A lot of good points made here. Another note is that the difference between LR and P is now only $5,000. The smaller price difference along with the much quicker delivery estimate makes a very strong case to just go for the most expensive model. 11 months ago when i took delivery the performance model was a $10,000 up charge. Much harder to justify for many folks.
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Model Y price cut may come when demand is satiated?
- Thread starter Terminator857
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I've always thought they could increase of the P any day. I've been thinking that for over 2 months. Considering what you get, it's more than reasonable to pay closer to $10k than $5k. Premium sport models of cars in general usually demand a healthy premium, but in the case of the P, you're actually getting Brembo brakes, more expensive wheels and a larger motor. I don't know if its worth $10k, but I could absolutely see them maintaining a difference of $7-8k. Glad I locked in at $62,990 (not taking delivery til March!). My only concern is getting a heavier car.. right before a switch to a lighter chassis. Performance is important to me, at you know the new version with the structural battery pack will be lighter and higher-performance in almost every regard.
Someone said earlier the Y and 3 won’t drop price as Tesla was an aspirational brand and filling tiered markets. I agree 100.
The S and X have increased to $100k vehicles from $60-70k when they first came out. Will they come back down? Absolutely not. And now over the past year they moved the 3 and Y into the $50-60k class. They won’t move them back.
They will keep these models at this price point until demand wanes. At that point a lower price $30-40k vehicle will be introduced. But they will never bring these vehicles back down to $35k. They might drop $3-5k but that’s it. Why devalue the brand after it earned a premium status? Better to make a smaller vehicle with less features and lower performance / battery size.
The S and X have increased to $100k vehicles from $60-70k when they first came out. Will they come back down? Absolutely not. And now over the past year they moved the 3 and Y into the $50-60k class. They won’t move them back.
They will keep these models at this price point until demand wanes. At that point a lower price $30-40k vehicle will be introduced. But they will never bring these vehicles back down to $35k. They might drop $3-5k but that’s it. Why devalue the brand after it earned a premium status? Better to make a smaller vehicle with less features and lower performance / battery size.
They'll never bring the LR and P below their current price points imo. They'll unlock more range down the road (albeit not as much now with the Ryzen) and add a few more options, but inflation will continue to catchup, every bit as fast as the competition does. $60k now was $54-55K 18 months ago, and that doesn't necessarily account for supply and demand within the auto-sector, just inflation in general. 18 months from now that same $60k will be, if inflation slows, the equivalent of $56-57k now.... or $51-52k 18 months ago.
Just on inflation alone, I don't see them lowering the price point, especially with the persistently higher cost of raw materials. If anything they'll find cost-effective means of adding features... and at some point increase prices again across the board. That is way, way more likely to happen imo than a price decrease.
The P in particular is at a huge discount atm. It could go up $1-2k tomorrow and I'd be wondering why it hasn't already happened. If they are able to cut 250-350lbs from the vehicle (via 4680 structural battery packs) it will make it that much faster (closer to an 11 second flat 1/4 mile, 0-60 of 3.2-3.3 seconds)... nearly equivalent to German ICE counterparts that cost $10-15k more.
Understand where your coming from. I love the performance as much as anyone too. I couldn’t justify the extra 10k at that time but if it would have only been 5k I probably would have gone for it. There is value in it for sure.
Here is the thing though…Tesla now has it priced just under 60k to start. Before you had two different buyers….those looking at <50k range and those looking for the P model at around 60k.
At 50k 10k is a 20% price premium. At 60k its only an 8% premium. To me it would seem like they don’t want to sell the LR. I don’t think they would just remove LR like they did for the SR but they are making it less practical and they are cutting out all the buying looking in the 50k price range.
Long story short I would speculate the price comes down in the next year or so. I don’t know it will come back to what it was 10 months ago.
A MYP in red with white interior and FSD is $80,000 before doc, destination, order fee, and sales tax. At this price they will sell a lot less and I don’t see how that is sustainable long term.
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I think it comes down to supply and demand. I don't see that changing as much as some folks do. Tesla's not stupid, I don't think they'll lower the price out of a goodness of their hearts. Yes, supply will increase across the board, but there's a significant increase in demand every year for new EVs.
I do think that the LR is overpriced atm, I do, I just don't think Tesla has cause to decrease it. I don't think they'd even consider it until the backlog of LR gets down to around 1-2 months.
In conclusion, think of it like this... and really, I'm curious of your thoughts on this last one. If you do agree that they would wait for the backlog to reduce to 2 months, how long do you think that will take to happen? The current EDD estimate on their site is between July and November, depending on options. Lets call it August... likely a low average. That's 6.5 months out. If that's even remotely accurate, it means they could take ZERO no orders for the next 4.5 months... and only then hit that 2 month benchmark to increase prices. They are however more likely to get more orders, many more orders. Lets say with new orders and higher production the back log is pushed down to 2 months by next December. Inflation will likely be 4-5% higher... but so will demand.
I guess it comes down to this, if my estimate above is even remotely accurate, the question becomes 'Will they consider reducing the price in very-late 2022, by which inflation will be higher, demand likely up AND 4680 either fully rolled out or significantly rolled out.
We'll see, there's certainly no way to tell for sure, it is fun to speculate though =) I personally don't mind the price, I'd rather they pour more money into adding a bunch of features and quality control than lower it... but that's me!
Yes, you make good points as well. The way I see it though up to this point Tesla has been the only game in town making a really compelling EV. That will be changing over the next 5 years I would say...maybe even sooner. The demand we are still seeing may change dramatically in the next year when new EV models come out from both the established brands and new startups. I am closely watching the Rivian R1S to see how well that does. What I am saying is competition will push down the prices and you will see many more players coming with compelling EV now that consumers are becoming more accepting of the new technology. Pure speculation on my part here but I see pricing coming down. Interest rates increasing over the next year will also put the squeeze on affordability. The used car market bubble will pop eventually and then a lot of the demand for new vehicles will be significantly reduced. Used cars are so expensive right now that many folks are making the argument...understandably so....that they may as well just purchase new. While we can all see the value in Tesla value is still subjective. Yes, there are many variables and it is all speculation. Yes it is fun
The S/X LR/100D did not come out at 60-70k. They dropped to that price over a number of years. So far, production is much lower at the new higher price points.
There were S/X models at the lower price point. Over time they dropped the lower end models and filled them with longer range.
I know, but removing the cheaper trims while introducing new cheaper models isn't the same as raising prices. The LR still costs less now than it did in 2016 afaik.
The cheapest model s in 2016 could be had for $65k. Today it’s $95k. Yes there is range and performance difference but by eliminating the lower priced options they elevated the brand. They will never offer another $65k model S again. That market is now filled by the $50 and $60k model 3 and y.
The $35k market in 2018 -2020 filled by the model 3 and y is now gone. They’ve vacated that market. The cheapest Tesla is now $45k. They will never move the 3 and Y back down to $35k. They will instead eventually retire the 3RWD solidifying the 3 and Y as premium in the $50-60k range.
They will then develop a small CUV to fill the market between $30-40k once the market demand / capacity and need is there.
That was my point. They are filling out the market but giving lower priced models, enticing buyers, and then moving the brand up. But they don’t (and marketing would say you should never) re-enter a lower market you vacated unless you make a strategy play to no longer be premium.
Agreed. That and it looks like they'll have enough demand in the future to satisfy maximum production from both Austin and Freemont. If they do end up building a cheaper model, I think it'd require a new assembly line at an existing factory or a new factory altogether. Given their ambition for future production, I think the latter is more likely.
They stated that in their earnings release that costs are down and margins are up. So, they definitely have room to lower prices should supply increase/demand decrease.
Read the earnings release:
Automotive gross margins are almost 4% higher than in 2020.
Our operating income improved to $2.6Bin Q4 compared to the same period last year, resulting in a 14.7%operating margin. This profit level was reached while incurring SBC expense attributable to the 2018 CEO award of $245M in Q4, driven by the final two operational milestones becoming probable. YoY, operating income was primarily impacted by the following items:
+ further per vehicle cost (COGS) reduction
+ growth in vehicle deliveries+ improved profitability of automotive leasing and Service & Other business-increase in SG&A driven mainly by $340M payroll tax on 2012 CEO award option exercise-rising raw material, commodity, logistics and expedite costs-increased warranty and recall cost related to a specific batch of vehicle
I think that any talk of lowering prices is mostly wishful thinking.
I didn't listen to the call but I've read some about it. We can all agree that Tesla is selling every car they can build. I don't think it's very controversial to say that production is, to some degree, parts-constrained. In that light, maximizing production of the most expensive models makes the most sense.
Elon did make some allusion to the development of a less-expensive model when supply of current models catches up with demand. Depending on margins, I can see production of a less costly model being the path to keeping demand in line with supply. They change the mix of vehicles (much like they have with the S/X relative to the 3/Y in recent years) and maximize profitability relative to production capacity.
I didn't listen to the call but I've read some about it. We can all agree that Tesla is selling every car they can build. I don't think it's very controversial to say that production is, to some degree, parts-constrained. In that light, maximizing production of the most expensive models makes the most sense.
Elon did make some allusion to the development of a less-expensive model when supply of current models catches up with demand. Depending on margins, I can see production of a less costly model being the path to keeping demand in line with supply. They change the mix of vehicles (much like they have with the S/X relative to the 3/Y in recent years) and maximize profitability relative to production capacity.
Hoping for lower Tesla prices in the future is often just a way to justify putting off a purchase.
Nobody knows what will happen to Tesla pricing in the future. Best guess is that they will keep churning out their current production, with continous improvements, while also rolling out the CyberTruck, Cyber ATV, Semi, New Roadster. Perhaps also a convertible (when they can address safety issues), a smaller and more nimble 2 door coupe, and perhaps even a boat or two.
Nobody knows what will happen to Tesla pricing in the future. Best guess is that they will keep churning out their current production, with continous improvements, while also rolling out the CyberTruck, Cyber ATV, Semi, New Roadster. Perhaps also a convertible (when they can address safety issues), a smaller and more nimble 2 door coupe, and perhaps even a boat or two.
Agreed. At some point, competition and Tesla's production will increase enough to warrant some price reduction. I doubt that it'll happen in 2022 though.
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