What will it take to make you seriously consider an EV?

If I were to buy my Mustang Mach-E today, I would pay about $15,000 more than I did a 14 months ago.

 

Would you be ok with an expedite fee? Pay $500.00 to move ahead of anyone who did not pay an expedite fee?

Real time price changes allows demand control. Im not necessarily suggesting this is a good practice. We should be honest...if $500.00 is going to break the deal, ya probably shouldn't be buying one in the first place.

 

I'm not sure how the expedite fee is related to Tesla changing prices in a blink of an eye.

 

So this Tesla price drop is going to completely rock the industry, here’s what happened.

Tesla demand in the US was strong in 2022, with it becoming the #1 luxury carmaker, EV or otherwise. In December there was an order drop off due to people holding off until Jan 1 in anticipation of the $7500 tax credit, this is completely rational consumer behavior. In order to meet Wall St delivery expectations, Tesla temporarily reduced prices by $7500 - matching what you would have gotten the next year had you waited, this discount expired on 1/1/23.

And then the IRA details got released and Tesla found out it got screwed over by the Biden administration. It’s best selling product, the Model Y, which at the time retailed for $66k, was not classified as an SUV according to the IRA, which means the price cap for the tax credit was $55k instead of $80k, disqualifying it. This is significant because Tesla is currently ramping up its Austin factory which will double its US production - these plans in part had the benefit of the IRA in mind.

I think there was a couple of ways to respond to this, lobbying for a change of the Model Y classification for one, but the Biden administration has been very anti Tesla(non-union) from the start. So instead, they went nuclear by taking advantage of industry leading profit margins and weaponizing it by bringing the Model Y starting price below the $55k cap, which was a -$13k price cut - but then on top also qualifying for the $7500 credit as well. -$20.5k net change.

Tesla had a 65% market share of US EVs before this. A $20.5k price reduction is going to complete nuke the market. They are sacrificing margin in exchange for total domination. Competition has no room to cut prices because they are losing money on selling EVs at their current price. In the coming months, especially as we enter a recession, we are going to see significant turmoil in the industry caused by this, and I would not be surprised if the Biden administration reverse course and reclassify the Model Y for the $80k cap in hopes of Tesla raising prices back up to protect union jobs at GM and Ford. Popcorn time.

 

I dont see why anyone (ie: Biden Administration) would think Tesla would raise their prices unless Tesla could not keep up with demand. Tesla's prices were so high because supply was low and Tesla could pocket the premium instead of car dealerships in legacy. I would imagine Tesla is prioritizing a 2-3 month backlog over pricing.

But I do tend to agree. Competition has finally arrived. Now its finna get destroyed. And why is Rivian fleeting Amazon first? Unless demand is not that high.

 

On the earnings call they just said that order intake after price cut is currently 2x production. If you order a Model Y right now it is end of March delivery which means it is already sold out for the quarter. The backlog will only grow because people don’t just order on the spot after a price cut like this, takes time for word to get around, test drives etc. On the other hand some of this will be counteracted throughout the year as Austin factory ramps up and US supply increases. Reason why Biden admin would want to reclassify Model Y as an SUV, allowing for a $80k price cap for the tax credit, is because unexpectedly his constituents (unions) are the ones that will get hurt the most by this (GM, F and other oems). The reason that prompted this massive price cut to begin with was to qualify for the $55k price cap in the IRA, not competition arriving. But the result is it will now effectively kill the competition in the US, which is not the intended purpose of the IRA - rather to spur industry adoption of EVs, not to create an effective monopoly in EVs.

In China on the other hand there was real demand issues at the end of the year. In part due to massive covid spike, but also real competition, particularly from BYD which sells a cheaper product. Covid will pass so that’s not an issue, but long term Tesla will need to develop a cheaper platform to effectively compete in the China market - which they are currently working on (Model 2).

 

I will tell you one thing...unless other manufacturers get serious about a better charging infrastructure....don't even bother making an EV.

all this ev talk. let me go listen to my flat six purrr

 

Point is this, the intention of leaving the Model Y out of the IRA was to screw over Tesla and decrease its sales while helping traditional (union) oems compete. NO ONE expected Tesla to go nuclear, sacrifice its margins (because it had room to) and bring Model Y price down so much to qualify for the $55k cap. Unless something changes and allows Model Y to reclassify as an SUV, the industry is going to face dire consequences. Crazy turn of events, popcorn.gif. Tesla stock is up nearly 70% in three weeks since these announced price cuts.

 

I don't think Tesla was targeted, so don't know what unions have to do with anything.

 

When it says “certain versions” of the Model Y, the only version that qualified was the 7 seater, which no one ever buys. Vast majority of Model Y sold(regular 5 seat version) did not qualify. And yes there were other CUVs that failed the qualification but none do any relevant sales. The Model Y is the best selling EV in the world, and it was excluded. If you count the total vehicles impacted, >90% is Tesla, so that’s why I say targeted(also given the administration’s adversarial history with Tesla).

Anyways the reasoning for it is immaterial, yes I’m speculating on the biased targeting. But the result and impact on the industry will be undeniable.

 

https://electrek.co/2023/01/03/tesla-model-y-mustang-mach-e-out-of-7500-credit-dumb-reason/

ID.4 does qualify, while the Mach e does not. Ford needs to spend more on lobbying. Because there’s no logical sense that can be made from this, the government’s SUV designation is based on vehicle weight and needs to be above a 6000lb threshold, meanwhile one of the most crucial tenets to designing an EV is reducing weight for increased range. It’s nonsensical. If you designed a 5000lb suv it won’t be classified as an suv unless you add 1000lb of dead weight so then the government can give you a $7500 credit.

 

Only certain trims of the ID4 qualifies as an SUV, just like only certain trims of the Model Y qualify as an SUV.

This articles did the best job explaining why ID4 AWD qualifies but not RWD and why Model Y 3 row qualifies, but not the other trims. The IRS is following the law as it is written. https://www.carscoops.com/2023/01/t...uvs-and-some-dont-for-the-ira-ev-tax-credits/

It's not just GVWR that matters. The AWD ID4 qualifies because it has a higher ground clearance than the RWD version that allows it to meet 4 of the 5 criterias as defined by https://www.ecfr.gov/current/title-49/subtitle-B/chapter-V/part-523/section-523.5.

MY 3-row qualifies not because it's an SUV. It qualifies because of standard 3 row seating defines it as a non-passenger automobile.

The definition of what is a passenger vehicle is woefully out of date and doesn't work for today's vehicles. I think everything should have the $55k MSRP limit IMO.

 

Tesla model Y vs R1S Rivian ,the later cost at least 35% more but seems twice better and doesn't have the welfare subsidy stigma with it

 

Where are you seeing 35%? I’m seeing starting msrp of $79800, assuming it qualifies for the tax credit then $72300, vs Model Y $46000. Good luck with that. Rivian most likely will not survive this.

 

if someone does not qualify for any credit, it becomes a 78k vs 53k price tag, niether is cheap by anymeans,but why would anyone pay more than others for the VW beetle of this era ?

 

If you don’t qualify for the credit then that means you can afford it. That’s how the credit is supposed to work.

The VW Beetle was the best selling car of all time during its era. Why pay more? I dunno, ask 65% of last year’s EV buyers and 80% of current ones. Must be because of all the brand damage.

 

refrence to WV beetle for sure was ment to acknowledge the mass sale volume success.

to me personally, a budget ev best choice would be a nissan leaf.
or spend more for cool toy like a rivian. Tesla would be a good choice as a used car purchase only (7500$ credit is like 14k in lower projected resale IMHO )

Edit:

just found this
https://electrek.co/2023/01/25/tesla-tsla-used-car-prices-down-bringing-level-affordability/

I was wrong,,or a bit optimistic, tesla used cars lost 18k

 

The Nissan Leaf sold 3,127 cars in the 4th quarter in the US. Tesla sold roughly 150k - and that’s before the massive price cut.

I know you guys like to think that these cars are actually competitive but none of this is based in reality, and funny thing is none of the people thinking this are in the market for any of these cars.

https://insideevs.com/news/629631/nissan-ariya-leaf-sales-2022q4/amp/

 

Rivian delivered 8k, but that is not indicative of where current demand is because they are supposedly still working through years of backlog, although they produced way more than they delivered this year so that deserves an eye brow raise as to why. Losing $1.7b per quarter, I’m not sure we will ever get to see what their true demand is before running out of money.

 

Can't wait to see I-35 next year. Tech bros in their Cybertruck in traffic.