EV Discussion thread

1961Nick

Martyn1981 said:

The 'PR' (I think) Lady in China said that prices were down as they are an estimate/gamble on future costs which have been falling again (after the steep spike last year). But I suspect that's only part of the real story. Plus Elon said some months back that Tesla was well placed to cope with a recession, and that they would focus on expansion and market size, even if margins had to be reduced or go to zero.

Tesla are in the enviable position of having a very large profit margin which can absorb a big price cut. They also have the manufacturing capacity to increase production by 50% this year which would restore the lost margin at a stroke. 

Martyn1981

1961Nick said:

Martyn1981 said:

Should be fun this year then. I think they've taken away most of the price increase from last year (March(ish)?), when prices were about £42k for the SR.

I've just had a look at the price of mine & it's still £1600 more than I paid for it 19 months ago (although the price did rise shortly before it was delivered).

Cool. And in the US prices are just a smidge over the start of 2021 (P models are a bit less, but had huge margins). So possibly less than inflation. All eye's on the Cybertruck now, I assumed significant price increases on the originals, but maybe they'll be closer now. Assumning they drop the single motor option, that was getting very few orders, then the dual motor price ($49,900 at launch), may still start with a 5 ..... total guess.

I think Tesla just declared war on ICEV's.

1961Nick

Martyn1981 said:

1961Nick said:

Martyn1981 said:

Should be fun this year then. I think they've taken away most of the price increase from last year (March(ish)?), when prices were about £42k for the SR.

I've just had a look at the price of mine & it's still £1600 more than I paid for it 19 months ago (although the price did rise shortly before it was delivered).

I think Tesla just declared war on ICEV's.

And in the process they've unfortunately declared war on all the other BEVs. The price drop does make the prospect of a £25K model 1 or 2 much more likely.

JKenH

Martyn1981 said:

1961Nick said:

Martyn1981 said:

Should be fun this year then. I think they've taken away most of the price increase from last year (March(ish)?), when prices were about £42k for the SR.

I've just had a look at the price of mine & it's still £1600 more than I paid for it 19 months ago (although the price did rise shortly before it was delivered).

I think Tesla just declared war on ICEV's.

For what it’s worth, I disagree. I think Tesla just declared war on other EV manufacturers. If you were buying an ICEv then you are probably still going to buy an ICEv. Tesla are reacting to loss of EV market share. They were not losing sales to ICEVs whose proportion of the market was falling. It is the threat from Chinese EV makers they are reacting to, not ICEVs.

When I bought my last Leaf 3 years ago I was already committed to getting an EV. It boiled down to what was available. I could have bought another Golf for less money but I wanted an EV so my choice boiled down to what EV was available and how much. The price of EVs didn’t really come into it. 

Companies are buying EVs for myriad reasons. There are significant tax advantages for them and their employees. Some companies are buying EVs because of environmental policies. Many individuals are buying them on SalSac schemes to save a shed load of tax and NI. In theses cases the decision to go EV is already made and it is just a choice of which one.

The difference in leasing cost or PCP with lower list prices might not actually be that much as higher prices usually are accompanied by higher residuals. Lower the list price and generally the residuals lower. As @1961Nick said, residuals on Teslas were already adjusting downwards in anticipation of price cuts following those in China.

I doubt that Toyota and the rest of the Japanese car industry will be unduly troubled in the short term by this move from Tesla as they don’t sell many EVs and it won’t affect their margins on ICEVs. A company already committed heavily to EVs will be worried. I can’t  imagine what Polestar will be thinking. 

In Europe it will really hurt the likes of VAG who are ramping up EV manufacturing with several direct competitor vehicles to Tesla. 

China will prop up its EV makers and I really can’t see Tesla winning a price war with the Chinese on home ground. 

Tesla already dominates the US market so the price cuts will hurt Tesla more than the US home grown competition. If you are going to buy a Bolt you probably aren’t in the market for a Tesla. Same with the Ford F-150 Lightning (at least until the CyberTruck comes along). The Lightning is reputedly changing hands at up to twice its list price so how will Tesla reducing the price of the TM3 or TMY affect Ford? They don’t set the price; the dealers do. They will just see Tesla slashing their own margins. 

To me the price cuts smack of desperation. I don’t buy the argument that Musk is using price to fine tune demand and manage waiting lists. If he is then he got it horribly wrong in 2022. There are other factors at play here; not only Chinese competition but also a lot of bad press over stuff like FSD and dissatisfaction with the brand and Musk. All this is taking place against a back drop of increasing electricity prices which while not slowing the transition  to EVs, is perhaps meaning the expansion of the world EV market is not happening as fast as it might have done. The EV pie isn’t quite as big as many thought it might be by now and Tesla has ramped up production faster than demand. Tesla business model depends on its factories operating at high outputs. If you are going to produce cars in a third of the time the competition takes then that efficiency needs high investment and high production numbers to convert the cost. Remember what Musk said about his new factories being “gigantic money furnaces” when he couldn’t  ramp up production in the summer at Berlin and Texas. Tesla it seems is being forced into buying production by slashing costs but that translates into slashing margins which is a gamble that might not pay off. How elastic is the market for Tesla cars? Does Musk actually know what will happen to sales? If you slash your margin by half you need to double your production to stand still. Was the situation so desperate that such a huge price cut was necessary?

That’s just my take. 

Martyn1981

1961Nick said:

Martyn1981 said:

1961Nick said:

Martyn1981 said:

Should be fun this year then. I think they've taken away most of the price increase from last year (March(ish)?), when prices were about £42k for the SR.

I've just had a look at the price of mine & it's still £1600 more than I paid for it 19 months ago (although the price did rise shortly before it was delivered).

I think Tesla just declared war on ICEV's.

And in the process they've unfortunately declared war on all the other BEVs. The price drop does make the prospect of a £25K model 1 or 2 much more likely.

Yep, fingers crossed. I just hope it comes with a steering wheel. Loads of demand befdore robo-taxis can take over (if they do).

JKenH

1961Nick said:

Martyn1981 said:

The 'PR' (I think) Lady in China said that prices were down as they are an estimate/gamble on future costs which have been falling again (after the steep spike last year). But I suspect that's only part of the real story. Plus Elon said some months back that Tesla was well placed to cope with a recession, and that they would focus on expansion and market size, even if margins had to be reduced or go to zero.

Tesla are in the enviable position of having a very large profit margin which can absorb a big price cut. They also have the manufacturing capacity to increase production by 50% this year which would restore the lost margin at a stroke. 

Given how much Tesla is slashing prices there won’t be much margin left after these price cuts

Nikkei Asia’s analysis shows Tesla made $9,570 per vehicle during Q3, enough to make Tesla more profitable per vehicle than any other manufacturer on the planet. 

https://www.teslarati.com/tesla-toyota-profit-margin-8-times-q3-2022/

Meanwhile Dan Ives of Wedbush Analysts suggests the price cuts will produce an additional 12-14% sales volume.

Dan Ives says the price cuts will spur demand by 12-14% globally in 2023, as Tesla and Musk go on the “offensive” in a softening backdrop.

https://finance.yahoo.com/news/tesla-price-cuts-are-the-right-medicine-at-the-right-time-analyst-says-154839009.html

I think Tesla’s profit will be considerably reduced by these price cuts as the increase in volume may not be enough to counter the loss of margin.

JKenH

Why China’s BYD Is The Biggest Threat To Tesla’s Electric Car Empire

The real reason Tesla are panicking. 

In 2022, BYD became the best-selling electric car brand in the world, selling  1.8 million new energy vehicles. BYD grew production of EVs by over 200% in 2022 manufacturing 235k EVs in December - that’s an annualised rate of 2.8 m units.

https://www.hotcars.com/china-byd-biggest-threat-tesla-electric-car-empire/

The BYD Seal long range has an 82kWh battery and a UK equivalent price of £31,850.

https://www.autoexpress.co.uk/road-tests/359352/new-byd-seal-2023-review

1961Nick

JKenH said:

1961Nick said:

Martyn1981 said:

The 'PR' (I think) Lady in China said that prices were down as they are an estimate/gamble on future costs which have been falling again (after the steep spike last year). But I suspect that's only part of the real story. Plus Elon said some months back that Tesla was well placed to cope with a recession, and that they would focus on expansion and market size, even if margins had to be reduced or go to zero.

Tesla are in the enviable position of having a very large profit margin which can absorb a big price cut. They also have the manufacturing capacity to increase production by 50% this year which would restore the lost margin at a stroke. 

Given how much Tesla is slashing prices there won’t be much margin left after these price cuts

Nikkei Asia’s analysis shows Tesla made $9,570 per vehicle during Q3, enough to make Tesla more profitable per vehicle than any other manufacturer on the planet. 

https://www.teslarati.com/tesla-toyota-profit-margin-8-times-q3-2022/

Meanwhile Dan Ives of Wedbush Analysts suggests the price cuts will produce an additional 12-14% sales volume.

Dan Ives says the price cuts will spur demand by 12-14% globally in 2023, as Tesla and Musk go on the “offensive” in a softening backdrop.

https://finance.yahoo.com/news/tesla-price-cuts-are-the-right-medicine-at-the-right-time-analyst-says-154839009.html

I think Tesla’s profit will be considerably reduced by these price cuts as the increase in volume may not be enough to counter the loss of margin.

The margin per vehicle was dragged down in 2022 by the cost of the Berlin & Texas ramp up. Before these two plants came online, the overall margin for Fremont & Shanghai was briefly reputed to be 35% at the elevated retail price. Considering that Fremont must have quite high labour costs as well as significantly less automation than Shanghai, it's feasible that the margin in China could have been as high as 40% at it's peak. That would leave plenty of scope for a price reduction especially if forecast raw material costs turned out to be too high.

Another thing to remember is that at the beginning of 2022 Tesla were sold a long way forward & particularly the model Y. Orders placed in 2021 were therefore delivered at 2021 prices. It's only in the last few months of 2022 that the price rises have been realised.

The RRP of my M3P is still £1600 more than I paid for it in June 2021 & production costs are likely to be lower now (Shanghai).

Trying to figure out how the IRA tax credit impacts Tesla proved too much of a challenge for me  - not helped by every analyst having a different opinion!  

Martyn1981

1961Nick said:

JKenH said:

1961Nick said:

Martyn1981 said:

The 'PR' (I think) Lady in China said that prices were down as they are an estimate/gamble on future costs which have been falling again (after the steep spike last year). But I suspect that's only part of the real story. Plus Elon said some months back that Tesla was well placed to cope with a recession, and that they would focus on expansion and market size, even if margins had to be reduced or go to zero.

Tesla are in the enviable position of having a very large profit margin which can absorb a big price cut. They also have the manufacturing capacity to increase production by 50% this year which would restore the lost margin at a stroke. 

Given how much Tesla is slashing prices there won’t be much margin left after these price cuts

Nikkei Asia’s analysis shows Tesla made $9,570 per vehicle during Q3, enough to make Tesla more profitable per vehicle than any other manufacturer on the planet. 

https://www.teslarati.com/tesla-toyota-profit-margin-8-times-q3-2022/

Meanwhile Dan Ives of Wedbush Analysts suggests the price cuts will produce an additional 12-14% sales volume.

Dan Ives says the price cuts will spur demand by 12-14% globally in 2023, as Tesla and Musk go on the “offensive” in a softening backdrop.

https://finance.yahoo.com/news/tesla-price-cuts-are-the-right-medicine-at-the-right-time-analyst-says-154839009.html

I think Tesla’s profit will be considerably reduced by these price cuts as the increase in volume may not be enough to counter the loss of margin.

Trying to figure out how the IRA tax credit impacts Tesla proved too much of a challenge for me  - not helped by every analyst having a different opinion!  

Not just me then!

Most suggestions seem to be that Tesla will earn (receive subsidies) of about $30/kWh for battery production*, so for a LR 3/Y that's about $2,400 per car. I lost track (or consciousness) regarding stationary storage, where a Megapack (~4MWh) might be worth $120k. I think they are ramping towards 40GWh by year end, so ~10,000 Megapacks annulised. Powerwall would be ~$300 each.

*It's a long time ago, probably summer, but I think it was confirmed that the credit for making and selling batteries applies to Tesla, even though they are 'sold' to themselves. Also the contract documents with Panasonic confirm that all subsidies, grants etc go to Tesla under their agreement.

Grumpy_chap

1961Nick said:

Another thing to remember is that at the beginning of 2022 Tesla were sold a long way forward & particularly the model Y. Orders placed in 2021 were therefore delivered at 2021 prices. It's only in the last few months of 2022 that the price rises have been realised.

That's a very good observation.  I wonder how many cars were actually ordered and paid at the highest price?

Today, TM3LR is £51k.
IIRC it was £59k a fortnight ago.
The £51k is still above the 2020 prices by some way.

As lead times extended, some manufacturers actually stopped taking orders.
Rather than stop taking orders, Tesla ramped the price to manage demand.

I wish I could locate an historical price tracker so that I could decide what the price would be that I should expect / need to pay.

Someone asked up thread whether Tesla are really just a tech firm - I think they are, the packaging in a car purpose is merely incidental.
It would not be surprising to see a Tesla phone...