Long term effect of Tesla Cars price drops on Tesla's Motors brand?

podge1979

There are obvious ones with the effect on 2nd values which effects their current customers. But will they be seen as premium an niche cars in the future.

Part of Tesla's success has been the margin the have on cars, higher price more margin. The price drops would take them competing with likes of VW and Hyundai who typically sell higher quantities lower margin.

Both VW and Hyundai are now trying to go higher end on price to compete with premium brands likes Tesla, BMW and Mercedes brand an reputation wise (having the product to compete is the other question). Looks like Tesla are dropping to compete with not just with the mass market but also the coming Chinese wave.

Having the tech cheap is one part of it but long term will it effect their brand.

Look at mobile phones you don't see Apple dropping prices to compete with cheaper Chinese brands (who have the tech too). They justify their price and margin on desirability.

I personally think long term Tesla are playing a dangerous game dropping prices 33% in a year seems to be sort term solution but will it be a long term gain.

But no-one complaining about picking up cheap Tesla's now.

Dasein

also has impact on PCP repayments because the future value is a key part of the calculation

I think it's Finance Ireland providing the PCP financing, they won't have enjoyed yesterday's price cut 😂

podge1979

Share price effect was interesting on Friday share dropped sharply recovered and kinda leveled off. I suppose would tank more if they report too much Inventory. Drops like the are unheard of so looks it my have come from the top.

banie01

The share price is IMO still trading far above its fair value. The realisation is dawning that Tesla are "just" a car company. The tech-bro sheen is wearing off and that share price action will now play out in competition with car company peers rather than FAANG.

The impact of Tesla's discounting will hit the pockets of owners, finance companies and resellers hardest, if you're in a PCP deal with a GMFV? Well you're probably rolling into next deal with a bit more equity than expected.

Dealers holding 2nd hand inventory? Have been royally screwed and that is at no net gain to Tesla. They are seeking to shift what are now ageing designs that are losing the original 1st mover advantage and have down it at the cost of their customers and the 2nd hand industry.

this guy has been calling general trends and issues in the US car market for a while and he has some interesting takes on Tesla too.

https://twitter.com/GuyDealership/status/1614068326807883776

slave1

No long term impact, there'll be more happy new Tesla owners versus disgruntled circa 2022 owners

Danzy

Tesla will grow market share and become a more established brand.

There might be some unhappy people in the process but overall..

slave1

It's their transition from luxury to mainstream, they have the factories now so volume can go up and volume will absorb overheads

joe1303l

https://www.boards.ie/discussion/comment/120108209#Comment_120108209

Tesla are definitely looking to go after market share and competitive pricing of the likes of the Model Y is certainly going to get results. It’s a car that has mass market appeal, the modern day equivalent of the golf or corolla. What’s happened will be yesterdays news at some point but it could have been handled better or even went for a more creative method to win sales without crushing resale values.

Danzy

https://www.boards.ie/discussion/comment/120108325#Comment_120108325

Very true

podge1979

https://www.boards.ie/discussion/comment/120108209#Comment_120108209

Yes more established, but less premium brand? They'll be duking it out with the likes of Toyota, VW and HKMC with mass market low margin cars? Rather than playing with the BMers and Mercs.

podge1979

How long till the reaction of "Wow you drive a Tesla" changes to "Meh you drive a Tesla" 😁.

innrain

https://www.boards.ie/discussion/comment/120108747#Comment_120108747

Tesla wants to sell 20M cars a year by 2030. BWM or Merc sell about 2M a year. From these figures one can see that Tesla has different target audience. There might be model S or X but those are niche to the main business. Y will replace Golf or Avensis not Class S.

podge1979

https://www.boards.ie/discussion/comment/120108900#Comment_120108900

Exactly going from premium high end brand to mass market, remember they lobbed a lot off the price of S also.

Jizique

https://www.boards.ie/discussion/comment/120108900#Comment_120108900

Tesla has zero hope of selling 20m cars in 2030, they would need to add 17m units of capacity over 5 years to be able to produce 20m in 2020; no new product in 3 years, history of screwing buyers with price cuts after they have purchased - the only way they produce 20m cars is if they buy Stellantis and Toyota

wfdrun

Golf cart with iPad attached. Bernard madoff.

Fred Cryton

https://www.boards.ie/discussion/comment/120107988#Comment_120107988

Except it's not "just" a car company. The real potential value for Tesla will be in battery storage farms, which the whole world will have to move to if we are to buy into Eamon Ryans vision of the future, and in which Tesla are absolutely cutting edge. I can see a time 10 or 15 years in the future when Tesla will be primarily a renewable energy generation and storage company, with some premium cars tagged on the side. Best to think of it as a conglomerate.

podge1979

https://www.boards.ie/discussion/comment/120109097#Comment_120109097

Mass market will not be premium, but interesting point also their approach to battery storage is to the detriment of the cars as they are yet to make them V2L or V2G capable. One of the reasons touted for this is potential internal competition with their storage side of things.

ted1

https://www.boards.ie/discussion/comment/120107988#Comment_120107988

Much bigger than a car company. Their energy business is booming. Large scale mega packs batteries going in around the world.

also their charging network gives them a supply business

Oafley Jones

Brand perception is a funny thing. How people define the likes of premium. I look at the current Tesla lineup and I just don't see it as a premium brand at all, maybe when it was just the S & X I'd agree, but the second their focus shifted to the 3 (and subsequently the Y) and largely abandoned the 100k segment those notions were gone. Remember the 3 was to be their 35,000 dollar mass market play. And while they completely failed to deliver on those prices, those cars have have all the hallmarks of their cost centric development. I really don't know where the idea of Premium with their current offerings comes from.

MightyMunster

https://www.boards.ie/discussion/comment/120108747#Comment_120108747

They were already 15k cheaper than BMW and even bigger difference vs Merc.

MightyMunster

https://www.boards.ie/discussion/comment/120109463#Comment_120109463

Failed? Achieved it 4 years ago you mean.

Model 3 isn't an S class Merc, Bentley or whatever you consider premium but neither is a 3 series, Audi A4. While being cheaper, faster, more efficient and much more modern inside. When the Model 3 was launched BMW were still including CD players in their cars.

podge1979

What cars are you quoting there, take the X1i and i4 they would be fairly much equivalent to M3 and MY LR they were pretty much in the same price bracket before the price drop.

Mantis Toboggan

https://www.boards.ie/discussion/comment/120109463#Comment_120109463

100% agree

eagerv

Hate the term Premium, I personally never use it with cars. To me, Premium just means higher price, ie a great marketing tool.

MightyMunster

https://www.boards.ie/discussion/comment/120109766#Comment_120109766

Is this directed at me? I4 M50 "from" 85k for example vs a M3P at 65.

The X1i I had to look up but starts in the mid 60s which was 10k more than Model 3, now 20k more. Same with the 3 series we have at home, 20k more than a M3 now too.

Gumbo

https://www.boards.ie/discussion/comment/120108879#Comment_120108879

I’d say Wednesday if we’re lucky!

MightyMunster

https://www.boards.ie/discussion/comment/120109929#Comment_120109929

I especially hate it since it started being used in every other post related to a certain Munich based company

Gumbo

https://www.boards.ie/discussion/comment/120109463#Comment_120109463

The Model 3 was never premium. It’s the everyday saloon. It’s the 3 series, A4 of years gone by. In a few years they will be everywhere.

There is no premium EV in this price bracket IMO

There be a niche version within, the same way bmw had the M3, Audi had the S4 and that’s where the Performance models will sit.

The new price lists is where Tesla should be. Expensive enough for what you get but also cheap enough for what you get.

For €66k, you can have a 500bhp saloon (M3P) that you can drive to mondello in, with the kids, race around the track, keeping up with everything and then drive home in with the kids in their car seats.

Incan hit the run way club, do a few 1km runs keeping up with mega German cars that cost twice as much. I’m happy with that.

carsfan2

Tesla have dropped prices because of dwindling order books and needed to stimulate things to generate business and keep their factories busy as far as I can see. I think this will work in the short term but it’s a dangerous game they are playing and will annoy existing owners who have seen huge chunks wiped off the value of their cars.

Trust in the brand will surely be eroded and I think the shine has well and truly come off it already with the antics of Musk who is the only advertising and PR the company appear to have.

I think the brand’s biggest problem going forward however is a lack of different looking new products. You need to make discernible changes to models to encourage new buyers and entice existing owners to trade up. There’s a reason conventional manufacturers do a mid life refresh and a whole new model every few years and publicise it and that is to maintain demand. People need to see differences between what they have and see around them to want the new car. Premium manufacturers are masters at this.

The current model 3 may be virtually a completely different car to the original ones that rolled out but they are virtually identical to the man in the street. Even the newest model S looks the same as a seven year old one. Tesla need to copy traditional manufacturers in my view to keep going otherwise they will be bought out by a rival as their share price drops more and I think the price drops may well accelerate this drop.

podge1979

https://www.boards.ie/discussion/comment/120110053#Comment_120110053

I4 starts at 68k, and high spec at that.

X1i is a SUV so comparable with the MY and at similar price prior to the double price cut in the last few months starts around early 60's which the MY used to be at.

Gumbo

https://www.boards.ie/discussion/comment/120110121#Comment_120110121

€68,825 for the sport which is the old SE Trim. So base trim.

Decent car, really well put together, but inside lets it down IMO.

spec wise, ok pros and cons but not as high as basic Tesla. TACC, €1k extra. Adaptive lights, extra. No sunroof/glass roof. But still, it’s a bmw. It will be priced higher for the badge. That’s how it’s always been.