Elon Musk hopes to lower vehicle costs when inflation slows down
Tesla CEO Elon Musk says that Tesla may start reducing the prices of its electric vehicles, which have increased 20-30% in the past two years.
When Musk was asked about when we can expect Tesla to lower its prices again, Elon said that Tesla could lower prices when "inflation calms down."
One of the main complaints about Tesla's electric cars is their cost. In late 2017 Tesla started with the Long Range RWD Model 3, and over the period of the next year or two, prices actually went down as Tesla reached volume production and manufacuring efficiencies.
However, as we hit 2020, the pandemic caused supply chain challenges and inflation that adversely impacted the auto industry along with the broader economy.
In early 2020, the Tesla Model Y started at $53,000. Today, the same vehicle starts at $66,000 representing a 25% increase in price in less than two years.
However these drastic price increases have not affected demand. In fact, recent inflation of gas prices has contributed to a significant backlog of orders. Some Tesla models having a 6 to 10 month delivery timeline on new orders.
Although Tesla has been increasing prices over the last two years, its gross margins have also increased. This means that Tesla's price increases have been greater than their cost increases.
This is because Tesla has to set prices based on the cost of vehicles produced in 6 to 10 months from now rather than the cost of vehicles produced today.
Put another way, vehicles being ordered today are priced based on the cost of vehicles produced (and delivered) in 6 to 10 months from now in order to account for future cost increases.
With so much uncertainty around the supply chain and inflation, it is hard for Tesla to predict those costs accurately.
If inflation calms down, we can lower prices for cars
Tesla is a regular in the news cycle; if it's not about the vehicle, it's about the CEO. It's no secret Tesla stock is down, and investors who are long on the stock have lost a considerable amount over the past month. One of those investors is Gary Black, the Future Fund managing partner, who said in August that Tesla is the fund's largest position. Black is calling on Tesla to hire a public relations department to inform the media and the public of the positives around the brand.
Oddly enough, at the shareholders' event in August, Black said, "the thing we worry about most is not PR; it's succession." Now it seems that is what Black is worried about. He recently tweeted: People can't complain about the media if TSLA refuses to correct articles that are wrong, or worse, won't maintain relationships with TSLA beat reporters and editors so they can get TSLA's POV out when needed. Strong PR will be needed to sell FSD safety. Think long-term.
Black's stance may be understandable to some, especially those who have watched their trading account shrink, but it's implausible because Tesla doesn't need a PR department.
Musk and the Mainstream Media Don't Mix
Musk is currently using his new company to hold mainstream media accountable. In case you missed it, he's releasing the Twitter Files, a detailed report backed up with real emails to show suppression of true stories.
The Tesla CEO also regularly calls out media outlets for false stories, misleading headlines and biased reporting. Musk will not hire a team to try to steer newsrooms, something he has so little respect for, and it's unlikely legacy media outlets will listen.
Media Biased Against Tesla
Bad news generates more views and clicks and keeps the advertisers paying. Even when the news isn't bad, take, for example, a recent Reliability Report by Consumer Reports. Most, if not all, mainstream media declared Tesla as the terrible one, even though Tesla moved up four spots from the previous year. It was hard to find a mention of the manufacturers that scored less. Those included Chevrolet, GMC, Volkswagen, Jeep, and Mercedes Benz. Yes, the expensive luxury brand was dead last in reliability. That is a story.
Reporters also picked up that electric vehicles scored low for reliability. Consumer Reports said it was because EVs are new on the market. However, scoring even lower were full-sized pickups. Those have been on the market for quite a bit longer.
Tesla, which also has not spent a dime on advertising, disbanded its public relations department in 2020. That's unheard of by a company its size, especially in the automotive sector. However, Tesla and Elon have something much better — you are reading it right now. Not a Tesla App is one of several blog sites that publish news about Tesla daily. Many of these websites have writers who own Teslas. The stories are much more accurate, positive and just plain better than anything readers will find in the mainstream. Who says bias must be negative?
Word of Mouth Advertising
Now add hundreds, maybe even thousands of loyal enthusiasts who defend and promote Tesla on social media platforms. Next, throw into the mix the hundreds of thousands of Tesla owners who quite often are spokespeople for the company whenever they get out of the car. I've been sure to add 10 minutes of travel time to my drives because I'm likely to get asked some questions at the grocery store or car wash.
This kind of advertising money cannot buy, and it's the kind of positive publicity media will not share. So while Black's concerns are legitimate, a PR department is not the solution. Instead, Tesla needs to keep doing what it's been doing and let the product, its fans and the Tesla-inspired websites do the rest.
Tesla is getting ready to introduce WiFi garage door support to their vehicles through MyQ.
Since our article yesterday additional details have emerged about how MyQ will operate, which vehicles will be supported and whether there will be a cost to use the service. This information is based on a page that appeared briefly on MyQ's website but has since been removed.
MyQ's website stated that support for their garage door openers would be coming to the Model 3 and Model Y. While this makes a lot of sense because those vehicles don't include a HomeLink module, we'd be surprised if Tesla didn't also add support for the Model S and Model X.
Let's get cost out of the way. Although MyQ does not charge a fee today to remotely open and close their garage doors, they do plan on charging a fee to use their devices in vehicles. This could be looked at similarly to how some services are free to use on a PC but require a subscription to use on your mobile phone.
The price posted on MyQ's website was a five-year plan for $179, which is still cheaper than Tesla's $350 installation cost for HomeLink.
Unfortunately, this removes a big benefit we thought MyQ would have over buying a HomeLink module for the Model 3 or Model Y. For Model S and Model X owners who already have HomeLink included in their vehicles, it may not make as much sense.
However, MyQ does provide some advantages over HomeLink.
The good news is that MyQ integration will be very similar to HomeLink, and better in some ways. What appears to be a rendering of the feature working in a Tesla was also posted to their website which shows off a screen very similar to HomeLink.
On the MyQ settings screen, you'll have a list of supported devices on the left side, such as garage doors, gates and possibly lights, but we haven't see any evidence of the latter yet.
On the right side, you'll see options pertaining to the device selected, such as its current state, whether the garage door should auto-open or close and the distance when the device should be triggered.
You'll also be able to have the vehicle fold in its mirrors when reaching the target location.
If you've used HomeLink, this should all look very familiar since it's almost exactly the same. However, there are a couple of differences that give the advantage to MyQ.
The first is that MyQ is a smarter system and it knows the state of your garage door. So if you're arriving home and the garage door is already open, it won't try to close it on you.
The other advantage is distance. Since MyQ works over the internet you'll be able to trigger the garage door or gate from further down the driveway, giving the door plenty of time to fully open before you arrive.
MyQ supports an array of devices, but it waits to be seen whether there will be support for these additional devices such as lights and door locks.
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