How Expensive is it to Buy a Tesla Now vs Pre-Covid?
January 2020
Tesla AWD Model Y List Price: $52000
Interest Rates: ~ 3.5%
Monthly Payment ($10k down):
$764
April 2023
Tesla AWD Model Y List Price: $50000
Interest Rates: ~ 6.5%
Monthly Payment ($10k down):
$782
Ignoring other factors for now,
Tesla's most sold car is still more expensive than it was over 3 years ago.
Other factors:
Supply / Demand Curves: All else equal, as volume increases, prices needed to sustain demand should decrease. Tesla has increased production rate by a factor of
4 in 3 years, yet the
affordability of the car has not gone down.
Wage Inflation: Average wages were up ~4%,4%, and 6% the last 3 years. Assuming white collar jobs matched these, raw purchasing power should have went up ~ 15% and so higher monthly payments should be tolerated.
Total Inflation: However total inflation has been even higher the past 2 years, while lower in 2020. Inflation obviously increases costs of other expenses reducing purchasing power for cars. I'd say this washes out wage inflation for now.
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Summary
The economic factors presented to Tesla in 2023 should mean that prices should even be lower than they currently are. Monthly payments are actually higher than 3 years ago while supporting a much larger base of potential customers.
Costs also inflated but should see some alleviation later this year, unfortunately those lag price cuts.
Price cuts effect on demand are not instantaneous, we may not see most effects until later this year.
Thus, this is the worst period of time for financials. Prices may need to be cut again. Q1 or Q2 should be the worst of it. Peak FUD is now through rest of Q2 and probably Q3.
Conclusion
Tesla does not have a demand problem, in fact, I would argue it is up. (I am surprised by this finding)
Tesla does not have an advertising problem.
Tesla has a "the economy sucks and there's nothing we can do about it but be patient" problem.
Investors need to suck it up and be patient too.