Reciprocity
Active Member
Agrred, and I think it might be even better: in this post I tried to estimate the addressable market of the Model 3 in the U.S. alone, about 600k units at $45k, 1,200k units at $39k and 1,800k units at $35k.
That's U.S. only and sustained - and if the Model 3 takes 30% of that it's huge.
But I do agree with Elon's approach of "measuring" demand by actually selling:
So I fully approve of Tesla's conservative approach, and I 110% approve of their low-latency, agile, feedback driven approach to vehicle options, bundling and pricing.
- No amount of market research would have told them the overwhelming preference for AWD (80% take rate initially) for example - reservation holder surveys didn't indicate this. Often customers don't know what they want, up to the point they click on "confirm order".
- Also, there was some early pushback against the minimalist interior - Tesla couldn't assume that it's such a hit with U.S. customers.
- The Model 3 was a "bet the farm" product, and the path to the summit of high-tech success is littered with the corpses of companies who assumed too much about what their customers wanted.
Yeah, I too think that Tesla owns the very lucrative, high-margin franchise/monopoly of premium EVs with no credible competition in sight, and such natural monopolies tend to be countercyclical and can grow even faster in recessions.
Now that Tesla doesn't depend on external sources of financing or equity sales anymore, because they are making 1.4 billion dollars of internally generated cash per quarter, their resilience to recessions has increased even more.
Tesla's oversight was not how many AWD vs rwd vs red vs anything at that level of detail. My point is that no one is getting a $35k car because demand for $50k eclipses what Tesla can make. MR is the result of trying to find a middle ground, which will inevitably be the bottom. To fulfill demand at $35k, Tesla needs to be able to make 2M cars per year, period. Maybe only 1.5M model 3s if model Y is also available.
People also forget, cars get more expensive every year. Not cheaper. My guess, Tesla night still 50k SR, WW by the end of next year, maybe more in China the year after.