Another Price Increase? 11/11

[raptor5244]

So Tesla raising prices due to shortages of parts, I don't get how raising prices changes anything. Someone explain it to me.

Simple supply and demand. With the supply shortages Tesla and many other companies can only build so many vehicles. The cost of the chips, raw materials, etc. required to build a car all go up in price so some of that is passed on to the consumer. Furthermore, demand is very high and with 6-9 month wait times Tesla can raise the price and maximize the profit per vehicle. Another variable is this impending tax credit, Tesla is raising the price, which will be offset by the tax credit. Same net price to customer, Tesla makes more money per vehicle. If you followed the pricing a couple years ago when the tax credit was still available you would see the price of the car drop by roughly the same amount of the tax credit available. They are just doing the opposite here. This is where EV competition is good for the consumer. Tesla should enjoy this for the next 2-3 years but once you can buy an EV with 300 mile range with a quality interior and desirable styling Tesla will the premium for EVs will have to come down. For example, for similar pricing as a Model Y that new Cadillac Lyriq looks a lot nicer.

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www.cadillac.com

You see this happening as well for traditional ICE based vehicles. The difference is that the manufacturers are all pretty much keeping the MSRP prices flat but the dealers are selling at MSRP or higher since they have no vehicles and need to maximize profit per transaction. For example, Chevy has 9-12 month wait times for the C8 Corvettes but the MSRP has stayed pretty much the same despite the supply challenges. However, dealers are charging $20-$30k markup if you want one now.

 

[SpaceShipDrvr]

I thought buying my Model Y in May was stupid because there would be price decrease over economies of scale.

I was so wrong.

That economy of scale won’t really kick in until Austin AND Berlin are going at full capacity. (Which will double Model Y production numbers) That is likely a year away. I don’t see any price decrease until that happens… and even then they will have a 9 month backlog to go through. Demand far exceed supply for the next 12+ months.

That assumes of course that the supply issues have been sorted out by then too.

 

[TSLY]

Just sold my leased BMW for 9% over residual value. Life's not supposed to work like that! It chopped several grand off my MY out of pocket. I've saved over $15K on my July order through the lease sale, EV credits, price hikes, taxes, financing, Supercharging, premium connectivity, etc. It's not just Tesla. The car market is crazy right now, which I attribute to the parts shortage -- which I, in turn, attribute to Covid.

 

[voltaren]

It really is supply and demand. Wholesale dealer auction price (Manheim) on the MY base RWD is between $58-63k. There was a base no option white MY RWD that sold for $57,250 with 13k miles at the end of Oct. That’s a $40-43k car in February that appreciated 50%.

 

[voltaren]

Additional wholesale info with 10k mi:
- ‘21 MYSR - $58k avg
- ‘21 MYLR - $66k avg
- ‘21 MYP - $73k avg

I should mention these are like 30-90day rolling averages, the prices in the past month are even higher.

 

[OrthoSurg]

I have both. M3 drives better

Totally true

 

[WillwayGTO]

This is the definition of supply and demand. High demand price goes up. Inflation also. Too many $$$ chasing too few goods. Economics 101. I needed a new car in Feb 21 glad I bought then. Never had a car worth more with 10k miles on it than what I bought it for. Luck rather than skill. Tho.

 

[raptor5244]

This is the definition of supply and demand. High demand price goes up. Inflation also. Too many $$$ chasing too few goods. Economics 101. I needed a new car in Feb 21 glad I bought then. Never had a car worth more with 10k miles on it than what I bought it for. Luck rather than skill. Tho.

Yep, the question is how bad will the depreciation hit be on these cars in 2 years once things stabilize? Once folks see normal 8-12 week lead times on the Tesla website the used pricing will stabilize and then start to drop. The depreciation on the Performance trims is actually pretty bad. My 2019 M3P was $60k minus $3,750 tax credit. About 9 months ago I could only get $41-42k on trade. Car only had 7,000 miles. That is a lot of depreciation for a 2 year old car with low miles. Anyway, once the supply shortages kicked into high gear the car was suddenly worth $48k so I sold it. Probably get north of $50k now. Now on the flip side my 2019 SR+ cost $37,250 after the tax credit, it has 28k miles and Carvana is now offering over $40k for it. They offered $32k 9 months ago and Tesla trade-in was a whopping $25k., lol.

 

[Spuzzz]

I remember when their big thing was the $35k car and making EVs affordable for the masses, save the planet and all that. The more expensive cars were supposed to pave the way for these.

Yes well the fact that our government has been printing and spending money for the last 3 years means that it now takes $50k to get the same buying power as $35k in 2018.

 

[SigNC]

Slowly walking the price up to offset the pending tax credit along with more demand than they can satisfy. Makes sense.

 

[rob968]

You see this happening as well for traditional ICE based vehicles. The difference is that the manufacturers are all pretty much keeping the MSRP prices flat but the dealers are selling at MSRP or higher since they have no vehicles and need to maximize profit per transaction. For example, Chevy has 9-12 month wait times for the C8 Corvettes but the MSRP has stayed pretty much the same despite the supply challenges. However, dealers are charging $20-$30k markup if you want one now.

Exactly this. It’s happening everywhere, but it’s far less visible to the consumer since it’s hidden at the dealer level. Personally, I love the transparency through Tesla’s model, but it’s difficult for the masses to understand since we’ve all been trained on a different model for our entire lives. Price changes make for juicy headlines, so the media is quick to jump on it as the prices fluctuate. Transparent pricing also amplifies both sides of the coin (buyer’s remorse and the feeling of pricing victory) after purchase, since it’s very much in your face whether you paid more or less than the guy who bought later. You typically don’t experience the same feeling with the traditional dealer model where price changes aren’t so public.

 

[CapeOne]

Exactly this. It’s happening everywhere, but it’s far less visible to the consumer since it’s hidden at the dealer level. Personally, I love the transparency through Tesla’s model, but it’s difficult for the masses to understand since we’ve all been trained on a different model for our entire lives. Price changes make for juicy headlines, so the media is quick to jump on it as the prices fluctuate. Transparent pricing also amplifies both sides of the coin (buyer’s remorse and the feeling of pricing victory) after purchase, since it’s very much in your face whether you paid more or less than the guy who bought later. You typically don’t experience the same feeling with the traditional dealer model where price changes aren’t so public.

I wouldn't necessarily say Tesla’s "model" is more transparent. When you buy a new Tesla MY LR today for $60,190 you may have no idea that the price of the car was $50,190 back in March and you are essentially paying $10k over sticker. If a "traditional" dealer is charging a $10k markup over sticker, you know it.

 

[tbcboo]

That economy of scale won’t really kick in until Austin AND Berlin are going at full capacity. (Which will double Model Y production numbers) That is likely a year away. I don’t see any price decrease until that happens… and even then they will have a 9 month backlog to go through. Demand far exceed supply for the next 12+ months.

That assumes of course that the supply issues have been sorted out by then too.

At current time and over the next year as Austin and Berlin ramp up, demand will continue to climb heavily as well. So it might have a net 0 effect in the next year until more competition comes on.

 

[HokieHaden]

It’s not money out of Tesla’s pocket but if they were selling the Y for 52k and then it qualifies for an 8k rebate they can raise the price to 60k and make an additional 8k while the price to the customer stays the same. So effectively they are negating the rebate for the consumer and taking the credit themselves.

Bingo

 

[rob968]

I wouldn't necessarily say Tesla’s "model" is more transparent. When you buy a new Tesla MY LR today for $60,190 you may have no idea that the price of the car was $50,190 back in March and you are essentially paying $10k over sticker. If a "traditional" dealer is charging a $10k markup over sticker, you know it.

I can see that. With the dealer model you basically know whether you're paying over or under a set benchmark (MSRP) at any given time. With Tesla, you know how much you're paying "right now", and only note the changes if you follow pricing or catch a headline.

 

[raptor5244]

Also keep in mind how strong the used market is right now. People are getting ridiculous offers for their trade-ins which is helping to offset the increasing new car prices.

 

[Kairide]

I wouldn't necessarily say Tesla’s "model" is more transparent. When you buy a new Tesla MY LR today for $60,190 you may have no idea that the price of the car was $50,190 back in March and you are essentially paying $10k over sticker. If a "traditional" dealer is charging a $10k markup over sticker, you know it.

Agree, I don’t think Tesla tries to be transparent. If so, the default price on their website would not be the “Potential Savings” price.
Also, the average new car price has risen 12% over the past year. Tesla Model Y prices have risen 18% since January alone, more if you count February’s low.

 

[SpaceShipDrvr]

Also keep in mind how strong the used market is right now. People are getting ridiculous offers for their trade-ins which is helping to offset the increasing new car prices.

The used car market is strong *because* of the new car market situation. Not the other way around.

 

[Tejkalra]

It's like in high school you will find some one sneaking drugs to you for free. Once you get hooked up then you start paying small amount like $20 a puff.. Soon u end up selling things to get over with your addiction. Same here... Tesla is bringing 35K model 3...that 35K was never available and if so long wait. Then slowly price increases like 1K here 2K there. Soon u find that 35K car that u were interested in you end up paying 60K. I bought model Y for 52K and booked another for 54K. Now 58K...wow. Not only that they want you to buy that 2000 dollar wheel option which is not only expensive but it drains your range. So now everyone who wants tesla are finding them self in financial situation. And trust me as of right now there is no better option and that's what Elon is cashing on.

 

[Tejkalra]

Why? You think prices will just go up forever?

Well that was the business strategy all along from beginning.... Eliminate competition... And then when no competition... Raise price... Cha ching