What will happen to current owners once Tesla drops the price of new Y's?

[Chomlee]

Yup. Supply and demand. There’s a near-zero chance of price decreases if people are still willing to wait months at their current prices. Even when inflation comes back down and the supply chain returns to normal, that just means the margins increase for Tesla. As long as Tesla is a publicly-traded company and people are willing to buy their cars at the increased price, it will continue to be about max profit.

Another thing about supply and demand that isn’t quite known but true is that when demand increases, the reaction of price increase is almost immediat. When prices go up and then demand decreases, it takes a long time to catch up and then force prices to decrease. Sellers try and hold on to that new found profit.

current real estate is a perfect example. Demand in most areas has dramatically decreased because new buyers can’t afford it and current owners don’t want to sell when they can’t get a good price on a replacement. But prices have stayed the same for the most part. Realtors are still pushing to get top dollar and it takes sellers with homes months in the market finally dropping their prices little by little. Same thing happened back in 2005.

 

[NovaTech]

Not worried at all really. The MYP I ordered last October now costs nearly 10K more than I paid.

 

[glide]

People on this thread are so shortsighted it’s ridiculous. This is literally how bubbles happen.

Hope you all aren’t buying houses in this market if this is your attitude toward vehicle purchases.

 

[NovaTech]

People on this thread are so shortsighted it’s ridiculous. This is literally how bubbles happen.

Hope you all aren’t buying houses in this market if this is your attitude toward vehicle purchases.

I think many people who purchased a Tesla over the last year or so put down plenty of money (53K in my case) and really aren't concerned about a potential downward shift in future pricing (although I highly doubt it). I'll need a car regardless, and it will be paid for in 2.5 years. I pay approx. $40/month to charge my car, and would be paying $400/month with current prices to fill up the vehicle I drove previously. I took advantage of the used car market in the Fall and did very well, but I also knew I was making a good financial choice. People have done the same with the housing market. Anyone buying a home in the current market won't be in the best position, but people still need to buy and sell homes for more than just financial reasons.
I do feel for those who put down 2-3K on their Tesla and have huge loan payments for 6+ years just to be in the EV club - but it's their money and not my right to question the choices of others.

 

[MileUnderDude]

Tesla will not decrease price on a Model Y LR, P, or SR-AWD down to 50k, I think we will see a drop down to 60-65k again, but at that point most people should have a 2-3 years of payments on the books, no reason they should be under water at that point.

People who think Vehicles are an appreciating asset lack financial literary.

I consider a Car payment the cost of living well, you're spending that money for the privilege of driving something reliable, comfortable, and eye catching.

If I spend $15-24k in payments over the course of 2 years, I'm happy to sale the Vehicle for whatever is left on the Loan, I've received my use of that Vehicle.

 

[YNoVA]

I think many people who purchased a Tesla over the last year or so put down plenty of money (53K in my case) and really aren't concerned about a potential downward shift in future pricing (although I highly doubt it). I'll need a car regardless, and it will be paid for in 2.5 years. I pay approx. $40/month to charge my car, and would be paying $400/month with current prices to fill up the vehicle I drove previously. I took advantage of the used car market in the Fall and did very well, but I also knew I was making a good financial choice. People have done the same with the housing market. Anyone buying a home in the current market won't be in the best position, but people still need to buy and sell homes for more than just financial reasons.
I do feel for those who put down 2-3K on their Tesla and have huge loan payments for 6+ years just to be in the EV club - but it's their money and not my right to question the choices of others.

I also took advantage of the market and sold my Standard Range Y. I paid off the loan and got a check for 20k on top of that. Plan on putting that 20k straight into the MYP.

 

[Unclepaul]

If prices drop, OP will suffer no financial damage.

If it is totaled by your insurance company, you will recieve enough $ to replace it. Has nothing to do with what you paid for it.
If you simply want to sell your car, the price you will be able to get will be lower, but so will the cost of your replacement car.

Things are working the same way with rising prices.

Only way to win or loose with price fluctuarions will be if you do not replace your current car.

 

[YNoVA]

If prices drop, OP will suffer no financial damage.

If it is totaled by your insurance company, you will recieve enough $ to replace it. Has nothing to do with what you paid for it.
If you simply want to sell your car, the price you will be able to get will be lower, but so will the cost of your replacement car.

Things are working the same way with rising prices.

Only way to win or loose with price fluctuarions will be if you do not replace your current car.

If it is totaled then you will get a check for the current value but still owe more on the loan which you're liable for.

 

[AndrewZ]

Deflation expectations by themselves could be something that contributes to price declines. Elon on the earnings call last night mentioning prices going to "embarrassing" levels and potential drops might incite more of that if people pick up on it, and I think we've seen a bit of it in this thread already.

If people expect prices to come down in a reasonable time after all these increases, why would they buy now? Inflation works to make people buy now rather than wait because prices will inflate over time, and deflation can have the opposite effect. If people put two and two together and figure that putting off buying will further balance supply and demand and make price decreases more likely sooner, it could snowball more quickly.

If Tesla does eventually drop prices, I have a feeling it will coincide with reduced or stopped acceptance of trade-ins and this would have a negative impact on trade-ins regardless since people who bought vehicles at these higher prices will be less likely to accept a trade-in value back from Tesla that is so much lower than what they had paid Tesla for the vehicle originally.


This type of situation is exactly how bubbles burst, and it could create a lot of "bagholders" who have been speculating/flipping in this market. People who intend to own and drive their vehicles long term wouldn't need to worry, it is what it is and obviously doesn't affect the real properties of the vehicle.

 

[Chomlee]

Deflation expectations by themselves could be something that contributes to price declines. Elon on the earnings call last night mentioning prices going to "embarrassing" levels and potential drops might incite more of that if people pick up on it, and I think we've seen a bit of it in this thread already.

If people expect prices to come down in a reasonable time after all these increases, why would they buy now? Inflation works to make people buy now rather than wait because prices will inflate over time, and deflation can have the opposite effect. If people put two and two together and figure that putting off buying will further balance supply and demand and make price decreases more likely sooner, it could snowball more quickly.

If Tesla does eventually drop prices, I have a feeling it will coincide with reduced or stopped acceptance of trade-ins and this would have a negative impact on trade-ins regardless since people who bought vehicles at these higher prices will be less likely to accept a trade-in value back from Tesla that is so much lower than what they had paid Tesla for the vehicle originally.


This type of situation is exactly how bubbles burst, and it could create a lot of "bagholders" who have been speculating/flipping in this market. People who intend to own and drive their vehicles long term wouldn't need to worry, it is what it is and obviously doesn't affect the real properties of the vehicle.

This current Inflation is so different than any other. There are many factors going on that are contributing to this. Some are transitory and temporary, some are permanent. I hope we learned the whole (whispering) “pay them more” doesn’t work, as anybody who took basic economics would tell you. There is a thinking that we could just have minimum wage set high enough so people could buy nice cars and a nice house, but its not possible and can’t happen.

Having said that, the labor wage increase will never go back down so you will still pay at least $12 for a Taco Bell combo. Housing prices will eventually come down but rent may not (especially if we continue to allow corporations to buy up single family homes and jack up rental prices. Supply chain issues could get resolved and we will feel the easing effect as suppliers are able to lower prices to normal conditions. So basically what I am saying is that I don’t see a bubble bursting, only some relaxation of prices here and there. Knowing how Elon is however, I could Definitely see a possibility of him lowering the prices A LITTLE to help people out even while there is still high demand (something the other guys would def not do). As we all know, his vision isn’t really to make money but to change the way things are done in this world. His position as the “richest man in the world” is simply a by product.

BTW, Tesla stock today up approx 10% today.

 

[popgodazipa]

I bought my MS at the 2nd lowest price Tesla ever offered, right before the refresh. Lots of grumbling from folks who paid a 100k plus for theirs vs less than 80k for mine.

But what are you gonna do? These things happen.

 

[AndrewZ]

This current Inflation is so different than any other. There are many factors going on that are contributing to this. Some are transitory and temporary, some are permanent. I hope we learned the whole (whispering) “pay them more” doesn’t work, as anybody who took basic economics would tell you. There is a thinking that we could just have minimum wage set high enough so people could buy nice cars and a nice house, but its not possible and can’t happen.

Having said that, the labor wage increase will never go back down so you will still pay at least $12 for a Taco Bell combo. Housing prices will eventually come down but rent may not (especially if we continue to allow corporations to buy up single family homes and jack up rental prices. Supply chain issues could get resolved and we will feel the easing effect as suppliers are able to lower prices to normal conditions. So basically what I am saying is that I don’t see a bubble bursting, only some relaxation of prices here and there. Knowing how Elon is however, I could Definitely see a possibility of him lowering the prices A LITTLE to help people out even while there is still high demand (something the other guys would def not do). As we all know, his vision isn’t really to make money but to change the way things are done in this world. His position as the “richest man in the world” is simply a by product.

BTW, Tesla stock today up approx 10% today.

The bubble bursting would be more about cratering of the speculation and such that has been happening in the car market recently, and it's rampant. And real pain among consumers would be limited to these speculators, although I think there would be downstream effects as mentioned in terms of trade-in values etc. Higher prices and trade-in values are surely helping the situation right now as people who bought vehicles just a couple years ago are likely seeing trade-in or third party sales values that may even be higher than what they originally paid for the older model. The opposite will happen when car prices eventually decline meaningfully, then you'll have people who paid higher prices and would now be eating a loss if they traded in.

 

[Whitehawk]

I placed my MYLR order before the last two price increases. If the price bubble doesn’t burst before I take delivery I will likely sell this car, put some $$$ in my pocket and wait another year or two before ordering another. Tesla profit margins are 28%, they have room to lower prices substantially if competition starts catching up…I’m guessing about $10,000 lower than current prices.

 

[popgodazipa]

I placed my MYLR order before the last two price increases. If the price bubble doesn’t burst before I take delivery I will likely sell this car, put some $$$ in my pocket and wait another year or two before ordering another. Tesla profit margins are 28%, they have room to lower prices substantially if competition starts catching up…I’m guessing about $10,000 lower than current prices.

I think a lot of folks may be kicking the tires on this strategy, me included. I can’t see Tesla lowering prices if people are in line to buy at the current rate. Why would you lower the cost when demand out paces your ability to supply? If we are a year out for those that order base models today you think Elon is going to lower the price on those orders? I’d say you will be waiting until 2024 at the earliest for lower pricing. Maybe when they have a refresh schedule which I saw somewhere in the forums but can’t recall the year.

 

[Charles R]

This current Inflation is so different than any other. There are many factors going on that are contributing to this. Some are transitory and temporary, some are permanent. I hope we learned the whole (whispering) “pay them more” doesn’t work, as anybody who took basic economics would tell you. There is a thinking that we could just have minimum wage set high enough so people could buy nice cars and a nice house, but its not possible and can’t happen.

Having said that, the labor wage increase will never go back down so you will still pay at least $12 for a Taco Bell combo. Housing prices will eventually come down but rent may not (especially if we continue to allow corporations to buy up single family homes and jack up rental prices. Supply chain issues could get resolved and we will feel the easing effect as suppliers are able to lower prices to normal conditions. So basically what I am saying is that I don’t see a bubble bursting, only some relaxation of prices here and there. Knowing how Elon is however, I could Definitely see a possibility of him lowering the prices A LITTLE to help people out even while there is still high demand (something the other guys would def not do). As we all know, his vision isn’t really to make money but to change the way things are done in this world. His position as the “richest man in the world” is simply a by product.

BTW, Tesla stock today up approx 10% today.

It’s been a couple decades since I took an economics class, but doesn’t higher pay typically lead to less hiring/higher unemployment?

 

[Unclepaul]

Companies will only hire people that can make them more $ that they cost.

 

[Chomlee]

It’s been a couple decades since I took an economics class, but doesn’t higher pay typically lead to less hiring/higher unemployment?

If it’s forced by the government then I think yes. If it’s as a result of supply and demand, not necessarily. In this case though Covid brought a lot of “free money” to people. And we also have “the great resignation” going on so I will admit it’s a weird combination we are facing and hard to predict a lot of things.

 

[CyberGus]

It’s been a couple decades since I took an economics class, but doesn’t higher pay typically lead to less hiring/higher unemployment?

Increasing wages will also increase employment.

• workers have more disposable income
• therefore more money is spent on goods and services
• thus, businesses make more profit
• plus, we all get a tax cut due to the reduction in poverty assistance

I call it the "trickle-up theory"

 

[kenstl]

The Increasing wages will also increase employment.

• workers have more disposable income
• therefore more money is spent on goods and services
• thus, businesses make more profit
• plus, we all get a tax cut due to the reduction in poverty assistance

I call it the "trickle-up theory"

Haven’t seen the above in all my years, specifically the the title and the last point, but hey, based on everything else going on these days nothing surprises me anymore.

 

[SFSolarPower]

IMHO anyone waiting for a price decrease on Teslas is living in a fantasy world. Used car prices will likely come down somewhat. This is not real estate. With waiting lists approaching a year for new Teslas, prices will not soften until Tesla has excess inventory over demand.