Drop in interest in EV's and further Tesla price cuts

[AndyFov]

I don't think the word "discount" wholly applies here. There's also an element of correction following the hikes during that post-Covid short supply, AND passing on the savings yielded by the gigafactories' efficiency.

Obviously, if there was an endless queue of punters lined up ready to pay £50k for a SR+ then it'd be bad business to charge less, but what's going on isn't really much of a firesale IMHO.

 

[Wattsisname]

- "Unexpectedly disassembled itself" on take off.

Not quite so unexpectedly. Check out this morning's Radio 4 Today interview with a representative of NASA for whom SpaceEx is working.

SpaceEx managed to get the largest ever payload off the pad, albeit temporally.
NASA/ SpaceEx are pushing the envelope and as such these launches are experiments using unmanned rockets.
Let's not forget that men died before the successful lunar landing.

As for the impact on Elon's finances, theses contingencies are expected and are covered in the NASA budget.

As for the Twitter nonsense* and the diversion of Elon's attention, that could be a valid concern although the man has raised the concept of multitasking to heights greater that that reached by yesterday's rocket and then some.

* I am no longer ( if ever I was) a fan of Twitter or the other social media platforms. I prefer special interest forums that are, for the most part, free of lunacy, rudeness and tiresome updates on the minutiae of peoples lives. I prefer to bore my real friends with old school direct communication.

 

[Rooster6655]

The Q1 financials were "as expected" and "slightly better" in places, and yet Tesla took a massive hit on stock price. I have no idea why. Maybe Musk telling investors that there was a lot of value in shipping FSD as the existing fleet would all become money-earning RoboTaxis. The investors know that they just don't believe that's "any time soon" (same as 99.9% of folk here )

But their Q1 margin, given the recent price cuts, was stronger than expected, so either their "reduce component count" is working - or components price is returning to pre-pandemic levels (as we hear for other industry sectors).

Also, "lots of inventory" at each quarter end needs to be considered in terms of overall numbers. If Tesla are making 2x as many cars as last year, then having 2x as much inventory at each quarter-end seems reasonable (actually, for me, I'd be happy with a higher number). Tesla are making "for stock", and then matching to customers orders, so if they choose to make "Lots of black ones" then that will be excess inventory at end of quarter, and if anyone wants a car in a hurry they have to compromise on "Any colour you want as long as it is black". If the inventory is shifted in Month 1 of the quarter that covers the period when no boats are arriving from China.

There could be a lot of value in post delivered cars through software even without FSD, but I don't see that happening in the near term

Historically I don't think they could produce enough hence these end of quarter rushes, as a business I would want to have stock to sell to a customer so having it on hand is the best option otherwise a percentage will go elsewhere.

 

[GeorgeSymonds]

There’s two ways to look at every action Tesla take and the truth is probably far more complex.

I’ve heard the ‘double production, double the amount of inventory in transit at quarter end”. I partly buy that, but also Berlin production has moved some European deliveries to being fairly local, Texas the same, so production growth has been for local markets. I don’t think there’s much debate about lead times and backlog either, I bought my MY this time last year, they were hard to get, used were selling over list, within a year prices are down, availability is plentiful, etc. ok, we’re one country, but across Europe it seems similar. Take the reintroduction of the MS and MX, they satisfied 18-24 months backlog of orders in less than 1 quarter. M3 UK sales can be worked out using SMMT data, a year ago it looks like the M3 and MY had the top two slots, the M3 doesn’t even figure now.

If the price drops are to encourage people away from buying competitors EVs, that’s kind of interesting, historically it was tempting people away from ICE. Again, it’s probably a bit of both.

I guess we can speculate all we want, the plain facts are they’re now cheaper and they’re readily available.

 

[WannabeOwner]

Historically I don't think they could produce enough hence these end of quarter rushes, as a business I would want to have stock to sell to a customer so having it on hand is the best option otherwise a percentage will go elsewhere.

I agree, although not sure about having stock-to-sell. Wall Street breathing down their neck created the end of quarter hiatus solution. With more factories / more local delivery that will ease - but they are still having to send to UK from China (and, it appears, inventing UK-specific models [M3 LR Single motor] - maybe to soak up China production). I expect that Tesla are big enough now to forget about Wall Street quarterly numbers ... but human nature being what it is if you have to publish figures every quarter I think all of us would want "everything sold" where possible. Even if not that, they've put a lot of effort into their "Quarterly based push" solution for production line scheduling, RoRo ship charter, and staff incentives / deployment ... so maybe its easier to keep the "not broken, don't fix it" process until there is a good opportunity for a change (such as local factory production significantly reducing the delivery time).

Germany has been (seemed to me to be) very slow coming on stream - Red Tape, Ecological protests and so on, so I think Germany factory production would have been expected to be delivering far more to UK, and rest of EU, by now. That is ramping up, and if Germany satisfies UK/EU soon then the China production has to find markets nearer to production source ... price-to-sell will help.

they’re now cheaper and they’re readily available.

Yes plus I think that expectation should be that Battery Tech will improve (e.g. energy density) and price will fall (economy of scale), so price of EVs was always expected to drop to the point of parity with ICE, or even better.

Pandemic mucked that up but perhaps that is coming back into play now.

 

[qwickshot]

It’s interesting the point about the model 3 dropping away in terms of sales.

I don’t see it coming back either, you only have to look at the wider car market to realise that.

The model 3 is not really a form factor that sells well in Europe. People bought the model 3 because it’s a really good car and all that was available in the EV space. What they really wanted was something in the Model Y segment. We are now seeing that bear out in the sales numbers and the cars that their competitors are bringing to market.

 

[yessuz]

It’s Sky, so nowhere.

Tesla state they still have more demand than they can supply. Even with the newer, lower prices they still have 10% plus margins. They’re going for economies of scale.

But the media love to have a bash at Tesla, despite still making tons of money and hitting their estimates. I wonder why that might be?

aged like milk

Tesla misses revenue mark as lowered car prices results in few takers

Drop in company’s gross margins in first-quarter earnings signal price cuts could hurt financials with share prices taking a tumble

www.theguardian.com

 

[ScottishBeanie]

I've not been able to find any info on whether UK prices are likely to drop in line with this week's USA price decrease to $39,990. I know the UK prices came down shortly after the States in January; is there any indication that'll happen here? I've got a M3 RWD on order through my work's Salary Sacrifice scheme and they've said they'll requote nearer delivery time if there's any pricing changes from Tesla so I'm kinda hoping it'll come down a bit!

 

[Rooster6655]

I've not been able to find any info on whether UK prices are likely to drop in line with this week's USA price decrease to $39,990. I know the UK prices came down shortly after the States in January; is there any indication that'll happen here? I've got a M3 RWD on order through my work's Salary Sacrifice scheme and they've said they'll requote nearer delivery time if there's any pricing changes from Tesla so I'm kinda hoping it'll come down a bit!

There won't be advanced notice, based on the hundreds of new cars in the 'New Inventory' pages and it being the first month of the quarter I suspect they may reduce the prices towards the end of the quarter for the M3 at least

 

[94jdh]

I've not been able to find any info on whether UK prices are likely to drop in line with this week's USA price decrease to $39,990. I know the UK prices came down shortly after the States in January; is there any indication that'll happen here? I've got a M3 RWD on order through my work's Salary Sacrifice scheme and they've said they'll requote nearer delivery time if there's any pricing changes from Tesla so I'm kinda hoping it'll come down a bit!

Tesla price war accelerates as it slashes car costs again

Tesla boss Elon Musk (pictured), one of the world's richest men, admitted last year that the cost of the cars was 'embarrassingly high'.

www.thisismoney.co.uk

 

[father_of_6]

I don't study this stuff, but one thing perhaps worth considering is that Tesla doesn't have many thousands of car dealership lots sitting around the country like legacy auto manufacturers do.

If Tesla's production outpaces demand by too much, they literally run out of places to put the vehicles.

I expect costs will continue to come down and so will prices... to the point that electric vehicles will be cheaper than ICE.

TLDR - supply and demand.

 

[Unclepaul]

When I worked for J&J, they drummed into my head that the lowest cost producer, with acceptable quality, controls the market.

When you have low production costs you can do what ever you want to gain market share. Increase Marketing, Increase Sales force, Advertise more, lower (or raise) prices, add innovation, buy out rivals, etc. You have all the power.

In the case of Tesla, they have developed a lower cost of producing acceptable quality electric cars. They also have the least costly to roll out fast charging network. By using huge factories, limiting choice and first to market with large integrated castings, they can produce faster and at less cost than the others. Makes taking market share much easier.

 

[FastLaneJB]

One part might be electric car cost and price of electricity but I suspect the constant bad press is working to put people off EV's. The long charging queue times, expensive cost to charge, broken chargers, came home from holiday and car didn't have enough range to get me home, etc.

As we know the UK public can easily be moulded, that's how we ended up with Brexit.

 

[father_of_6]

One part might be electric car cost and price of electricity but I suspect the constant bad press is working to put people off EV's. The long charging queue times, expensive cost to charge, broken chargers, came home from holiday and car didn't have enough range to get me home, etc.

As we know the UK public can easily be moulded, that's how we ended up with Brexit.

None of that's reaytrue though, is it? It's not true in the US, that's for sure. That doesn't stop people from believing the misinformation thought.

Funny story, I was sitting at a coffee shop recently and overheard two men talking. One owned a gas station, and the other was doing his sales pitch for new dispensers. They started talking about EVs and we're *completely* misinformed.

I couldn't help myself - I totally butted in and "yelled" at them about how clueless they were, and explained everything wrong with what they were saying (e.g. the grid can't handle EVs, the US is going to need 8 nuclear power plants if we transition to EVs, charging takes hours, etc).

 

[qwickshot]

If there is one part of Tesla’s strategy which I think isn’t working anymore is its marketing. I think they have got to the end of the road with their viral marketing and they need to start more traditional marketing pushes to capture more of the traditional mass market.

Some people actually think the model 3 is an £80k car and anyone that drives one is rich. While they are expensive, they are really not THAT expensive and every man and his dog seems to have an Audi or BMW these days and they are pitched higher in the market.

 

[CWT3LR]

If there is one part of Tesla’s strategy which I think isn’t working anymore is its marketing. I think they have got to the end of the road with their viral marketing and they need to start more traditional marketing pushes to capture more of the traditional mass market.

Some people actually think the model 3 is an £80k car and anyone that drives one is rich. While they are expensive, they are really not THAT expensive and every man and his dog seems to have an Audi or BMW these days and they are pitched higher in the market.

The marketing to date has been Elon. And now he is as toxic as polonium, they need to rewrite history again, but this time leaving him out of the story.

It works for North Korea.

 

[Jason71]

It’s interesting the point about the model 3 dropping away in terms of sales.

I don’t see it coming back either, you only have to look at the wider car market to realise that.

The model 3 is not really a form factor that sells well in Europe. People bought the model 3 because it’s a really good car and all that was available in the EV space. What they really wanted was something in the Model Y segment. We are now seeing that bear out in the sales numbers and the cars that their competitors are bringing to market.

I agree, and I switched to an MY from an M3 since I needed the extra versatility and boot space but I am not and have never been a fan of the Crossover/SUV form factor. I would switch back the M3 in a heartbeat if it was a hatchback!

 

[WannabeOwner]

I would switch back the M3 in a heartbeat if it was a hatchback!

Me too. The M3 was much more fun to drive

 

[Pauld999]

I think the point Auto Trader was trying to make was that searches for EV have fallen by a third. We can speculate why - high purchase price both new and second hand (in relative terms as well as absolute compared to ICE), high recent cost of electricity both retail and commercial pushing up charge costs in relative and absolute terms compared to fossil, the initial buzz around EVs now being more muted, insert your own pet theory here.

But what is highly amusing is the usual crowd of Tesla fanatics taking it as a personal attack. And then in turn proposing conspiracy theories for Murdoch hating Tesla, media bias, hatred of electric vehicles by every single journalist, ....

Well said, makes me laugh that the same old crowd will blindly 'hate' anyone who may dare to say anything that maybe construed as negative against the Tesla gods.

 

[FastLaneJB]

None of that's reaytrue though, is it? It's not true in the US, that's for sure. That doesn't stop people from believing the misinformation thought.

Funny story, I was sitting at a coffee shop recently and overheard two men talking. One owned a gas station, and the other was doing his sales pitch for new dispensers. They started talking about EVs and we're *completely* misinformed.

I couldn't help myself - I totally butted in and "yelled" at them about how clueless they were, and explained everything wrong with what they were saying (e.g. the grid can't handle EVs, the US is going to need 8 nuclear power plants if we transition to EVs, charging takes hours, etc).

I think that’s the point of my post is it not? Misinformation works just fine if the flow is constant and consistent.

Some of it has a hint of truth in some articles. There isn’t enough chargers in the UK vs the amount of cars and the rate of installation doesn’t match the amount of EV’s being sold. Also a lot of chargers outside of Tesla’s network can be broken, too many to be honest.

See this video as one of many examples and this is a very pro EV person: EV Man Testing 10 chargers