Pricing strategy for 2023?

[ucmndd]

I believe Tesla has sufficient demand levers left to pull

So we’re saying the same thing it sounds like?

Of course they have significant demand levers to pull - they’ve raised the prices of their essentially unchanged product portfolio by upwards of $10,000 in the past year or two. That makes for a whole lot of “demand levers” to pull (euphemism for “price decrease”) in response to a changing market.

Don’t get me wrong, the company will be just fine - albeit with a more real world market cap for the foreseeable future - but it’s straight up crazy to think that prices aren’t coming down in the very near future.

 

[tangible1]

Surprised to see folks still argue the “demand is as strong as before” and they “can’t sell them fast enough” and “don’t need to subsidize”. For literally a third of q4, they dramatically cut prices on their 3/Y cars. Close to $9-10k off (7500+supercharging value, pretax). And they still missed targets. Missing by 3% is actually a pretty big deal (companies who miss by 10-20% would be in a more dire existential situation). Imagine if they hadn’t don’t that. Q1 will be even harder since any money off is now a tax refund. And q2 onward will be even worse.

Trust me. I wish TSLA still had the unlimited demand and pricing power than they once enjoyed. Certainly stand to profit far far more of they did. But the writing is on the wall and we will see their actions over the next few months.

one third of Q4 is one month.
that month was about offsetting the EoY government tax-incentive chaos of Buyers trying to capture tax credits next year by delaying delivery if they could.
it wasn't a demand spike or a reflection of softening demand.
the exact same thing happened last year due to the BBB legislation (that failed, but still caused havoc). So Tesla adapted this year.

It might happen yet again in 18 months if Government continues to try and buy elections (it's working, so why not double down?)

 

[Olle]

Shocking to see how few people realize that the EV transition is real. That's 25% as next car in the US. In Europe it sounds closer to 100% EV for their next car when I spoke to friends and family over there now during Christmas. But EV production is under 10% globally. Doesn't take a PhD in statistics to figure out that Tesla will sell all the cars it can make even if the overall car market collapses to half, or worse.

The strategy will probably be to adjust the prices by country on a weekly basis to keep the wait list at a minimum, but not 0. If need be, they will lower the prices to 0 margin to keep growing, Elon already said as much. Also as others have written here, more variants will be added before. On both ends. Of course RWD Y in more markets as well as Y7. They might add extra luxury and/or performance+ option for 3 and Y to add an additional extra price layer for those. Important in a recession since affluent buyers are less dependent on economics and rates.

 

[ucmndd]

I see there are still plenty of people drunk on Elon Juice here.

A quarter of Americans might say they WANT an EV as their next car. But if that EV comes at a very significant price premium compared to a comparable ICE car in a time of economic uncertainty and stable gas prices, relatively few are going to pay that premium.

Pretty much everyone of means in a square state will choose a $60k Chevy Tahoe over a similarly-priced Model Y.

The strategy will probably be to adjust the prices by country on a weekly basis to keep the wait list at a minimum, but not 0.

Not a chance. Look at all the whining, moaning, and infantile claims of “unfairness” in this forum alone over the past few weeks because Tesla had the audacity to change prices and not apply favorable terms retroactively.

If people get used to the idea of Tesla changing prices weekly, particularly in a market where they’re more likely to go down instead of up, nobody will buy anything at the chance of risking missing out on a better deal next week.

 

[DarrenHD]

So we’re saying the same thing it sounds like?

Of course they have significant demand levers to pull - they’ve raised the prices of their essentially unchanged product portfolio by upwards of $10,000 in the past year or two. That makes for a whole lot of “demand levers” to pull (euphemism for “price decrease”) in response to a changing market.

Don’t get me wrong, the company will be just fine - albeit with a more real world market cap for the foreseeable future - but it’s straight up crazy to think that prices aren’t coming down in the very near future.

Agreed. Tesla is selling a CPO (certified Pre-Owned) 2019 Model 3 SR+ in Canada with 74000kms on it for 57 CAD. That is crazy. Less than 2 years ago I bought my brand new 2021 Model Y SR for less. Prices need to come back to early 2021 levels. They aren't there yet, in the new or used market. The pandemic bubble has further to pop.

 

[Olle]

I see there are still plenty of people drunk on Elon Juice here. Pretty much everyone of means in a square state will choose a $60k Chevy Tahoe over a similarly-priced Model Y.

I see there are still plenty on people projecting their personal rear view mirror onto the world

Nothing wrong with square states but even if every single person there insisted on only buying ICE cars, the EV transition would still happen, since square states are only home to 0.25% of the world's population.


The world has moved on. Europe and China are a done deal in EV transition. Even Sweden, despite scrapping its EV incentive this year, reached 49.6% market share for BEV in December.

Tesla will increase production fast this year and lower the prices if need be, IMHO.

 

[eleison]

Tesla will increase production fast this year and lower the prices if need be, IMHO.

That is the question: will tesla NEED to lower prices in order to justify increasing production? If so, by how much? We all pretty much agree that Tesla manufacturing is getting better and more efficient.

 

[Olle]

That is the question: will tesla NEED to lower prices in order to justify increasing production? If so, by how much? We all pretty much agree that Tesla manufacturing is getting better and more efficient.

Definitely yes. That was already the plan before the recession. As volume grows, they work their way down the price segments. I had fooled myself into believing that inflation would eclipse the price reductions, at least in the US, so that there wouldn't be price reductions in nominal dollars. Now with the recession there must be price reductions I think. How much and how fast depends on how deep the recession becomes. Tesla of course can't know yet so I think they will need to adjust gradually along the way. I see the comments that people get upset by price reductions but I wonder how many they really are. Not many, would be my guess.

More variants will be part of the price strategy, to indirectly adjust price mix without having to change price of each specific variant too often. Holding back variants like e.g. YP7 and YRWD was a way to reduce demand /wait lists. YP7 has already been submitted to the IRS for this year.

 

[Ash83]

Prices will absolutely need to come down to sustain this level of demand. Pretty much every Tesla model is dramatically overpriced for the market we’re likely to find ourselves in for 2023.

At minimum there will need to be various 3/Y configs that are both compelling enough and priced to qualify for any available tax incentives (let the government do the discounting first).

When the battery materials requirements kick in around March and reduce the credit to $3750 for essentially everyone, I expect Tesla will be forced into an across the board $3750 discount to make up for it.

What do yo mean by demand? high or low?

I assume high as Tesla still have couple of months wait on the 3/y.

The high demand and the lower price you are suggesting does not make any sense. also the incentives are kicking in so Tesla most likely will keep current price or slight adjust it to be under the limit to get the tax credit. It is not their fault if you are not eligible due to other reasons like income.

 

[KonSre]

What do yo mean by demand? high or low?

I assume high as Tesla still have couple of months wait on the 3/y.

The high demand and the lower price you are suggesting does not make any sense. also the incentives are kicking in so Tesla most likely will keep current price or slight adjust it to be under the limit to get the tax credit. It is not their fault if you are not eligible due to other reasons like income.

Exactly one year back the prices were 10k below. and the reason is being supply shortage. Now there is no or very less supply shortage. So do you still want to pay 10k more than what the car is worth for unless you are a partner in tesla. TESLA must and should lesser their prices. if not the demand will go down for sure with increasing production of their cars. People already got 7500 off between dec 21st and 31st. So do you think people will spend full MSRP with out any discount this month? If any one is buying for sure it would be their necessity not they wanted to buy because the car is worth. 55K for LWD is ideal. Again was the price 12-14 months back. We are not asking TESLA to go bankrupt by taking losses. Even at 55k price point tesla will be in huge profits, JUST THINK

 

[tangible1]

Exactly one year back the prices were 10k below. and the reason is being supply shortage. Now there is no or very less supply shortage. So do you still want to pay 10k more than what the car is worth for unless you are a partner in tesla. TESLA must and should lesser their prices. if not the demand will go down for sure with increasing production of their cars. People already got 7500 off between dec 21st and 31st. So do you think people will spend full MSRP with out any discount this month? If any one is buying for sure it would be their necessity not they wanted to buy because the car is worth. 55K for LWD is ideal. Again was the price 12-14 months back. We are not asking TESLA to go bankrupt by taking losses. Even at 55k price point tesla will be in huge profits, JUST THINK

'Must' and 'Should' are your adjectives. There is no such requirement.
And December was just Tesla responding to tax incentive manifest chaos. It's over. Those that took the deals made out better than tax credits.
Car companies, like most firms, are reluctant to lower MSRP.
Typically during slack demand periods they increase incentives or build less product.

My guess (and that's what all of us are doing - guessing) is that Tesla will keep the current MSRP.
Perhaps they'll offer a bit more range or incentives such as SuperCharger access for Referrals again, or maybe better FSD / EAP subscription terms.

If demand slackens (which isn't a sure bet) then they'll make variants of the MY and M3 that are lower priced.
Examples are AWD or RWD - that are lower featured in range, performance, etc.
Tesla has tremendous flexibility there to do whatever they want.
Let's also not forget a M3 refresh is coming, and that will spur demand.

Either way, Tesla can't even scratch the surface of the depth of demand to replace the worldwide fleet of ICE cars.
So short term, it's dependent on local conditions and economies, but longer term, it's gonna take decades to replace ICE.

 

[KonSre]

'Must' and 'Should' are your adjectives. There is no such requirement.
And December was just Tesla responding to tax incentive manifest chaos. It's over. Those that took the deals made out better than tax credits.
Car companies, like most firms, are reluctant to lower MSRP.
Typically during slack demand periods they increase incentives or build less product.

My guess (and that's what all of us are doing - guessing) is that Tesla will keep the current MSRP.
Perhaps they'll offer a bit more range or incentives such as SuperCharger access for Referrals again, or maybe better FSD / EAP subscription terms.

If demand slackens (which isn't a sure bet) then they'll make variants of the MY and M3 that are lower priced.
Examples are AWD or RWD - that are lower featured in range, performance, etc.
Tesla has tremendous flexibility there to do whatever they want.
Let's also not forget a M3 refresh is coming, and that will spur demand.

Either way, Tesla can't even scratch the surface of the depth of demand to replace the worldwide fleet of ICE cars.
So short term, it's dependent on local conditions and economies, but longer term, it's gonna take decades to replace ICE.

'Must' and 'Should' are your adjectives. There is no such requirement. Agree -- But remember as demand lowers Must and Should becomes real. We should always remember to not drink(or encourage) their juice for expensive price just that they increase however they want.

 

[tangible1]

'Must' and 'Should' are your adjectives. There is no such requirement. Agree -- But remember as demand lowers Must and Should becomes real. We should always remember to not drink(or encourage) their juice for expensive price just that they increase however they want.

One of the early lessons I learned after college was that assumptions of price movements based on Economics 101 were WRONG.
Demand got lower, interest rates went up, and prices ROSE in the late 70's. Exactly OPPOSITE to what classical economics preaches.
Why?
Manufacturers have fixed, base line costs. Those costs got spread over fewer units sold. Consequently, prices rose.

We could be witness to similar circumstances today, only now those costs are driven up by rising interest rates on funds used to build new factories for EV's.
The good news for Tesla is that with average profit of almost 10K per vehicle sold, they're largely self-funded.
Not so for the Big 3 OEM's. They dove into the finance pool and are building bunches of new facilities. Some is subsidized, but the $$$ loans are massive.

Be careful what you wish for. Lower volume sales typically lead to higher prices in the car industry. The last several years have seen record volumes.

 

[KonSre]

One of the early lessons I learned after college was that assumptions of price movements based on Economics 101 were WRONG.
Demand got lower, interest rates went up, and prices ROSE in the late 70's. Exactly OPPOSITE to what classical economics preaches.
Why?
Manufacturers have fixed, base line costs. Those costs got spread over fewer units sold. Consequently, prices rose.

We could be witness to similar circumstances today, only now those costs are driven up by rising interest rates on funds used to build new factories for EV's.
The good news for Tesla is that with average profit of almost 10K per vehicle sold, they're largely self-funded.
Not so for the Big 3 OEM's. They dove into the finance pool and are building bunches of new facilities. Some is subsidized, but the $$$ loans are massive.

Be careful what you wish for. Lower volume sales typically lead to higher prices in the car industry. The last several years have seen record volumes.

Alright! Let the time speak

 

[RVAC]

7-seat Model Y qualifies, so they don't need to push prices below $55k to get the credit. Just have to make that the standard.

 

[ord3r]

I see there are still plenty of people drunk on Elon Juice here.

This forum has a lot of shareholders compared to other car forums, and they give some pretty questionable advice from a consumer perspective, but the advice usually makes sense from a making Tesla more money perspective. One of the few places you see people on forums rooting against a price drop.

I'd recommend a wait and see approach at current prices if not in need of a car now, especially if considering a 5 seater Y considering the tax credit shenanigans.

 

[KonSre]

This forum has a lot of shareholders compared to other car forums, and they give some pretty questionable advice from a consumer perspective, but the advice usually makes sense from a making Tesla more money perspective. One of the few places you see people on forums rooting against a price drop.

I'd recommend a wait and see approach at current prices if not in need of a car now, especially if considering a 5 seater Y considering the tax credit shenanigans.

Agree. Wait and see wins the race for this situation in market now.

 

[voxel]

Agreed. Tesla is selling a CPO (certified Pre-Owned) 2019 Model 3 SR+ in Canada with 74000kms on it for 57 CAD. That is crazy. Less than 2 years ago I bought my brand new 2021 Model Y SR for less. Prices need to come back to early 2021 levels. They aren't there yet, in the new or used market. The pandemic bubble has further to pop.

Canada has a messed up used market due to how dealers are forced to sell new at MSRP.

In Florida, there are dozens of 2022 MYPs with 5000ish miles for $62K. Used car depreciation is back to normal. The second you drive off the lot with a new Model Y you lose 10%-15%.

 

[voxel]

The new hot EV is the old Bolt. I hear of stories of 7+ people fighting over one Bolt at dealerships.

I still think Tesla will sell a lot of EVs but no more 50% growth. More like 10% growth if they continue their current pricing strategy. Other EV makers are ramping up production (finally). Wait times for ID.4s and i4s have plummeted.

 

[Happy Hippo]

Canada has a messed up used market due to how dealers are forced to sell new at MSRP.

In Florida, there are dozens of 2022 MYPs with 5000ish miles for $62K. Used car depreciation is back to normal. The second you drive off the lot with a new Model Y you lose 10%-15%.

that price needs to go down much further.