Tesla faces an aggregate demand curve composed of millions of individual demand curves. Yours is very inelastic, so Tesla could charge you a very high price and you'd still buy. Tesla cannot, however, engage in (much) price discrimination, i.e. it can't charge you one price and me another. Therefore, even as a monopolist, Tesla has to look at the overall willingness-to-pay of all potential buyers, and in that context, I think that they face very stiff competitive forces -- or, put another way, the bulk of their target audience is fairly price sensitive because of excellent current options from premium ICE vehicles and enticing future options from Infiniti et al.
Yeah, I know what you mean -- but there is a big *hunk* of that market which is either not considering ICE vehicles, or willing to pay a large premium to get off of gas, and that helps Tesla's pricing power a lot. Facing a second proven battery-electric car manufacturer with lower prices available now, Tesla could be in very serious trouble, in the way I think the Tango is in trouble.
The market of potential buyers is quite differentiated, and I'm not sure if anyone's studied what percentage of Roadster buyers were "electric first" types and what percentage were "any sports car" types; and I'm sure nobody's studied this properly for the potential model S market. My unproven hunch is that the "electric mode bias" is actually quite large, and that people with some degree of it are a large percentage of the market for the model S. I think this partly because of Tesla's total lack of advertising and lack of dealerships; the only people considering a Tesla so far are people who *bothered to look into* electric cars, and were then willing to order from a small manufacturer, both hurdles that most car buyers won't make, period.
People with electric mode bias actually come in two groups, the ones happy with a plug-in hybrid, and the ones who want a pure electric. The former group is probably larger, but even the plug-in hybrid category provides relatively little competition (though I think there is some real competition there, and more coming, unlike in the pure battery-electric market, where Tesla has effectively got several years to itself).
Eventually these groups of customers with electric mode bias will all have their cars, and Tesla will be properly competing with the ICE carmakers, to an audience who doesn't care that the car is electric, but I don't expect it to happen for several years. By which point Tesla can, of course, change its prices.
Footnote re price discrimination: Tesla does, of course, engage in several forms of
price discrimination. The premium on the Signature cars is one example; people who really, really want a Model S are willing to pay a premium that's unlinked from the actual market value of the car, and the Signature pricing allows Tesla to earn a few extra thousand $ in margin from these people.
Though we're resentful about it.
Well, I don't feel so bad any more, since it satisfies my really unusual special need for a polyester-free car, but that *can't* be typical.
Similarly, it's common knowledge that margins are higher on options than on the base vehicle; this pricing (by all OEMs) is another form of price discrimination to sort consumers by higher- and lower-price elasticity (and, therefore, follow the rule for profit maximization by a monopolist, which is to charge more to price-inelastic customers).
Sorry for the essay; I'm busy avoiding doing useful things...
Me too.
Thanks for describing all of this stuff. I actually do know it all, but I tend to shorthand it rather than being clear. :-(