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This is literally by definition. Nobody cuts prices when there is more demand than supply. Anyone arguing against this is not worth listening to. I'm with you that the dollars would be more wisely spent on educational marketing than on price cuts. I do subscribe to Elon's philosophy of building a superior product that sells itself, and this strategy worked well in the past before Tesla got to this scale. To sell several million vehicles per year, they need to inform people about their superior product. There's a whole business discipline for this called marketing.
Why has every new technology followed the exact same pattern of constant improvements and lowered costs? First cell phones vs current ones, first PCs vs current ones, etc. As many others have pointed out Tesla has reduced production costs in many ways and will continue to do so. That will be reflected in the price of the product, it's part of the plan.This is literally by definition. Nobody cuts prices when there is more demand than supply. Anyone arguing against this is not worth listening to.
It doesn’t have to be an either-or situation. Tesla can continue to drive down 3/Y costs and introduce a lower cost model. If they don’t, someone else will.So, I see lots of people calling for advertising vs price cuts. I see people calling for a $25k car. Some call for both.
Some say: look at Company ABC (usually tech), they introduce down market products while keeping prices high on legacy products.
But here's the thing: vehicles are application limited.
Computers get faster, they run more complicated software faster, that improves utility/ functionality/ value per dollar.
Cars? Not so much.
EVs in general, and Teslas in particular, 'suffer' from the reality that power, and especially torque, in an electric powertrain is way easier to achieve than in an ICE. The Model 3 drive units propelled the Semi prototypes. The Plaid motors push the limits of road usable tires.
Speed: limited by regulations
Acceleration: has practical limits in normal driving
Passenger capacity: most hold 5, some 6-7, then you're in the passenger van category
Cargo: car, SUV, truck
Features: Tesla FSD is the same regardless of model
With only 2 mass produced models, Tesla has covered a vast percentage of use cases. Performance of the base versions is already more than the years of previous ICE vehicles. There are body styles that are not represented, but other than that, where lies product differentiation?
Tesla optimized the heck out of the 3/Y. What content can they remove at this point? There are no removable subsystems, cross platform commonality runs rampant. The only options are to scale back performance or range, neither of which are huge cost savers; especially if one still wants a useful end product. Nerf for nerfs sake?
The Tesla version of a four seater econobox would be a down market step (other than FSD only) that has both purpose (low passenger count commuter) and engineering advantage (lighter, lower crossection) and enough delta size to matter. This is possibly what Mexico will produce.
A lower cost model will still have more performance than an ICE, be safer than a typical ICE, hold approximately as many people as a 3, have FSD and related safety features. That car is still so dang practical, it could turn the 3 into a "Why?".
Putting this together: Tesla would rather not introduce a down market car in current 3/Y regions because there is so much overlap on the specs that, while it would increase TAM, it would also take market share from 3 and, to a lesser extent, Y. Net result: less production efficiency, higher COGS on existing lines, and higher price for same margin. Instead, they push 3/Y costs and price down. They do develop and produce a further cost reduced, materials reduced, but similarly useful vehicle to sell into new markets.
tl;dr; no ads, product line expansion in new markets, price reductions to increase accessibility
Thanks for coming to my TED talk.
I’m hoping Tesla can improve the CAN bus and low voltage systems.So, I see lots of people calling for advertising vs price cuts. I see people calling for a $25k car. Some call for both.
Some say: look at Company ABC (usually tech), they introduce down market products while keeping prices high on legacy products.
But here's the thing: vehicles are application limited.
Computers get faster, they run more complicated software faster, that improves utility/ functionality/ value per dollar.
Cars? Not so much.
EVs in general, and Teslas in particular, 'suffer' from the reality that power, and especially torque, in an electric powertrain is way easier to achieve than in an ICE. The Model 3 drive units propelled the Semi prototypes. The Plaid motors push the limits of road usable tires.
Speed: limited by regulations
Acceleration: has practical limits in normal driving
Passenger capacity: most hold 5, some 6-7, then you're in the passenger van category
Cargo: car, SUV, truck
Features: Tesla FSD is the same regardless of model
With only 2 mass produced models, Tesla has covered a vast percentage of use cases. Performance of the base versions is already more than the years of previous ICE vehicles. There are body styles that are not represented, but other than that, where lies product differentiation?
Tesla optimized the heck out of the 3/Y. What content can they remove at this point? There are no removable subsystems, cross platform commonality runs rampant. The only options are to scale back performance or range, neither of which are huge cost savers; especially if one still wants a useful end product. Nerf for nerfs sake?
The Tesla version of a four seater econobox would be a down market step (other than FSD only) that has both purpose (low passenger count commuter) and engineering advantage (lighter, lower crossection) and enough delta size to matter. This is possibly what Mexico will produce.
A lower cost model will still have more performance than an ICE, be safer than a typical ICE, hold approximately as many people as a 3, have FSD and related safety features. That car is still so dang practical, it could turn the 3 into a "Why?".
Putting this together: Tesla would rather not introduce a down market car in current 3/Y regions because there is so much overlap on the specs that, while it would increase TAM, it would also take market share from 3 and, to a lesser extent, Y. Net result: less production efficiency, higher COGS on existing lines, and higher price for same margin. Instead, they push 3/Y costs and price down. They do develop and produce a further cost reduced, materials reduced, but similarly useful vehicle to sell into new markets.
tl;dr; no ads, product line expansion in new markets, price reductions to increase accessibility
Thanks for coming to my TED talk.
If they don’t, someone else will.
I’m hoping Tesla can improve the CAN bus and low voltage systems.
I meant on existing models.., for improvements to reduce costs further.Um, yeah, they don't use CANBUS, and, have recently announced at Investor Day a 48v architecture being implemented into new models.
Yes, the 21st century ‘most’ is rapid innovation with continuously reduced costs, improved efficiency and effectiveness, regardless of the product category.“I think moats are lame. They are like nice in a sort of quaint, vestigial way. If your only defense against invading armies is a moat, you will not last long. What matters is the pace of innovation, that is the fundamental determinant of competitiveness.”
Indeed, Europe does prefer smaller form factors and currently does not have a Model 3 plant.It doesn’t have to be an either-or situation. Tesla can continue to drive down 3/Y costs and introduce a lower cost model. If they don’t, someone else will.
There are not many large car markets outside of current 3/Y regions. Tesla can not get to 4 million gen3 vehicles without selling in Europe and China.
Yes, and then all cars will get those improvements, which would be a cost reduction, but not a user visible feature differentiation (other than dead '12V' issues).I’m hoping Tesla can improve the CAN bus and low voltage systems.
From the linked article:I meant on existing models.
Exploring the Tesla Model S CAN Bus
Exploring the Tesla Model S CAN Bus: Recently I thought it might be fun to try poking around the Model S CAN bus, since the car is basically one big computer with almost all of the controls accessed from the large centrally placed 17" touch screen. As I once heard someone say, "The onl…www.instructables.com
Perhaps Elon should be HIRING Rob Maurer.
Maybe he'll finally get the interview. I would watch that.