this post was submitted on 02 Apr 2024
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There is nothing wrong with a logistical strategy of pushing products to market (without a demand). It's a reasonable way to be able to push the price down. And I believe that is what Tesla wants to do? Tesla is not supposed to be a luxury brand
If you produce a car, you better sell it. You're in trouble otherwise.
Yes a car is definitely not something that increases in value siting on a shelf ( if you don't believe Musk). But they made the same car for years, so it is the same car as a few years ago? Does it matter if I get one from the shelf or one a year from now really?
it looks like they have trouble selling though. the reason behind the gap is more dangerous than the gap itself.
They did lower prices several times, but even though Tesla may not see itself as a luxury brand, they're definitely in the higher priced range. And there they are competing with more and more compelling offers from other companies, including traditional car manufacturers.
Tesla at this point has no edge. It's not cheap, not well built, range is just okay, the only thing it has is brand recognition. But that can backfire, obviously.
Here in Germany, Tesla's image used to be excellent, then they built a gigafactory near Berlin and had to be dragged by courts and striking workers to comply with the law, and they still thought it would be a good idea to put a water thirsty factory in the middle of a stretch of land that is literally turning into a desert right now. And Musk just stood there and laughed his simulation of human laughter into the faces of journalists and the chancellor when confronted during the opening.
Why would anyone want to intentionally produce more than the current demand which lowers prices and therefore profit?
Unless you mean they produce more to lower their own costs, which I doubt would really be the case here.
One of the problems with the automaking industry is that there's a lot of stuff where you buy a very expensive machine and have a very expensive setup for said expensive machine (molds, templates, whatnot) and then the cost for almost everything else (materials, person-hours, etc) is lost in the noise.
Scaling up and down a car assembly line is hard so an automaker really wants to plan this out really really well such that the design is done at exactly the right time for the big switchover, you have a constant staffing level for the line, all of the machines are working roughly at their optimum capacity, and you've got enough spare cars so everybody can go to the lot and get a car of their choice fast enough to satisfy whatever impulse caused them to want a new one.
So I guess mayyyyybe possibly they are working to get ahead of the seasonality of car buying but I'm betting that what really happened is that they screwed up their planning, possibly because some chunk of the potential buying population doesn't want a Tesla anymore.
Like an X-factor, would you say?
Yeah definitely what they want to do, it is a well known tactic for company looking to lower their market cap to devalue their product and not seek the most money for it.