Musk's gut punch to rival automakers on price

MARKETING: TESLA PRICE CUTS



Just when the media was portraying Tesla chief Elon Musk of being capricious and unstable (regarding Twitter, his $44 billion playtoy) he taught the world's automakers a lesson in economics.
He cut the price on Tesla cars. Suddenly and dramatically The cuts run from roughly 10% to approximately 15%
Cutting his profit? Yes, that hurts but he had raised Tesla prices in the previous year so he's just getting back to where they once were or ve below in some cases.
I cite the website Inside EVs : " The Model Y Long Range is now 20 percent cheaper than before, now costing $52,990 compared to $65,990 – that’s $13,000 less, making the five-seater model again eligible for the $7,500 federal tax credit. The Model Y Performance is around 19 percent cheaper, now costing $13,000 less than before. Its price therefore drops from $69,990 to $56,990.

Tesla also made the larger Model S and Model X cheaper. For the Model S, the price has dropped by $10,000 (around 10 percent), from $104,990 to $94,990, while for the Plaid it’s even more significant – 15 percent, or around $21,000, bringing its price down to $114,990 from $135,990. The Model S Plaid gets the biggest price reduction of the entire lineup.


The Model X is also cheaper, by 9 percent or $11,000, now costing from $109,990 instead of $120,990. The Plaid variant is 14 percent cheaper too, taking $19,000 off its previous price of $138,990 and bringing it down to $119,990.


Keep in mind, though, that these big price cuts come after a year of price increases, that brought all models’ prices to never-before-seen levels. The manufacturer hopes that this will allow its vehicles to remain America’s most popular EVs in the face of ever more talented rivals being launched."

A LESSON IN CAPITALISM

There's an old saying "Don't bring a knife to a gunfight." Musk brought a gun to the more or less ancient procedure of carmakers stating list prices and more or less sticking to them for the year (though there's been dealers accused of vastly overcharging on desirable models) Teslas are bought online so he can change the prices instantly.

Once it became apparent that Teslas were being excluded from government rebates (rewards essentially) to consumers because they were priced too high, Musk just ordered the price lowered on some models to qualify for the rebate.

That not only hurt the companies with rival products that were enjoying being able to offer that rebate but it hurt the start up companies like Fisker, Lucid, Rivian et al. Sort of a gut punch as it were.

Hey welcome to capitalism! American companies have rarely had that kind of flexibility in recent years--to instantly make changes in prices across the board, to turn on a dime.

As the son of a former automaker employee (my father worked the line at the Rouge in the 1930s, building Model A Fords) I like to see Musk has not only built factories in the USA, but is making them paragons of production efficiency.

Those automakers coming into the US with electric cars face potential problems like a cut-off of supplies if there's political strife between the US and whatever country it is.

There's several small countries where the Tesla is not only the best selling electric but the best selling luxury car, Oh maybe the drop in price took some Teslas out of the luxury class as defined by price but we all know its features are luxury car like.

The only thing holding back Tesla's future penetration is Musk's insistence on avoiding the frequent model re-stylings that other automaker (particularly when Harley Earl ran GM styling) convinced us was necessary I grew up in the '50s and in my neighborhood there was a bit of a cloud over your head if you were seen driving "last year;'s car," recognizable because it had tailfins that were too low compared to the latest model. You were mentally branded a loser.

Musk, in a way, freed us from that mindset. That delusion of owning the latest thing styling wise, when by constant over-the-air-up-dates, Teslas are often the latest thing electronically on the road.

The only thing holding him back from grabbing larger market share in any one category is Musk has promised models in heretofore untried categories for Tesla as long as six years ago that still aren't in showrooms (Oh, I forgot he doesn't need showrooms). If he had salable models in all of these niche slots below, he could increase production on any one of them to dent the competition:

-4-seater convertible

-roadster

-pickup truck

-station wagon (not SUV, the old traditional kind)

But now he's a tad busy rolling out a semi that could change America's trucking if the maintenance cost proves measurably better than the diesel trucks that comprise all of long haul trucking.

Oh, and Mars. He's still talking about going to Mars.A slight distraction. I don't recall any heads of US automaking firms that, on the side, ran a multi-billion company that is making such strides in a field far more technical than the auto industry.

I didn't get too far on writing a Musk bio--i was afraid he was too quirky, too unpredictable. Now I am just observing but admire the way he turned on a dime, getting thousands of Teslas eligible for a government rebate and showed other electric car makers that he can take a hit profit-wise while they can't.

Isn't there an old saying "Don't mess with Texas..."

Comments anyone?

 

It's not for the buildings//locations that he refused then. He thinks the whole concept of dealerships piss people off. Look all the people who answer an ad for a truck at a dealership and when they get there the saleman says there's a $10,000 premium. And then dealers are always pushing maintenance you don't need. My dealer told me a year go i needed new brakes. i stopped going there. 15,000 miles later my independent mechanic says the brakes are fine. Musk knew Americans hate dealers.