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by gamblor956 2522 days ago
A company that is production constrained does not need to lower the price of its products. It can keep the price the same or even increase prices. This is basic economics.

Tesla has already lowered the price of its vehicles 3x this year...
2 comments
mehrdada 2522 days ago
Two points: the basic model assumes there’s a single market to sell to, but different geos ramping up may spike your supply in one market while your other segment is not deliverable yet, causing short term supply spike in one segment while simultaneously being production-constrained in total.

For the Model 3 specifically, the price cuts are mostly in-line with tax credit phaseout and they have reshuffled features (AP features moved to more expensive FSD option for instance). of course the higher end vehicles faced more price cuts, but that speaks little of the demand of the base vehicle.

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WheelsAtLarge 2522 days ago
Basic economics also tells us that at some point substitutes will be found for your product. So, if product x1 is too expensive then x2 will do. It's not a 1 to 1 substitute but if it meets your needs then x1 will need to find a way to lower the cost or make it more attractive in other ways.

Tesla is not the only car manufacturer. There are plenty of transportation options to choose from. It has a niche now but it needs to sell large quantities to survive long term.

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