Inflationary Price Increase coming?

[Zebelkhan]

I think we can justify price increases all day long but the reality is that a long range Model Y with its current features is not a $70k car (after taxes and fees). An equivalent MB or BMW ICE car has way more features. Now if one is rich and would like to continue to donate to Tesla for whatever reason, that is fine. But from a consumer perspective, Tesla is not a middle class car anymore and I don’t think it will ever be again. I hardly doubt they ever reduce prices significantly. The way Musk brushed off the question about the $25k Tesla in the Q1 earnings call was all you needed to know about where the company is headed.

I was planning on buying a second MYLR for our family but I think it is now too expensive and have canceled my plan.

 

[stevesark]

We haven't even talked about the seeming neurosis of the price hikes; lol. $1k hike overnight, $2.5k hike days later.

I feel like others may do this better. If Apple wants more for an iPhone, they time increase to feature releases and some regularity.

 

[HellsKitchen]

I had replied here that I am skeptical that the Y prices would come back down once the supply chain issues get resolved and the materials costs fall. But imagine how pissed off customers would be if they shelled out this much and then the prices DO come back down, kicking their resale value right in the nuts.

 

[dagug]

From Tesla's perspective, I don't see any reason for them to lower prices, regardless if supply costs ever drop, unless they see a significant hit to orders in the future.

 

[Corndart]

NOT saying price increases are fun or fair but to some that point this out as a Tesla plan or strategy I don’t follow. EV cars in this volume consume a crap ton of exotic materials that are hitting all time world costs. Aluminum as an example (most of a Tesla) is up 40% over a year and only going up as they Were getting a large amount from Russia for all these castings, parts, and panels. Not so easy to replace a supplier like that at budget prices. Everything is going up in price. Find a forum about a product that doesn’t have the Same complaint.

In Germany yes

Tesla has bought aluminum from Russian company Rusal since 2020, showing how war complicates supply chain

Like other large automakers, Tesla has supply chain ties in Russia -- specifically, it's been buying aluminum from Rusal since 2020.

www.cnbc.com

"By December 2020, Tesla decided to start sourcing some aluminum from Rusal for casting at its new plant being built in Germany and was doing so through February 2022."

 

[Yelobird]

In Germany yes

Tesla has bought aluminum from Russian company Rusal since 2020, showing how war complicates supply chain

Like other large automakers, Tesla has supply chain ties in Russia -- specifically, it's been buying aluminum from Rusal since 2020.

www.cnbc.com

Is Tesla Germany a different company then Tesla? Seems they have the same bank account

 

[Pharaoh83]

They can and will charge what the market will bare. Basic retail.
That said, they do continue to offer more personalized service and ever expanding tech. The car, to a point, gets 'better' with time... Compared to traditional vehicles.

 

[Corndart]

Is Tesla Germany a different company then Tesla? Seems they have the same bank account

The assertion "Were getting a large amount from Russia for all these castings, parts, and panels." is incorrect unless you are receiving a car made in Germany. What does bank account have to do with anything?

 

[loanchau2k]

Manufacturers still use the dealer model because they can outsource the entire headache of the sales process by outsourcing it. They cut out that entire segment of the product life cycle to focus more on production. Yes, they get less in return since the dealers take a cut... yes, customers hate it... but as of right now, this is still the standard and if everyone (except tesla) is doing it... well, sucks to be the consumer but take it or leave it. With traditional manufacturers, their EV sales are still only a fraction of their entire portfolio so there's no sense in pissing off their dealers over the relatively small (for now) EV market and taking on all the sales/regulatory headaches.

And it's mostly human psychology... better the devil you know than the devil you don't (even if it's an outdated and losing model).

If manufacturers do what dealers do (all tricks, all hidden fee, all bs that get the profit), then yes, it's a big headache, surely that they don't want to do that. Then make sense for them to outsource it. But, we are talking the whole different sale model, why would you want to use the old sale model, having third man to sell car for you. Invest on software, technology, let software handle that for you, there is no third man involved.

 

[dagug]

If manufacturers do what dealers do (all tricks, all hidden fee, all bs that get the profit), then yes, it's a big headache, surely that they don't want to do that. Then make sense for them to outsource it. But, we are talking the whole different sale model, why would you want to use the old sale model, having third man to sell car for you. Invest on software, technology, let software handle that for you, there is no third man involved.

Operative word here is invest.
These legacy companies are all public companies and that means shareholders. Shareholders generally means you have to prioritize short term gains over long term gains. It's all about the upcoming quarter performance and investing in the future means losing money in the short term. Can't have that! That and it's very difficult to turn a big ship around. Most big public companies will just keep doing what used to work, regardless if it's not a good long term solution and there's a much better solution slapping them repeatedly in the face.

 

[loanchau2k]

Operative word here is invest.
These legacy companies are all public companies and that means shareholders. Shareholders generally means you have to prioritize short term gains over long term gains. It's all about the upcoming quarter performance and investing in the future means losing money in the short term. Can't have that! That and it's very difficult to turn a big ship around. Most big public companies will just keep doing what used to work, regardless if it's not a good long term solution and there's a much better solution slapping them repeatedly in the face.

I agree 100%. Is not that they don't realize that, but because they are "legacy", it's extremely hard for them to do.
We saw that with Kodak, Sears, Kmart et all....Not like those CEOs were really stupid, but sometime is extremely hard to execute. No matter how hard you try, you will fail because your business does not fit the trend, and it's hard to change them completely. That was why they failed even though the realized too well.

I know it's hard man. As I say, all of them know EV is the future, but in the mean time they also have to focus on ICE cars. That's why I see Tesla has a huge advantage when it comes to EV, because that's the only focus that Tesla have.

 

[Yelobird]

The assertion "Were getting a large amount from Russia for all these castings, parts, and panels." is incorrect unless you are receiving a car made in Germany. What does bank account have to do with anything?

So you Know where Tesla uses their aluminum? Lol. And yes, the same company no matter Where the building is located is buying the materials So it’s a cost of Business not location.

 

[Corndart]

So you Know where Tesla uses their aluminum? Lol. And yes, the same company no matter Where the building is located is buying the materials So it’s a cost of Business not location.

I guess generating random hypothesis about where the aluminum goes instead of reading and actually understanding what is known thus far is easier for you ?

Tesla has bought aluminum from Russian company Rusal since 2020, showing how war complicates supply chain

Like other large automakers, Tesla has supply chain ties in Russia -- specifically, it's been buying aluminum from Rusal since 2020.

www.cnbc.com

"Tesla purchases Rusal aluminum for casting parts at its new vehicle assembly plant outside of Berlin, according to invoices, internal correspondence, and several current and former employees who spoke with CNBC on condition of anonymity, citing fear of retaliation.

The aluminum can be used, among other things, for casting and to make body shells for the Tesla Model Y, and has been used in production on new manufacturing lines at the Tesla plant in Brandenburg, Germany. That plant is not fully up and running yet, but recently gained conditional approval to start commercial production soon. There’s no indication that Rusal aluminum has been used in US production."

You seem to be confused about my point - you stated , and I quote - "Were getting a large amount from Russia for all these castings, parts, and panels." That is not true for any cars made in the US according to the available information.

Nowhere did I argue global prices of materials such as aluminum have gone up substantially, nor that Tesla will have to find an alternate supplier.

 

[andaconda]

Picked up my Model Y exactly one year ago. The same exact car is now $10,250 more. Never had a car that appreciated. Most of the new cars that I bought in the last few decades, depreciated 20% as soon as I drove them off the lot.

Boy, did I make a mistake! I must have missed something -- This same car is actually $13,150 more Today (3/16/22)

 

[Yelobird]

I guess generating random hypothesis about where the aluminum goes instead of reading and actually understanding what is known thus far is easier for you ?

Tesla has bought aluminum from Russian company Rusal since 2020, showing how war complicates supply chain

Like other large automakers, Tesla has supply chain ties in Russia -- specifically, it's been buying aluminum from Rusal since 2020.

www.cnbc.com

"Tesla purchases Rusal aluminum for casting parts at its new vehicle assembly plant outside of Berlin, according to invoices, internal correspondence, and several current and former employees who spoke with CNBC on condition of anonymity, citing fear of retaliation.

The aluminum can be used, among other things, for casting and to make body shells for the Tesla Model Y, and has been used in production on new manufacturing lines at the Tesla plant in Brandenburg, Germany. That plant is not fully up and running yet, but recently gained conditional approval to start commercial production soon. There’s no indication that Rusal aluminum has been used in US production."

You seem to be confused about my point - you stated , and I quote - "Were getting a large amount from Russia for all these castings, parts, and panels." That is not true for any cars made in the US according to the available information.

Nowhere did I argue global prices of materials such as aluminum have gone up substantially, nor that Tesla will have to find an alternate supplier.

Think we are just on a different page. My point was, a Tesla plant (Germany) was using this aluminum. Now they (still Tesla) have to source a New supplier which is not easy Nor cheap which increases Teslas cost of goods as a company which will be spread out as a product cost for all products.

 

[gx9901]

The MYP is basically $70k + TTL now. Had I been in the market to buy now instead of last July, I seriously think I would have either bought a different EV or got another ICE. That would make me sad since I love everything about the MYP. I've put 10k miles in about 5.5 months of driving, so I'm not sure if any of the current EVs in my price range would suffice given that how much cold weather takes a bite out of the range. My wife just got a Volvo C40 Recharge, and while I think it's a great car that I would love to drive daily, the range really could be an issue in cold weather for me.

At the rate it's going, I'm not sure there's another Tesla in my future, but the good thing is there should be a ton of options by the time I'm in the market for another car.

 

[djsyndrome]

I had replied here that I am skeptical that the Y prices would come back down once the supply chain issues get resolved and the materials costs fall. But imagine how pissed off customers would be if they shelled out this much and then the prices DO come back down, kicking their resale value right in the nuts.

One of the earlier known examples of this is the A80 Toyota Supra - Toyota cut the price partway through the model run in 1997, knocking up to $10k off both the NA and Turbo models due to poor sales. Imagine watching a quarter of the value of your just-purchased Supra vanish overnight.

 

[patmurphey]

Just to be fair an Audi SQ5 Prestige - to match standard features of Model Y LR and slightly less performance is over $65,000 (to maintain some of the features require $29 month subscription). I like my Model Y more than the Q5 that I sold.

 

[AJ..]

I thought MYP at $63k might be a good upgrade for my 2019 Model 3 at some point, but not $67k. At this point, I'll baby my Model 3 as long as humanely possible. Even worst worse case of paying out of pocket for a battery failure at $15-20k seems like a bargain by comparison!

At this rate of Tesla price increases - even $15k -20k battery replacement (already outrageously high but it’s initial phase so can still understand) may be bumped much higher to make it useless option (after all battery material seems like the big issue)…

 

[AJ..]

I agree with competition in EVs, more traditional car manufacturers will take market share from Tesla for sure, it's just a basic math. I do agree also they make better car, but not EV, Tesla is still leading the EV race by wide margin. When I say EV, I mean the whole experience of online buying, software update, battery, charging, I think Tesla is way ahead. Those car manufactures still believe in the middle man, the dealers, is beyond my comprehension. Not only they have to share the money with dealers, but also they don't understand that car buyers really hate dealers. All the potential saving "dealer money", Tesla will invest that to improve its software, hence it keeps getting better. My friend, ordered March-e online from Ford, he said it was a joke. It gave hime more headache, since he still needed to go thru dealers.
The way I see is this. Tesla just focus and all energy in one area, EV. Where as traditional manufacturers need to put focus on ICE and EV at the same time. To me, you will lose that edge.

Great point! Big reason I got one (“traditional dealerships” and avoiding them at all costs). Given Tesla has pushed these to new levels, I’m hoping will force other major manufacturers will be forced to follow suit. Tesla thinks like a tech company - which is awesome. But battery tech side - it’s tricky to maintain the lead. Tbh, I can’t say much about their motors and stuff and would really like to see them beat the crap out of competitors till the day they have dealership sitting in between. Which is where these irrational hikes (at least to me, and not a proper explanation of hikes) - seem to make Tesla like any other company. Tesla does focus on EV - true - but also having SC miles away is an issue too. In CT, the whole dealership thing has been ongoing. If hiking prices by 10k -15k over fairly priced similar EVs (up for debate I get that) - their advantage of skipping dealerships starts to diminish as well.