... Price cutting is always a sign of economics working and while investors might not like to see the supply/demand curves working they clearly work; almost as perfectly as gravity...
Conventional wisdom says that. Actual market results are quite different. Many products (e.g. Rolex and all 'luxury' watches, numerous badge-engineered vehicles, designer clothing, Fendi, and the entire lines of LVMH, not to mention Burgundy and Champagne) have higher prices as an integral part of the product. The notion that lower prices stimulate demand is true for commodities, but far less price elasticity of demand exists for clearly differentiated products, most Teslas are in that category.
Elon is speaking to a very different point. Reducing prices on identical models does not advance the Tesla mission in any material way. Producing vehicles intended for urban use, smaller vehicles and other types of vehicle all do contribute to the mission. Elon used shorthand about all that. Many of us imagined that he might think the Model S Plaid is too expensive while rational valuation suggests the Plaid is too cheap, after all the competitors cost several multiples of Model S Plaid price. One might even think the Model S LR is too cheap.
If either of those last cars had been produced by Porsche they'd have the same base price, but the infotainment alone would be, say, $15,000 and the mapping system would be another $5,000 etc. Roughly across Porsche's product lines average MSRPis around 150% of base MSRP. In that case the marketing plan is intended specifically to allow the buyers to disclose the base rather than the actual price, as explicitly stated in a 1989 strategy discussion I attended. Many vehicles fit that model.
FWIW, we all know and repeat the Model 3 vs Model Y economics but do not question higher pricing of Model Y.
Really, please understand that Tesla and Elon Musk DO understand marketing. It is that fact that explains why they disdain dealers and advertising. Those factors enable the Word of Mouth to accelerate, and encourage very high admiration in younger audiences. They will not willy-nilly reduce prices, especially not when they tend to have order volume rise with increased prices.
Nothing about that suggests we will not try to get the best deal we can. Nothing about this suggests Tesla will not expand market segments with new products as soon as they can build the capacity to do so.
