Model 3 Price drop [Speculation]

[TMThree]

News stories now are saying Tesla is losing $600 per car due to the AP being made standard. That seems odd to me since now all cars get AP, which means higher profit margins across all vehicles. But what do I know.

Needless to say, I don't expect much in the way of price drops simply because while sales are up, profit per vehicle is down, and at some point it doesn't matter how many cars Tesla sells if they can't make enough profit margin to sustain the company.

 

[OCR1]

News stories now are saying Tesla is losing $600 per car due to the AP being made standard. That seems odd to me since now all cars get AP, which means higher profit margins across all vehicles. But what do I know.

Needless to say, I don't expect much in the way of price drops simply because while sales are up, profit per vehicle is down, and at some point it doesn't matter how many cars Tesla sells if they can't make enough profit margin to sustain the company.

That sounds off. There is no “incremental” cost to adding AP to the car but they raised the price by $2K now that it is standard. So unless they were previously selling almost every car with a $3K AP upgrade there is no way that adding AP to the car would have reduced their profit margins.

 

[boriszima]

No way to a price drop. There's no drop in demand, they can't even keep up with deliveries.

Yep. While demand is strong, keep things are. Once Orders start falling, maybe then lower prices.

 

[Phlier]

The only thing we can be sure of is that either the price is going to:
1. Go up
2. Stay the same
3. Go down

If they have a good price to demand ratio, there's no reason to lower the price. If demand > supply, then the price will go up. If demand < supply, the price will go down. If demand is approximately equal to supply, the price will stay the same.

Since there is no way to know this information, you might as well throw a dart and where it lands determine your guess.

In this case, history teaches you *nothing* about the future; the conditions that exist now are conditions that exist now. Which are, obviously, different than they were. As an example, they have further refined the building process.

 

[AcesUp]

I haven’t read all of the comments in this thread but I would think they are more likely to include maybe some options and things like charging adapter, floor mats, etc rather than have a price reduction.That would be much better for their margins.

 

[sperkin]

To get the best possible price you need to wait until mid-Q4. Tesla inventory will have steep discounts to move cars by end of year. So don't worry about July 1st prices.

 

[Rothgarr]

Honestly, the OP message sounds like a bear market short selling tactic -- try to spread rumors of a price drop to get people to hold off on their purchases.

 

[Sully151]

Is there an assumption that the price may drop because of the Fed Tax Credit being cut?

Or is it because there are a lot of EV’s coming to the market that will have the full $7k?

I looked at the Kia Niro and the Hyundai Kona EV’s and they are nice enough (nowhere near a Model 3) and even with the dealer mark up I see in SoCal of $5-7k they will be less than a model 3 after rebates.

Then with the Volvo and VW’s coming down the line, Tesla will have even more competition.

 

[T3SLAROD]

I dont think they should drop the price of the car itself but they should drop that $1200 delivery fee, lower their paint cost and stop requiring the $2500 deposit just to get one.

 

[raptor5244]

Is there an assumption that the price may drop because of the Fed Tax Credit being cut?

Or is it because there are a lot of EV’s coming to the market that will have the full $7k?

I looked at the Kia Niro and the Hyundai Kona EV’s and they are nice enough (nowhere near a Model 3) and even with the dealer mark up I see in SoCal of $5-7k they will be less than a model 3 after rebates.

Then with the Volvo and VW’s coming down the line, Tesla will have even more competition.

I think that is the assumption. Maybe they have started removing some content, Homelink, Nema-adapter, etc. in preparation to lower the price of the car $500-1000?

The EVs coming to market will be eligible for the full $7500 credit but the manufactures know this and will probably keep the price higher to offset that. It is one thing to build an EV and it is another thing to build an EV that people actually want to own. Tesla can't even keep up with demand right now and they don't even advertise. It sure doesn't seem like they need to drop prices at all right now. Maybe $500-1000 just to get the next round of folks that are on the fence waiting for the final tax credit phase out.

 

[OCR1]

They couldn’t keep up with demand in Q4 due to the pending tax credit reduction. Then Q1 came around and sales dropped significantly so we saw some sizable incentives and three rounds of price drops. I have no idea what to expect in Q3 but clearly people are motivated to take delivery by tomorrow to get the $3,750 credit. Come Monday there is no rush to take delivery so we will see what the demand looks like next week.

 

[ammulder]

Come Monday there is no rush to take delivery so we will see what the demand looks like next week.

Except low demand next week would actually be a bonus -- I'm sure sales and delivery could use a breather, maybe service would have a bit of room to catch up on fixing up the past deliveries with issues, and production could build a bunch of cars for overseas. By the time those are built and shipped, we'll all be asking 'how come it takes four weeks to get a Model 3?' again.

I feel like the end-of-quarter discounts on offer were a lot smaller just now than at the end of Q1, which seems to suggest there's no desperation. Just the urgency to post good numbers that we've all heard.

Though thinking about it, I wonder whether Q1 will always have a slew of discounts on "last year's model" inventory? Or if it's more driven by the update schedule and they wanted to clear out pre-HW3 inventory?

 

[T3SLAROD]

Except low demand next week would actually be a bonus -- I'm sure sales and delivery could use a breather, maybe service would have a bit of room to catch up on fixing up the past deliveries with issues, and production could build a bunch of cars for overseas. By the time those are built and shipped, we'll all be asking 'how come it takes four weeks to get a Model 3?' again.

I feel like the end-of-quarter discounts on offer were a lot smaller just now than at the end of Q1, which seems to suggest there's no desperation. Just the urgency to post good numbers that we've all heard.

Though thinking about it, I wonder whether Q1 will always have a slew of discounts on "last year's model" inventory? Or if it's more driven by the update schedule and they wanted to clear out pre-HW3 inventory?

Good point on them trying to get rid of the previous years models during Q1.

 

[Watts 4 Me]

Honestly, the OP message sounds like a bear market short selling tactic -- try to spread rumors of a price drop to get people to hold off on their purchases.

Not at all, I'm simply stating that Tesla usually drop the price of their models after the rebate drops. This time it's dropping by 1800+. I'm betting demand in the US drops after this. They only way to build up demand is the lower the price or include something for free that wasn't free before.

 

[TMThree]

I dont think they should drop the price of the car itself but they should drop that $1200 delivery fee, lower their paint cost and stop requiring the $2500 deposit just to get one.

All car mfgs have destination fees. Dropping it doesn't help them since customers expects it.

Deposit fee doesn't increase the cost of the vehicle, in fact, it eliminates tire kickers and allows their reps to deal with real customers, saving the company money.

Paint cost... yeah, it's a bit on the high side when I paid $1500 for MSM, but it's now $1000, and that seems just fine. It's a great way for them to make more profit margin and customers don't need to opt for a non-default color if cash is tight.

Tesla needs more profit margin per vehicle, not less.

 

[raptor5244]

Not at all, I'm simply stating that Tesla usually drop the price of their models after the rebate drops. This time it's dropping by 1800+. I'm betting demand in the US drops after this. They only way to build up demand is the lower the price or include something for free that wasn't free before.

There is obviously a surge of orders this month for those on the fence that want to take advantage of the $3750 tax credit but is $1875 on a $40-60k vehicle really going to have a huge effect on demand? Folks see that kind of delta on new car prices all the time as manufacturers include incentives when needed to move more inventory.

 

[OCR1]

There were 89 Model 3’s in inventory in Southern California as of Saturday morning. Currently there are 35 remaining. So while that is a very good run, I guess we can’t say they have more demand than supply. On New Year’s Eve they stayed open until midnight. I wonder if they will try to repeat that tonight.

 

[raptor5244]

There were 89 Model 3’s in inventory in Southern California as of Saturday morning. Currently there are 35 remaining. So while that is a very good run, I guess we can’t say they have more demand and supply. On New Year’s Eve they stayed open until midnight. I wonder if they will try to repeat that tonight.

No inventory showing online in all of Florida. I saw 54 available a few days ago.

 

[Rothgarr]

No inventory showing up in either CT or NYC area, either. Nor around Boston.

 

[Talax74]

Yes.

Base price graphed includes all features that are standard and included. The chart shows trims available to order online and off the menu (OTM) trims available only in store or by phone. Pricing is for US market in US dollars. Global prices, trims, and options vary by region. Pricing excludes destination charges, government fees, taxes, and all options.

See the graph and reference links at: Google Sheets

Great graph, but the price ofthe SR+ is not correct.
Including AP the history of price is (oldest to more recent date)
40K
40.5K
39.5K