Todd Burch
14-Year Member
All this talk about “demand problems” have me experiencing flashbacks to Econ 101. It’s really simple.
Did Tesla have demand problems at their old prices? Not at the start of 2022, at the production rate of early 2022. That’s why prices rose, so their order books wouldn’t grow further.
Did Tesla have demand problems at their old prices at the end of 2022, at the production rates at the end of 2022? Absolutely.
What changed? Macro environment and production rate.
Seriously, this is trival economics. Tesla lowered their prices because they had a demand problem in December. They’re tweaking them back up because demand is exceeding current production rates, but their prices are based off of future (higher) production rates.
Tesla will ask as much as they can get for their vehicles to balance order rates with production rates. Supply vs demand. If they lower prices, it’s because there’s not enough D for the S. If they raise them, there’s not enough S for the D.
We are currently entering a deflationary period with fears of recession, and the cost of borrowing money is high. Tesla’s also significantly ramping production. This brings prices down.
If we get past the recession fears and interest rates start coming back down, we’ll probably see prices go back up.
There’s no conspiracy here, and it’s not a Tesla problem. It’s simple economics and Tesla’s just reacting to the macro environment. All other companies will have to do the same.
Fortunately for us, Tesla knows how to minimize cost, giving them wide berth to make such decisions. Others don’t have that luxury. Watch as some competitors suffer under the pricing pressure this year.
Did Tesla have demand problems at their old prices? Not at the start of 2022, at the production rate of early 2022. That’s why prices rose, so their order books wouldn’t grow further.
Did Tesla have demand problems at their old prices at the end of 2022, at the production rates at the end of 2022? Absolutely.
What changed? Macro environment and production rate.
Seriously, this is trival economics. Tesla lowered their prices because they had a demand problem in December. They’re tweaking them back up because demand is exceeding current production rates, but their prices are based off of future (higher) production rates.
Tesla will ask as much as they can get for their vehicles to balance order rates with production rates. Supply vs demand. If they lower prices, it’s because there’s not enough D for the S. If they raise them, there’s not enough S for the D.
We are currently entering a deflationary period with fears of recession, and the cost of borrowing money is high. Tesla’s also significantly ramping production. This brings prices down.
If we get past the recession fears and interest rates start coming back down, we’ll probably see prices go back up.
There’s no conspiracy here, and it’s not a Tesla problem. It’s simple economics and Tesla’s just reacting to the macro environment. All other companies will have to do the same.
Fortunately for us, Tesla knows how to minimize cost, giving them wide berth to make such decisions. Others don’t have that luxury. Watch as some competitors suffer under the pricing pressure this year.