Big price drop

[AndrewZ]

That’s not entirely true. Other manufacturers sold through dealer networks don’t have transparency like Tesla for their pricing. Take an example for Audi, at a time e-tron had a huge factory trunk money incentive for dealers to move units. Likewise for typical dealers. Consumers just may never know that until u really shop for it.

There are pros and cons to this and pros and cons to Tesla's approach.

A manufacturer maintaining stable MSRP then doing "temporary" or discretionary discounts at the dealership level probably serves to keep vehicle values more stable, because much of this stuff is determined based on MSRP. When you start flipping around MSRP, it feels more permanent and the added visibility of this could and likely will ripple through and have implications that don't seem obvious. It's really good when values go up, but it might be equally bad on the way down.

 

[afadeev]

Tesla is not a car company. It is a company that makes computers on wheels.

Hmmmm, so like this:

.... or this....

Are you sure?

BMW, Mercedes, etc.. makes cars.. cars that act like status symbols therefore prices must be at a certain level to have brand consistency. Tesla is not like that

Dude, Tesla is 100% like that!

Or even an ICE… a Model 3 is barely more costly than a Camry, if the federal incentive applies.

Is $10K (43,990 - 7,500 - 26,220) or 39% of the price a <barely> amount for you?
For folks shopping for $26K car car, it probably is not.

SooooooOoo... What u are saying is that Elon still has some more work to do to get Tesla prices even lower.

Not at all.
Just that comparing Model 3 to a Camry is silly.
The former is way more expensive, and the latter is way larger of a family car.

Size-for-size in interior space, Camry is more inline with a Model S.
If you want to go there.

Tesla Model S (2022) vs. Toyota Camry Specs

TrueDelta.com provides detailed Tesla Model S (2022) vs. Toyota Camry specs comparisons as well as price comparisons, reliability information, and more.

www.truedelta.com

I don't disagree. That is his ultimate goal.

Are you sure about that?
It appears cratering a social media company by liberating it from its revenue is his current ultimate goal?

a

 

[vickh]

Wait until the legacy manufacturers react to Tesla's price cuts.

Still waiting....

 

[vickh]

What are you comparing? The cheapest Model 3 with $7,500 federal credit would be $38,130. A new Camry (before any potential discounts, rebates or incentives) starts at $27,315.

No Toyota dealer actually sells at MSRP... yet They all have add ons + BS at least in AZ

TSLA is the opposite. No add ons unless I want it. The reps yesterday were the opposite of an aggressive sales person

 

[Hiline]

Is $10K (43,990 - 7,500 - 26,220) or 39% of the price a <barely> amount for you?
For folks shopping for $26K car car, it probably is not.

To come close to the performance of the Model 3, the Camry would need to be pretty close to full options. And then if you factor in cost of ownership, the Model 3 may even come out ahead.

Still waiting....

If you were the CEO of one of them, would you try to make an enormous decision like this within the weekend?

Tesla's move was definitely pre-meditated, probably from when the Act was passed. It's going to take the competitors at least a few weeks, with multiple internal meetings among the executives, to figure out what to do. Cut prices to move cars and lose money vs keep prices the same and see EV sales drop like a rock vs lobby with the government to hamper Tesla is an existential decision - if you make the wrong move, you're headed straight to Chapter 11.

 

[CapeOne]

No Toyota dealer actually sells at MSRP... yet They all have add ons + BS at least in AZ

TSLA is the opposite. No add ons unless I want it. The reps yesterday were the opposite of an aggressive sales person

Tesla has "add-ons" too including things like a $250 to $500 (depending on if you're buying new or used) non-refundable order fee.

My point was simply that a new Camry can be had for significantly less than the least expensive new Model 3 even after $7,500 federal credit.

 

[ElectricIAC]

Tesla has "add-ons" too including things like a $250 to $500 (depending on if you're buying new or used) non-refundable order fee.

My point was simply that a new Camry can be had for significantly less than the least expensive new Model 3 even after $7,500 federal credit.

Yeah. But then you have to drive a Camry, which is a fate worse than death.

 

[eleison]

My point was simply that a new Camry can be had for significantly less than the least expensive new Model 3 even after $7,500 federal credit.

Elon is working on fixing this...

 

[CapeOne]

Yeah. But then you have to drive a Camry, which is a fate worse than death.

I'm sure many people like their Camrys but I wasn't the one who originally brought up the Camry comparison, I just responded to it.

 

[vickh]

Tesla has "add-ons" too including things like a $250 to $500 (depending on if you're buying new or used) non-refundable order fee.

My point was simply that a new Camry can be had for significantly less than the least expensive new Model 3 even after $7,500 federal credit.

That was not true when I bought my $35K SR 3- fed tax credits. + No reg. fees VLT that are based on value of car.

Now with the Y I can't find any new SUV PHEV or EV either. Although I believe No state reg. fees VLT that are based on value of car have gone away so i might look at used options as well.

 

[cdub]

The order fee is an actual fee and not used towards the balance owed?

 

[sleepydoc]

It's a very dirty move. The thing is, us, who paid this much, really liked the car. I promise that i won't be buying another Tesla. I will gladly take my almost $100K CAD somewhere else. In the next 3-4 years, other EV makers with catch up with EV tech and it will be an easy switch.

Why is it a dirty move? Last year when the market was insane Tesla raised its prices but honored every order that was made at the lower price. The market has shifted and Tesla is now dropping its prices to match.

I understand your frustration, but what would you have Tesla do? Retroactively give refunds? Pick your time period or date - I guarantee you you‘d have someone one day before that date complaining. Not drop their prices at all?

I don't recall Audi, BMW, Mercedes doing it. My wife drives Audi and the price never went down. You could negotiate before the covid nonsense, but the manufacturer doesn't scream at you and pretty much saying "fak you, you dumb ass for buying". It's dirty and screw Tesla.

Exactly - how often have car prices dropped like this? And just how is Tesla saying “fak you, you dumb ass for buying?”

 

[afadeev]

Exactly - how often have car prices dropped like this? And just how is Tesla saying “fak you, you dumb ass for buying?”

Every Tesla owner has just taken a massive used-car depreciation hit, proportional to the drop in the new Tesla prices.
Is that really THAT hard to see?

The value loss maybe more visible to those who had just purchased their cars, but all of us got hit. Hard.
If you didn't realize that yet, call around to price the value of your used Tesla.

BOHICA!

a

 

[Hiline]

Some people haven't realized that Tesla is a much more profitable automaker than any other. The reason the other car manufacturers have never dropped prices like this is that competition has resulted in such a low margin per unit that they simply cannot afford to drop prices.

Tesla cars have a fat margin because they basically operate in their own market, and they can reduce prices because of this margin. If Audi or whatever were making $20k on each car sold they could cut their prices by $10k and still make a profit too.

 

[CapeOne]

The order fee is an actual fee and not used towards the balance owed?

The order fee is an actual fee and is on top of the retail price of the car including destination fee. There can also be taxes and other fees.

 

[CapeOne]

Some people haven't realized that Tesla is a much more profitable automaker than any other. The reason the other car manufacturers have never dropped prices like this is that competition has resulted in such a low margin per unit that they simply cannot afford to drop prices.

Tesla cars have a fat margin because they basically operate in their own market, and they can reduce prices because of this margin. If Audi or whatever were making $20k on each car sold they could cut their prices by $10k and still make a profit too.

Tesla may be more profitable but it is also important to note that the margin is not just as a manufacturer but also as a dealer/retailer so they potentially achieve profits from two business units while other automakers typically only profit at the manufacturer level.

 

[ElectricIAC]

Every Tesla owner has just taken a massive used-car depreciation hit, proportional to the drop in the new Tesla prices.
Is that really THAT hard to see?

The value loss maybe more visible to those who had just purchased their cars, but all of us got hit. Hard.
If you didn't realize that yet, call around to price the value of your used Tesla.

BOHICA!

a

Are you planning on selling today?

 

[holeydonut]

The order fee is an actual fee and is on top of the retail price of the car including destination fee. There can also be taxes and other fees.

View attachment 896546

Yeah, the problem for a lot of buyers is they finance all the adder-costs. Very few people contemplate buying a car has a ~15% premium on top of the "price" on the TV ad, window sticker, or website-listing. When I give people advice on car buying, I always tell them to add ~10% to15% on top of what they think a car is listed/advertised and make sure their budgets/financing include a healthy down payment (or all-cash by saving over time up front if it's possible).

So ~$9,000 of a $60k car purchase can simply be the sales tax, DFC (destination), doc, and order fees all get rolled into the financing. When the equity gets wiped out because the car loses immediate value thanks to a very public/overt pricing action, it basically wipes out what little down payment many people scrape together to purchase a car.

If someone is really worried about this sudden erosion, they should stay away from DTC car companies like Tesla, Rivian, Lucid, etc. There is one major downside to the situation if everyone knows the price being paid for a vehicle... the car immediately loses value when pricing gets cut. To the point others have made... there is upside if the prices go up. But these are cars; I don't think people buy them trying to make them an analog for stock. It's more likely that most car buyers want their vehicle's net book value to flow down a predictable depreciation curve over time.

GAP insurance only really helps someone when the car gets totaled and deals with negative equity in certain cases. For the vast majority of buyers, they simply just lost a ton of equity in their recent Tesla purchases. Some people save for years to be able to afford the down payment on their cars. Sucks for them I guess.

 

[ElectricIAC]

There might be a way to satiate people, and it’s one that actually boosts sales while generating good will.

Offer folks who bought direct and at elevated pricing from Tesla a $5-15K (model dependent) bump on their trade in toward a new unit.

 

[T3SLAROD]

Tesla vehicles are still $5k too expensive. They aren’t a Luxury Brand, they are premium like Acura and Buick, Infiniti.

I’m sure it cost Musk about $25-$30k to make a Model 3 and with no middle man they keep all the profit.