![]() We then had the dramatic drop to $53,990 in January 2023, which we are addressing next.With the increased demand, the company started increasing the price up to $62,900 in mid-2022 to further increase the margin and achieve higher profitability.As the company continued achieving economies of scale, it continued dropping the price to a low of $58,000, while maintaining its healthy margin.In May 2018, Model-3-Performance was at a high and soon after, its price dropped to maintain competitiveness of the car and increase its sales volume.Let's now take a moment and try to explain what might have happened in this chart: More details about Tesla's price history can be downloaded from Tesla Car Price History. This is certainly not the lowest price it has been. Taking the inflation into consideration, based on the CPI Inflation Calculator, the $53,990 should have been worth $64,200 based on May 2018 prices. However, the above chart does not take inflation into consideration. The current price of Model-3-Performance is the lowest it has ever been, at $53,990. Source: Compiled by Author from Tesla Car Price History Data from 0 at $78,000 to 2 at $53,990. ![]() The article shows how Tesla's action has caused competitors to suffer from this price cut and how this suffering would most likely continue into the future.įinally, the article performs a valuation on TSLA, and comes with the same conclusion that I came up with before, this time, taking the price cut angle into consideration: Tesla is a three trillion-dollar company. Tesla has competitive advantages that competitors do not have and its pricing strategy relies on these advantages. The article explains why the sales should be growing beyond the traditional supply/demand relationships. While margins should be dropping, the increased sales would compensate for that from a bottom-line perspective resulting in an unprecedented increase in the total earnings for Tesla. ![]() The article predicts that further price cuts may be coming, although not as dramatic. Tesla's price cuts of up to 20%, remarkable as it might look, may just be the start of many future price cuts. I decided to perform my own analysis related to the Tesla price cuts and I am sharing it here. I went through Seeking Alpha articles and could not find a clear fundamental analysis of where the auto prices are heading in the future and how the price cuts are related to the company valuation. The analysts provided sometimes, diametrically opposing views of this decision some analysts praised this decision, and others considered it the start of Tesla's demise. Ī one-time cut in prices by up to 30% is unheard of in the auto industry, and the business literature analysts did not hold back on commenting on this action. Of course, not all Tesla cars received such a price cut or are eligible for the tax credit, and the details of the price cuts can be found in Tesla Car Price History. Adding $7,500, the electric vehicle ("EV") now costs $45,490, which is a 31% discount from the original $65,990. Take for example, the Model-Y which dropped from 65,990 to $52,990 (before the credit). Federal Tax Credit, we would discover that the cuts can be as high as over 30% rather than 20%. ( NASDAQ: TSLA) auto price cuts of up to 20% for some of its models is quite remarkable. Robert Way/iStock Editorial via Getty Images What prompted this article?
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