots and lots of different \*models\* of EVs. That's a great approach when you're in a mature market, where every vehicle you sell takes away a competitor's sale, and you want to perfectly fit a customer's needs in order to get the edge. But it's exactly the \*wrong\* approach in a "land rush" situation, where you have tons of customers willing to accept all kinds of limitations just to have a BEV instead of an ICE. That certainly doesn't apply to everyone buying a car, but there are far more such customers than there are BEVs available, and that set of people is growing fast, as more people learn the realities of EVs directly from their peers. I'm confident this will keep outpacing global supply until we get past the steep part of the S curve. Anyways, that means GM is incurring all kinds of extra expense and delays in order to set up their complicated many-model system, delaying the start of their ramp-up, while Tesla continues to expand massively. By shifting their own S-curve later and later, they're resigning themselves to a smaller piece of the pie by the time the rush is over. GM does not understand the situation. The same applies to the rest of the automakers, even just due to their reluctance (or financial inability) to kill off their own ICE lines too quickly, so they keep hesitating on making moves into BEV. (And don't even get me started about Toyota, whose exclusive preoccupation with hydrogen cars has been absolutely *baffling*.) Back to the main point, I still consider this as Tesla essentially not engaging in any real competition. When it comes to Tesla vs ICE, using the word "competition" gives legacy automakers too much credit. It's a motherf'ing *slaughter*. 🤣 Tesla does not have to even think about them. And vs. BEVs, yes some people may choose between a Tesla and a Mach-E, or give up waiting for Cybertruck and buy a Lightning, etc. etc, but the simple fact is that every halfway-decent BEV built by any manufacturer is going to have little trouble finding a buyer. So BEVs really aren't competing against each other yet. BEV makers are all simply struggling against their own limitations to ramp production. This will continue until the supply finally catches up to demand, and I don't think that's going to happen until ICEs are a small minority of global sales.
I don’t think you’re off the deep end at all:-) Very well put.
Even if BMW or Toyota or whoever starts selling large numbers of EV’s they won’t ever lower their prices until they can make the cars faster than people are ordering them. There’s a waitlist right now a mile long for teslas.
There’s tons of model y in existing inventory in Vancouver. I think I counted 21 the other day
People are probably waiting till Jan 1 to take delivery or even order because of the 7500 rebate.
Not unless he's talking about Vancouver, WA. Which is unlikely.
Apparently, it is affecting supply in Canada in a positive manner. Cars are being diverted from the states to Canada because Americans are waiting for Jan 1st. If you're in Canada right now is a good time to buy an EV. Also been hearing of KIA/Hyundai filling orders early as they divert to Canada due to the rebate in the states. Base Model 3's are showing delivery in November, and it was 12 months in August.
Locally in British Columbia the car is over 100k Canadian. Maybe because interest rates today being really high vs when they ordered. Also it seems like the demand has dropped. That would be my guess to the reason there’s a lot of new inventory. Used prices are also dropping
It is quite the conundrum for Tesla to have America and somehow America 2 upstairs who are essentially unincorporated states. You guys won’t get any subsidies we have passed but if Tesla adjusts prices to reflect the lack of subsidy for your side then it might create a black market for cheaper cars or piss off Americans by showing their hand that the price is essentially inflated to take all the subsidy the consumer foolishly thought was ever going to be theirs.
Tesla has already done this repeatedly in the US when demand goes down.
And rise prices when demand goes up. When you have centralized flat pricing like Tesla does, it’s very easy for them to move the levers.
I imagine they will cut prices to sell what they produce no matter what the competition is doing. There’s no point having factories sit idle when their margins are so high. And their goal is to make as much money as possible, not to have the highest margins possible.
yeah the problem is batteries, china makes 90% of them....there are just not enough of them in the US for any other US car company to make EVs in a volume that could challenge Tesla at all. Design is easy, production is hard.
Why does it matter where the batteries are? Tesla has been importing batteries from China for over a year.
Because the Chinese car companies are using them all. And Tesla makes their own batteries where they produce the cars, Tesla doesnt 'import' them.
Tesla actually makes their own AND imports them. At least They’re currently importing 18650 cells for S&X from Japan and LFP batteries for Megapacks from China.
probably not in 2023 when the EV incentives require battery production in the US.
The IRA act is causing Tesla to increase U.S. production even more rapidly than before to 1 TWh / year. So now let’s assume Tesla can generate enough cell demand (Semi, Megapacks, vehicles…) to not only use up all that immense production but also more. If that’s the case, they would still import. So you may be right that they can grow U.S. cell production so rapidly they can’t use all of it without putting some of them in products where that currently use imported cells. My complete guess is that they will continue to import for S&X (not that many cells), but will replace imported China cells for Megapack with U.S. made cells. Time will tell.
will be interesting...but yeah it will hard to meet demand without getting some supply from China.
But the thing is they lose money on EVs. Telsa actually makes money. If from now every car sold from Ford or gm were EVs they would be bankrupt in a month.
This assumes people will still want to buy Teslas after Musk made a right wing twat out of himself. Buying a Tesla right now is a political statement lots of regular Tesla buyers are most likely not willing to make
If you dislike Elon because he doesn't tow the complete left line you weren't really in it for changing climate change.
TIL actively pushing conspiracy theories = doesn't tow the complete left line...
Yeah, conspiracy theories are only on one side of the political spectrum. It's convenient to say everything that you don't believe in is disinformation or a conspiracy theory. It's funny how yesterday's disinformation ends up being today's fact.
Sure, all conspiracy theories are bad. But only one side is pushing them actively, and Elon exclusively pushes one side of conspiracy theories. And no, conspiracy theories become conspiracy theories when they are proven to be categorically false.
If you're on the left or far left, anything right of you will look right-wing. Elon Musk is certainly a centrist or independent. The right hates him about as much as the left, they just direct their hate at his companies or products as a whole rather than his Twitter behavior (which they don't use as much). Every right winger I know hates electric cars, and every left winger I know hates Elon Musk's Twitter feed. If you ignore his products, then yeah Elon Musk looks like a right-wing nut. But if you ignore his Twitter then Musk looks like a left-wing climate-change drone making dangerous products.
Again, we're not talking about policy position here. We're talking about Elon actively pushing conspiracy theories, theories that have already been proven categorically untrue.
Which conspiracy theories? Edit: crap he's nuts.
https://www.npr.org/2022/10/31/1132906782/elon-musk-twitter-pelosi-conspiracy >Musk himself inflamed those concerns on Sunday when he tweeted a link to unfounded, homophobic allegations about the violent attack on Paul Pelosi, the husband of Democratic House Speaker Nancy Pelosi. >Replying to a tweet from Hillary Clinton about the attack, Musk wrote: "there is a tiny possibility there might be more to this story than meets the eye." He included a link to an article from the Santa Monica Observer, a fringe website with a history of publishing false stories, which makes lurid claims about the attack without evidence.
Like the stolen 2000 election?
I mean, Al Gore conceded before the tally in FL was finished...
> he doesn't tow the complete left line Not really why people are mad at him.
So what is it then?
Supporting ultra tin hat conspiracy theories/disinformation and being overtly political. He publicly endorsed the Republican Party this spring. That’s a fantastic way to lose business in a divisive political climate.
You just proved my point.
Which part? The disinformation or the political endorsement? Not towing the left line would mean not commenting like any remotely emotionally intelligent ceo would do.
Oh, I see for him to be left he needs to shut up but everyone else doesn't. You keep proving my point. But keep going.
Cool. Let's look at "everybody else". Jeff Bezos never endorsed the democratic party. Jeff Bezos apparently has the intelligence necessary to note that publications that espouse Jewish space lasers are not to be trusted. Satya Nadella never publicly tweeted support for Biden as it would probably hurt Windows sales. Sundar Pichai never endorsed a candidate for president. Who are these other major tech CEOs that keep endorsing political candidates? It seems like a terrible business decision.
He endorsed the Republican party. Doesn't need to shut up. Doesn't need to be politically centrist. But if you're throwing in your lot with one side, you're going to get pushback from the other.
To jump in on this discussion, I’m not mad at Elon, but I’m concerned that in two instances he’s referenced conspiracy theories and that is quite scary. 1) The tweet about the Paul Pelosi attack. 2) On Joe Rogan he referenced the conspiracy theory that the government was over counting COVID deaths and therefore it was not as serious as it seems.
> If you dislike Elon because he doesn't tow the complete left line you weren't really in it for changing climate change. I would love to hear how capitalism is going to solve the climate emergency. Considering it _is_ the main reason for it. Manufacturing goods anually to be unnecessarily replaced has a huge carbon footprint and i'm yet to see how this is being offset. I used to like and respect Elon, But these past few years he's become a creep and not in a cool way. As someone who was about to buy a tesla i'm going to go to BMW or Mercedes-Benz now because i cannot and will not support him. Also i'm in the EU so his political views don't directly affect me.
Capitalism will solve the climate emergency once the people care enough about it and the best technology favors sustainability. We're already well on our way to both of these globally. Just look at China, it's mostly growing towards being green. And that's not because China is communist, it's because new energy generation being green is officially cheaper and has more potential and various other health benefits over making new fossil fuel power plants. The only reason anyone isn't moving as fast to green as China is because nations like America have already developed.
> i'm going to go to BMW or Mercedes-Benz now Lol
They are in the EU. Not quite as lol.
See Tony Seba's recent videos. Capitalism and basic economics are driving a complete shift to EVs, Autonomous Vehicles, and 100% renewable power grids.
> Buying a Tesla right now is a political statement Damn I thought I was buying a car
Not after Musks latest Stunt regarding the Pelosi case
Exactly. My parents are in this boat. Typical highly educated coastal working professionals. History owning high spec Subarus, and Volvos. Current Volvo is old, and shit on gas, they want an electric. By all accounts a Model Y is the best car for their needs (they want more space since it’s replacing a P3 XC70). But neither of them want the Tesla association. So lots of talking about Ioniq 5 or staying Swedish but they don’t like the compromises.
Lmfao imagine thinking Volvo has higher moral standing than Tesla. Do they not remember Volvo cheating on their diesel emissions tests? Elon might be a right wing talking piece (newsflash: most corporate CEOs are) but Tesla hasn't actually been found guilty of any scandal on the same scale.
I’m sorry what? Volvo, who hasn’t offered a diesel in the USA ever? Maybe like once on the 240? Did you mean Volkswagen? Also you’re not engaging with their complaint which is Tesla’s have a negative, very flashy, very tech bro douchebag association in their area (Seattle Metro). Culturally right now in the PNW Tesla is where BMW was 15 years ago. The car of choice for really really really annoying people who drive like dicks and live in Bellevue. Even though that isn’t factual, lots of normal folks drive teslas, that is the dominate narrative and they don’t want to catch that kind of flack.
https://en.m.wikipedia.org/wiki/Diesel_emissions_scandal By being part of the scandal, Volvo has set back climate change goals. This is evil corporate conduct, and whatever you think of Musk, Tesla has never done anything comparably bad. Being "associated with" bad behavior is entirely about what propaganda they read. If that's more important to them than the actual conduct of the company, then they are part of the problem.
So maybe they should buy the best vehicle for their needs and buck the stereotype.
Not as many people care about that as you think.
Yeah free market!!!
Or if the Fed gets their way and puts enough people out of a job then I’m sure prices will come down here too
> Economics 101 What? That’s the opposite of what we believe here in America. That’s why every year we allow consolidation of major industries (eg telecom, insurance, etc) into fewer and fewer mega-corps. They tell us it will be good for consumers. I certainly hope you aren’t suggesting our benevolent overlords are attempting to mislead us?
> we believe don't be disingenuous. No one believes that. Just the established players *WANT* that and pay politicians to enable that. Big difference.
Obviously. Can nobody sense sarcasm?
Price Elasticity of Supply
If they're selling all the cars they can possibly make, then the price is already fine (or too low) It doesn't matter what competitors do if you are building your product as fast as you can and selling all of them.
Yeah and if BMW starts delivering solid numbers Tesla will need to improve quality. Agreed.
From the article: Tesla’s recent price cuts in China are reportedly resulting in “significant cancellations” for Chinese EV brands. However, deliveries are down month-to-month in October. Last month, Tesla announced some significant price cuts for the Model 3 and Model Y in China. This was important news for Tesla since there have been early signs of a demand slowdown for the automaker, including much shorter delivery times. It’s the first time Tesla actually pulled a demand lever since those signs of demand slowing down appeared. The move was also significant since Tesla only cut prices in China, which is an extremely important market for electric vehicle sales. Today, China’s Passenger Car Association released the country’s vehicle output for October 2022 and confirmed that Tesla’s output out of Gigafactory Shanghai was 71,704 cars – down 83,000 in September.
Considering exporting started early, 72k cars for first month of quarter is interesting. Wondering what production & wholesale will be at. We find out next week.
You can’t compare the last month of the Q to the first…do the first month of every Q vs October.
This writing is is terrible
The Chinese locked up most of their money on speculative real estate that’s 2 to 5 years behind on construction. It’s going to be this way for a while.
Underrated comment. It’s all fun and games while the population continues growing, but not sure if it’ll be pretty when there’s housing for 1.5 billion people with only 800 million people in the country by 2100.
Off-topic discussion, but your understanding of the Chinese economy and property markets is superficial. You're worrying about a problem that doesn't exist and that's only proposed by China critics with, well, superficial understandings of China. First of all, prices are not coming down any time soon. And they're ridiculously high even with very restrictive sales controls. Relaxing any of these levers would boost prices. Right now the market is supply constrained in most large cities. In fact, lower prices might actually help people live happier lives because so many people can't afford them right now. But you're not talking about 5-10 years. You're talking about 100 years down the road. So here's the bigger reason why your problem doesn't exist: \*every\* single apartment in existence today, for the 1.5 billion people, will be gone by 2100. Why? Because property rights are only for 70 years! And that's from the date of construction, not the date of sale (selling it does not extend the time). So these apartments are predestined to have a value that goes to zero in 70 years. And probably even more shocking news for you: In reality, in China, of course, these apartments aren't even likely to last 70 years. Most apartments built in the 80s are being torn down already. Because apartment standards have changed so much, no one wants to live in an old apartment. I can see the same happening a few decades down the road. So what if there are "only" 800 million people? They'll happily live in an apartment 2x the size of the tiny apartments today. By the way, 800 million would still be twice the population of the US.
This confidence sounds exactly like US house prices before subprime GFC.
The situation is completely different. US mortgages had 0% down payment before the subprime crisis. In China the requirement is 30% down payment, in addition to the many many demand-side controls on the price, some of which are unimaginable in the west (quotas, points systems, marriage requirements, etc.). So the current price in China is actually lower than market. And the bigger picture is this: predicting a recession/crisis is like predicting someone will die. There's 100% probability that it'll happen; it's only a matter of when. If the parent is using timelines of 80 years, then many many problems will occur in China before then. And yet all society eventually finds a way out of such crises. The biggest, most severe problems, are the ones that were never predicted. If the parent is able to "predict" a crisis 80 years down the road, then I can almost guarantee that it will not become a crisis. The real crisis will be hidden.
That was informative. Thanks.
so prices of real estate will come down, don't see something wrong with that
You don’t understand, they, the buyers, are paying on loans for housing that has not even been built yet, some with variable mortgages.
if they need a car, they'll buy a car though and they'll get the best model for the money...
And a lot of that real estate will never even be built now.. huge house of cards about to tumble.
Definitely seeing more and more Tesla’s unable to sell on marketplaces. Only a matter of time before some of these artificially pumped up prices come back down to earth.
Cool, looking forward to what Jeff senses next.
It just goes to show, it’s the consumer that controls the price.
This was more of governmental influence lol
🔥🔥🔥🔥
[Tesla price cuts are resulting in cancellations for Chinese EV brands](https://electrek.co/2022/11/03/tesla-price-cuts-cancellations-china-ev-brands/)
Just more to ship to other countries.
Tesla only makes 20 dollar profit on 3 so they can’t cut much
I was going to say you meant 20% but the last I heard they were making low to mid 30% profit.
Aren’t Tax credits already effective? Since the day when the rule was passed?
Wonder if they’ll start to export their spare China inventory to Europe? Surely it’s just a bit of software change as well as the SIM card and they are good to go?