| | | Who cuts prices when you have a ton of demand?
Short answer = a fool, unless you have competition.
My preface all along is Musk's biggest mistake was taking on a lot of debt in a low margin business, even though he has been hugely innovative!
When you lose money and are the only game in town, you won't have the funds for mid-cycle refreshments - a staple in the auto business.
Selling the same ole car went out the window when the bug got discontinued by Volkswagen.
Then add in, that you want your product to be considered a luxury item ($69,000 is an entry level luxury cars - that's 9,000 more than the base Corvette!)
The finer SUV's (GMC's 4x4 Denali) sells for that price range and it has taken apart the luxury car segment.
I sold Buicks (upper end non luxury cars imo). Once in a while Buick made a really beautiful car -(think Riviera). That gave me experience in selling luxury car buyers.
Luxury car buyers are fickle.
They have almost zero brand loyalty.
When TSLA has competition with new styling and more bells and whistles, the fickle luxury car buyer will trade that TSLA, upgrade into what is cool and new, and then complain about how much they paid - which is a veiled egotistical way of bragging. They love to do it.
The Tesla's old design will be warmed over dog food and the dogs won't eat it, is my bet!
When and not until TSLA redesigns their existing lineups will they see bigger margins, TSLA will be forced to be the price leader in a luxury car segment. That's a lower margin position for a car company NOT MAKING MUCH MONEY while holding exclusivity in a growth market.
EV's will grow, but there are technology improvements needed and huge infrastructure needs - yet to be put in place on a national level.
The 2030 EV plan is to have 30% of the total market share ( in the developed countries).That leaves 70% of the CARS SOLD IN DEVELOPED COUNTRIES TO BE HAVING AN INTERNAL COMBUSTION ENGINE (AND THAT REQUIRES FOSSIL FUELS FOR THE NEXT 50 YEARS AT LEAST!)
THEN THERE IS THE EMERGING MARKETS NEEDS
Emerging markets will not get even close to there, and that is where the fast growth in units will be.
TOTAL WORLD MARKET SHARE in 2030 IF they make their huge goal = 15%-20% EV's
The electrification of autos requires a huge expansion of generating electricity globally. That's not happening
without nuclear in developed and a LOT more of Coal powered electricity plants planned now in India, China and yes go got it the green poster child of Europe Germany.
EV's and a "fossil fuel free world" are two of this markets truly hyped bubbles.
In 2000 the internet was going to be wireless and ubiquitous.
Now 20 years later the internet has changed the world, but Walmart who was left for dead is still around.
I suspect so too will be CVX and XOM now selling at decade low prices.
Embrace the bargain and I won't touch TSLA with your ten foot pole!! <smile>
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Bob |
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