Big price drop

[afadeev]

Why not just imagine a world full of EVs instead of gas cars?

Why not imagine 3 super-models in your bed, instead?
Way more exciting, don't you think?

and lowering the price of EVs definitely helps in heading that direction.

Not really.
We can start another thread on the subject of EV manufacturing and raw material constraints, but it's besides the point.

And if "heading in that direction" was the motivation, it would have happened long ago.
Please stop being silly.

Cars are not an investment.... Cars are for the most part depreciating assets.

True.
But the rate of asset's depreciation has a very material impact on many folks perceived and/or real sense of wealth.
An acceleration of asset deprecation leads to reduction in perceived and/or real wealth.
And wealth matters in a capitalist society.
OK, comrade?

 

[Hiline]

I am honestly stunned that Tesla was able to cut prices by this much. Their production cost must have gone way down. At these prices, who can compete against Tesla in the US? Tesla is pumping out millions of cars per year now.

 

[RedY2023]

Did anyone here actually took delivery in January before the price cut? Can they get their price adjusted? They paid full price and no tax rebate.

 

[digitaldriver]

You purchased an item because you felt that the price was acceptable for what you were getting in return. This hasn't changed. Save for a few unique and rare outliers, cars depreciate at massive chunks each month. Moreso when they are brand new. This is a known quantity and why people who's goal is financial independence stay away from buying new. Some depreciate at different rates but depreciate they all do.

People need to chillax about the price roller coaster. This is nothing new, especially with Tesla. You knew this when you bought in and nobody forced you to buy anything. The prices go up, the prices go down. The clock turns and time marches on.

Your purchase gives you all of zero right to any perceived depreciation rate. It's silly to think that you have some sort of claim to your car being worth anything at any point after you take delivery. It's unreasonable and Tesla doesn't care anymore than Ford, Chevy or Toyota. The only difference is that Tesla is smaller and isn't quite as insulation from these swings as the larger legacy manufacturers but they also have had massive price swings lately. We will likely see those prices come down too once they get their inventory of raw materials and supply fully restocked. Since they're larger, these changes take longer and sometimes aren't as big. Nature of the beast.

Ignoring the outside forces such as inflation and supply line issues that directly impact these figures isn't doing anyone any good either. Eggs are $7 per dozen and out-of-stock. A few months back I could get a frunk full of eggs w/o even putting a dent in what was on the shelves @ $2 per dozen. You bought a car for transportation and enjoyment so use it for those things. When the time comes to get something else is when you'll realize whatever financial impact it brings to sell. If that seems uncomfortable, it should. The time to avoid that volatility was when you made the decision to buy when you still had control... not after.

First, I didn't know about Tesla dropping the price. Absolutely new to me.

Second, stop looking for an excuse for Tesla doing this bullshit. I bought all my cars new and never seen this before. I've owned more than 10 cars.

Lastly, Yes cars depreciate but when your car depreciates $8,000 overnight this is not cool.

 

[digitaldriver]

Will other EV makers catch up with Telsa? Tesla is showing to the world right now they can lower their prices by a lot because of their efficiency (mega mold, simplicit dash layout, no dealership, no advertising, etc, etc..) not to mention their tech which is still further along than any other company.

Tesla is not a car company. It is a company that makes computers on wheels. BMW, Mercedes, etc.. makes cars.. cars that act like status symbols therefore prices must be at a certain level to have brand consistency. Tesla is not like that which to be honest is an innovative idea.

Imagine a time when people don't care too much about the brand of a car... it's just a car... prices can go up or down based on demand and the cost to make a car. Not to keep the brand imagine consistent so people who brought the car earlier don't get upset because their car is somehow less valuable because other people can now afford it, even though it's the exact same car before and after the price cut.

Name me one legacy manufacturer that reduced the price by $8,000 overnight. On a brand new inventory that doesn't even exist, they have to build it. Hence that's why you have one to two months of waiting time.

I understand if you reduce the price on demo cars no problem, but not on brand new cars that have to be build.

 

[Hiline]

Name me one legacy manufacturer that reduced the price by $8,000 overnight. On a brand new inventory that doesn't even exist, they have to build it. Hence that's why you have one to two months of waiting time.

I understand if you reduce the price on demo cars no problem, but not on brand new cars that have to be build.

Wait until the legacy manufacturers react to Tesla's price cuts.

 

[digitaldriver]

You may have a valid point about peculiarities of Tesla customer service and communication style of the CEO.

However, if Audi / BMW / Mercedes were sitting on three (3) quarters of inventory build up, they would also lower prices to move the dead-beat inventory. They might not be so brazen about it (e.g.: call it a promotion, or winter credits, or something sexy). But the prices would be lowered.

The clumsy across-the-board price cut is a response to sagging demand, and is designed to stimulate sales. Nothing more, nothing less.
The same scenario unfolded for the same reasons in China a few months ago. BTW, it worked - China sales have rebounded.

Lowered by how much. My good friend got plaid right before me. Also pretty upset with about 20% drop. This is nonsense.

 

[Takumi]

Name me one legacy manufacturer that reduced the price by $8,000 overnight. On a brand new inventory that doesn't even exist, they have to build it. Hence that's why you have one to two months of waiting time.

I understand if you reduce the price on demo cars no problem, but not on brand new cars that have to be build.

That's the problem. Tesla's conversation is not with us, but with Wall Street (Analysts). They are not only talking to Wall Street, but showing their work (numbers) too.

Tesla is not setting the pace, they're stilll accelerating despite being in the lead. If the sentiment is that the Legacy Auto is "catching up", expect Tesla to raise the tempo up. It's no secret. It's in the mission statement.

 

[Takumi]

That's the problem. Tesla's conversation is not with us, but with Wall Street (Analysts). They are not only talking to Wall Street, but showing their work (numbers) too.

Sorry, my mistake this isn't to the Analysts. This move is speaking to the government (UAW?). You're doing the incentives wrong, but we'll play. Will Legacy? Is Legacy capable? Toyota?

 

[holeydonut]

The FOMO for those who bought too early (paid the higher price) is worse under Tesla's pricing model vs normal automakers.

Car buyers under the normal (non-Tesla) dealership model were paying huge variances compared to other customers. Incentives/net-pricing changed all the time, but the customer never saw it. The traditional sales model involves customers going into a vehicle showroom and haggling, so each deal is unique. And due to all the clever obfuscations, it wasn't terribly clear what any one person paid for a vehicle compared to another customer purchasing the same build.

At a high level, dealerships could make margin on each transaction by...

1) Throwing the amount of factory-to-dealer incentives the automaker has offered against that inventory
2) Diverting a portion of dealer margin/holdback/sales-commission into the transaction
3) Fenagling with points/resid on leases
4) Screwing with the perceived sale-price (before taxes and doc-fees, etc) of a vehicle
5) Messing with the used-car-trade-in allowance
6) Fudging interest rates in partnership with their captive financing arm

Prior to COVID, Buyer A could get a "sweet deal" on item #4 but get absolutely HOSED on items #5 and #6. Buyers never saw items #1, #2, #3 so they were oblivious what was actually going on behind the scenes to make the deal work. Prior to COVID, the non-Tesla dealer negotiation model always had big savers (those that traded the sweat of haggling for saving dollars) and big spenders (those that just paid MSRP).

Back in 2006, I got a $55k MSRP car for $28k cash after taxes and doc fees (thanks Financial Crisis!). Someone else could have paid $40k from the same dealership on the identical configuration... and felt like they were getting a "sweet deal". There was no such thing as flat pricing, and no pricing transparency like today with Tesla. So today, Tesla's customers know who is paying $75k or $65k, and the FOMO kicks in.

COVID screwed everything up and got everyone paying MSRP (or more)... so recent pricing experience is all out of whack.

But that's why the Tesla model feels so painful to those who hear about ~13% to 20% price drops. Without all the obfuscation of all the traditional sales friction at a dealership, Tesla customers only see a reduced transaction price. There are none of the other "gotcha" buckets that come into play with Tesla. So, it feels like a much more severe kick in the groin because now some customers know how much more they over-paid compared to today's customer.

 

[zoomer0056]

The only ones not complaining are those that will get their car at a new lower price. Wait .... I'm not complaining. It's a year old and still awesome. The value can only be determined at sale time and mine ain't for sale.

 

[ELRev]

Did anyone here actually took delivery in January before the price cut? Can they get their price adjusted? They paid full price and no tax rebate.

Good question- check my post here, as that’s what happened to me: Recent Model 3/Y Deliveries - re: price cuts

 

[Hiline]

The FOMO for those who bought too early (paid the higher price) is worse under Tesla's pricing model vs normal automakers.

Car buyers under the normal (non-Tesla) dealership model were paying huge variances compared to other customers. Incentives/net-pricing changed all the time, but the customer never saw it. The traditional sales model involves customers going into a vehicle showroom and haggling, so each deal is unique. And due to all the clever obfuscations, it wasn't terribly clear what any one person paid for a vehicle compared to another customer purchasing the same build.

At a high level, dealerships could make margin on each transaction by...

1) Throwing the amount of factory-to-dealer incentives the automaker has offered against that inventory
2) Diverting a portion of dealer margin/holdback/sales-commission into the transaction
3) Fenagling with points/resid on leases
4) Screwing with the perceived sale-price (before taxes and doc-fees, etc) of a vehicle
5) Messing with the used-car-trade-in allowance
6) Fudging interest rates in partnership with their captive financing arm

Prior to COVID, Buyer A could get a "sweet deal" on item #4 but get absolutely HOSED on items #5 and #6. Buyers never saw items #1, #2, #3 so they were oblivious what was actually going on behind the scenes to make the deal work. Prior to COVID, the non-Tesla dealer negotiation model always had big savers (those that traded the sweat of haggling for saving dollars) and big spenders (those that just paid MSRP).

Back in 2006, I got a $55k MSRP car for $28k cash after taxes and doc fees (thanks Financial Crisis!). Someone else could have paid $40k from the same dealership on the identical configuration... and felt like they were getting a "sweet deal". There was no such thing as flat pricing, and no pricing transparency like today with Tesla. So today, Tesla's customers know who is paying $75k or $65k, and the FOMO kicks in.

COVID screwed everything up and got everyone paying MSRP (or more)... so recent pricing experience is all out of whack.

But that's why the Tesla model feels so painful to those who hear about ~13% to 20% price drops. Without all the obfuscation of all the traditional sales friction at a dealership, Tesla customers only see a reduced transaction price. There are none of the other "gotcha" buckets that come into play with Tesla. So, it feels like a much more severe kick in the groin because now some customers know how much more they over-paid compared to today's customer.

Comparison is the thief of joy. Everyone is happy when they don't know how much others pay

 

[itch808]

Other EV manufacturers like Rivian and Lucid have been raising the price of their vehicles since launch. The R1T is thousands more than when first announced. Tesla simply had no incentive before the Federal government decided to offer a $7500 incentive and raise interest rates. Tesla is reacting to the economy the way it seems fit. Other OEMs will not do it because they're not as nimble and arent able to...they also don't have CEOs who listen to customers on Twitter either--so there's that.

Tesla continues to be a love it or hate it company. Call them whatever you want, say you'll never buy a car from Tesla again, but I see Tesla winning this year in 2023.

 

[Lavender]

and now I regret buying it in July 2022, paying 72k+ for MYP. I will never buy anything from tesla again…

Im right there with you. I'd drive this POS off a cliff if I had GAP insurance on the loan, but now I have to drive it until the wheel fall off

 

[holeydonut]

Comparison is the thief of joy. Everyone is happy when they don't know how much others pay

Haha, I like that.

But I think the thief of joy is not having money to spend on joy-ful things/experiences. So paying too much for a car steals joy one way or another even if the customer is unaware at how badly they got hosed.

 

[Ostrichsak]

First, I didn't know about Tesla dropping the price. Absolutely new to me.

Second, stop looking for an excuse for Tesla doing this bullshit. I bought all my cars new and never seen this before. I've owned more than 10 cars.

Lastly, Yes cars depreciate but when your car depreciates $8,000 overnight this is not cool.

Excuse? I'm the last person to excuse Tesla's actions. You've bought more than 10 cars, huh? Am I supposed to be impressed or something? Not sure what that weird flex has to do with this conversation. I love how you act like $8k is crazy and yet it wasn't that long ago the Ford, GM, Dodge (and others) were offering $15k-$20k rebates and incentives for buying new vehicles. Nobody cared then. This is different because.... Tesla?

 

[hsfrank]

I know that how the market works, but that does not stop me from feeling bad about it. I guess anyone who just paid 10k+ for the same model few days ago would have the same feeling

Not necessarily so. I am one who bought and got delivered in Dec. I am quite happy with my purchase. I was surprised when I got $7000 instead of the $3750 promised with free supercharger miles to boot. While I would be happier if I got the lower price and the tax credit,why cry over spilled milk?

You purchased an item because you felt that the price was acceptable for what you were getting in return. This hasn't changed. Save for a few unique and rare outliers, cars depreciate at massive chunks each month. Moreso when they are brand new. This is a known quantity and why people who's goal is financial independence stay away from buying new. Some depreciate at different rates but depreciate they all do.

People need to chillax about the price roller coaster. This is nothing new, especially with Tesla. You knew this when you bought in and nobody forced you to buy anything. The prices go up, the prices go down. The clock turns and time marches on.

Your purchase gives you all of zero right to any perceived depreciation rate. It's silly to think that you have some sort of claim to your car being worth anything at any point after you take delivery. It's unreasonable and Tesla doesn't care anymore than Ford, Chevy or Toyota. The only difference is that Tesla is smaller and isn't quite as insulation from these swings as the larger legacy manufacturers but they also have had massive price swings lately. We will likely see those prices come down too once they get their inventory of raw materials and supply fully restocked. Since they're larger, these changes take longer and sometimes aren't as big. Nature of the beast.

Ignoring the outside forces such as inflation and supply line issues that directly impact these figures isn't doing anyone any good either. Eggs are $7 per dozen and out-of-stock. A few months back I could get a frunk full of eggs w/o even putting a dent in what was on the shelves @ $2 per dozen. You bought a car for transportation and enjoyment so use it for those things. When the time comes to get something else is when you'll realize whatever financial impact it brings to sell. If that seems uncomfortable, it should. The time to avoid that volatility was when you made the decision to buy when you still had control... not after.

Very well said and written

 

[Sambub]

I think the biggest issue for Tesla because of the price cuts is the negative impact to customers brand loyalty. The folks that paid the high prices in 2022 have deep pockets and may have been back to get another Tesla eventually. I’m not so sure they will now.

 

[zoomer0056]

I’m not so sure they will now.

The price was $100 bucks and because the price is now $80 bucks people won't buy. Only time will tell. I don't know if its really true but Electric Viking reported that sales went through the roof with price reductions in China.