For years, Tesla has seemed unstoppable — the stock price long ago soared beyond what most folks thought was reasonable. Conventional wisdom was that only a drop in demand would bring the TSLA rocket ship back down to Earth.
The press has certainly been piling on — from EV media outlets to major newspapers to lifestyle mags that typically mention Tesla only a couple of times a year, almost everyone seems to agree that the price cuts signal shrinking demand, and often the beginning of the end. A typical headline:Now, there are some aspects of the party line that would be hard to argue with.
All that aside, here’s a dissenting view: Tesla’s price cuts are indeed bad news — but not for Tesla. Tesla’s price cuts could bring Models 3 and Y within reach of a much larger pool of car buyers. Hopefully, more buyers will mean more rave reviews, leading to even more buyers, and hopefully Tesla will be able to respond to the increased demand not by jacking prices back up, but by increasing production — it has two new Gigafactories that aren’t producing at anywhere near their potential capacities.
Neutral earnings. War declared.
They are definitely a sign of impending doom, just not for Tesla.
No one seems to remember that Tesla increased their prices over the last 18 months to capitalize on huge demand. The new prices are about the same as they were in 2021, and still have greater margins than all competitors.
Doom.
I think the observation you make in the last paragraph makes it clear what the market thinks, regardless of what the media is spewing.
It's a sign of margin hell.
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Source: verge - 🏆 94. / 67 Read more »