Read up on demand economics, it will explain a great many things to you.
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One needs to be very careful on this subject. All too often people misunderstand the reality that Price does matter greatly, it’s part of Positionng. So, for example: LVMH products do sell partly in price, that is High price is part of the product.
In cars: Both Ferrari and Porsche have for decades been highly successful in part through supply restrictions helping support high prices.
Demand economics, as a subject, tends to have excellent insight in relation to commodities. Take Lithium, for example. Absent substations equally effective price rapidly rise as battery demand rises. Once substitutes are perfected and more efficient extraction and refining happens prices plummet.
Cars are not commodities. Although pricing is very important, lower pricing is not always wise, sometimes higher pricing is more effective, With Tesla today there is a serious problem with pricing because ignorant people have convinced Tesla management that price is the primary demand lever. Many of us have foolishly promoted that fiction.
The net is that well meaning fools are bent on turning Tesla vehicles into commodities. Bad, auful news.
Models S and X should have been positioned as Premium, not directly sold on low price but on Premium Value. Add special included features like Premium Connectivity, FSD, special Concierge-style services. All that would have been cheaper and more effective than this Procing idiocy.
Listening to securities analysts and/or Bloggers is nearly certain to be wrong. None of them know anything at all about business, they do know how to generate clicks.
Sad, very sad, to see all this happening. After years trying to help avoid this outcome, here we are watching as FUD is displacing First Principles. I really hope this is not portending Xerox or Kodak, both of which were not prepared for change. Bizarrely Tesla is on the verge of ignoring First Principles by itself. We should all beg for adult, diligent solutions.
