Tesla Model Y price slashing again, and the future of RIVN

[sphereobject]

On Friday Tesla slashed the price of the Model Y:

https://techcrunch.com/2024/04/05/tesla-slashes-model-y-inventory-prices-cut/

Remarkably, even with this price slashing, the Model Y is still positive margin for Tesla. It looks like Tesla is trying to clear out inventory of 40,000+ Model Ys. I checked the Tesla Model Y inventory site, and you can get a Model Y RWD for as low as $40,940. If you qualify for the tax credit, that's $33,440. That is insane. How is any manufacturer going to compete with this?

If you are budget constrained buyer (I assume the majority of people are) and you need to buy a SUV now, why would you buy any car other than a Model Y right now? A $33,440 Model Y is incredible value. Teslas are Teslas, and many people do not like Teslas. For lease, for the spec above the price is $2,999 down and $336 p/month plus tax. That is cheap as dirt for the tech and performance you get with that car.

I have a Model X Plaid and it is awesome. But, I totally get why people do not like Teslas. But, many people might like dollars more than they dislike the quirks of Teslas (or EM), and a $33,440 Model Y is just a screaming deal.

Keep in mind, although the media is blowing up the state of the economy as a being the worst of times, the reality is that unemployment and credit default rates are at near all time lows. If this is what the car market looks like at the near-best of times, what happens if things are no longer best of times?

If I am spending billions ramping up the R2 that I have to sell at upper trim at $60k+ to be positive margin, and Tesla is cranking out infinite Model Ys at $40,940 at margin, I think I don't like the business I am in. Yes, a Model Y is not a R2, but RIVN has to sell 500,000+ R2s a year to be in the money, so the Model Y is competition at that kind of volume.

Can any EV seller other than Tesla survive Tesla's pricing advantage? Other than the Chinese manufacturers, I am not sure...

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[BigSkies]

Tesla has some inherent advantages here.

Many of those advantages come with scale. Scale is repeatable (eventually) by other makers, but they have to commit to making things they can sell in high volumes. Something in the neighborhood of 500k EV's per year is the point of financial viability. Financial advantages really begin to accrue beyond that.

Keep in mind that Tesla's gross margins are just shy of double the traditional automakers. So they have room to cut prices even further. Just don't look for Tesla to admit that publicly, as it would destroy the stock price.

There are key factors in the EV race that will determine winners and losers. Each manufacturer has different strengths and weaknesses on these measures. Things I see as the major differentiators:

1. We generally keep focused on the US here. International exposure is an underappreciated advantage. The US is a global laggard in EV adoption. EV market share in the US is around 10% last I looked, with slowing growth. Market share in the EU and China is 20%+ and growing rapidly last time I looked. Selling in multiple markets means a much shorter path to scale. Tesla is prevalent in all three markets. VW is as well, although they seem to be losing out in China. Rivian has a viable path to the EU once R2 and R3 launch, but that's still many years away.

2. A dedicated EV platform is a must. Ford ran into this problem. They rushed to market with the Mach-E and Lightning (which still wasn't a horrendous call at the time), but now they're struggling on EV margin, pricing and scale. They're working on it, but are now a few years behind others. We'll see if GM's platform is worth they hype.

3. Vertical integration is a plus. It avoids the hidden costs of inventory, lack of control over the sales experience, and builds in some margin on the service side of the business. Solid numbers are hard to come by, but there's probably hundreds if not low thousands of dollars per vehicle in extra margin by controlling the sales experience. Rivian should eventually benefit from this, but probably only with greater scale.

 

[Mr. Ham]

Whats the difference between "TESLA SLASHING PRICES", and your average Truck-tober Sale-a-Palooza? One is just done in private at the dealer, and Tesla has to post it online for their... T-April Ev-xtravaganza?

 

[Electrified Outdoors]

anyone who has been waiting to buy an EV....this is the time! That is an insane value! Here in Maryland we get a $3,000 credit provided MSRP is <$50,000. that's a brand new RWD Model Y for $30,440+ tax and fees. For an extra 5k you can get a dual long range! Completely insane!

 

[Stickboy46]

Whats the difference between "TESLA SLASHING PRICES", and your average Truck-tober Sale-a-Palooza? One is just done in private at the dealer, and Tesla has to post it online for their... T-April Ev-xtravaganza?

One difference on the negative side is consumer perception.

Take two cars
A Ford with a MSRP of 50k
A Tesla with a MSRP of 50k

The ford goes "on sale" at a dealer. The MSRP is still 50k, but incentives and dealer pricing brings it down to 40k. To a customer ... that is a "deal" and the car is still worth 50k because the incentives and dealer pricing might not be repeatable in the future. So when you start thinking secondary market, most people will compare to the MSRP when trying to figure out depreciation and value.

The Tesla gets marked down to 40k from Tesla. That Tesla model is now only worth 40k. Every existing owned car of that model "loses" 10k in value overnight. When people think of depreciation and pricing, its going to be based off 40k, not 50k like in the other scenario.

So that's one difference with how much Tesla flexes their pricing.

 

[sphereobject]

anyone who has been waiting to buy an EV....this is the time! That is an insane value! Here in Maryland we get a $3,000 credit provided MSRP is <$50,000. that's a brand new RWD Model Y for $30,440+ tax and fees. For an extra 5k you can get a dual long range! Completely insane!

Seriously an amazing deal. I would love to be a lender in this space. I would lend on or be the lessee on a $30,440 Model Y 29 hours a day 8 days a week.

 

[Count Orlok]

for the Y? still over priced.

 

[SolartoEV]

Great deal to drive a turd shapped car.

Just a perfect loaf pinched nice.

 

[sphereobject]

for the Y? still over priced.

LOL. What new car, gas, hybrid, or electric, can be had for anything near this price?

The Model Y is a nice car by any standard. Yes, it is Tesla-y, and some people don't like Tesla-ness, but it is still nice.

 

[jjswan33]

Still wouldn't buy one, just doesn't meet my needs.

Not to mention the model Y is 4-5 years old and was a mini me of the MX that is 10 years old. They should release something new and interesting and their sales might improve without the need to discount.

 

[Gentilly7]

As much as I don’t care for the Model Y and have a deep dislike for Elon, model Y pricing is a super deal and Rivian better be careful how they price the R2. Most people will pick an R2 over a model Y but if it came down to a $10k price difference for comparable range, an R2 will be a hard sell.

 

[majorfriend]

It's a great deal to be sure, and if I was shopping today there would probably be one in my garage soon.

But, the cheapest AWD is $44,990 (before the tax credit). I think there is a decent chance of getting an AWD R2 for $50k.

In that scenario I'd go for the R2, I like the styling much better, it has more usable interior space, better off-roading capability which is important for us, so the $5k is easily worth it. My guess is based on styling alone many people would spend the extra to get an R2.

Maybe there is a refreshed MY at that time, but the way it is looking now I think R2 can easily be competitive with MY even at MY's current pricing.

We'll see....

 

[jjwolf120]

The ford goes "on sale" at a dealer. The MSRP is still 50k, but incentives and dealer pricing brings it down to 40k. To a customer ... that is a "deal" and the car is still worth 50k because the incentives and dealer pricing might not be repeatable in the future. So when you start thinking secondary market, most people will compare to the MSRP when trying to figure out depreciation and value.

This will make depreciation more consistent among all cars sold since everyone will be comparing to MSRP, but each individual buyer will have their own depreciation depending on what price they actually paid. In the end there is no difference in depreciation between the two sales models. If the sold the exact same cars at the exact same price (but nominally different models) both directly and through a dealer, the depreciation would be the same on average.

 

[ohseedee]

It’s a great deal for a solid EV. I picked up a RWD Model Y when they were discounting Q4s last year for <41K. People shit on it here all the time, but I frequently take my wife’s Model Y over my R1T all the time ?‍. Great car and loving the 1 month trial of FSD 12.

 

[Gen(R3)Xer]

On Friday Tesla slashed the price of the Model Y:

https://techcrunch.com/2024/04/05/tesla-slashes-model-y-inventory-prices-cut/

Remarkably, even with this price slashing, the Model Y is still positive margin for Tesla. It looks like Tesla is trying to clear out inventory of 40,000+ Model Ys. I checked the Tesla Model Y inventory site, and you can get a Model Y RWD for as low as $40,940. If you qualify for the tax credit, that's $33,440. That is insane. How is any manufacturer going to compete with this?

If you are budget constrained buyer (I assume the majority of people are) and you need to buy a SUV now, why would you buy any car other than a Model Y right now? A $33,440 Model Y is incredible value. Teslas are Teslas, and many people do not like Teslas. For lease, for the spec above the price is $2,999 down and $336 p/month plus tax. That is cheap as dirt for the tech and performance you get with that car.

I have a Model X Plaid and it is awesome. But, I totally get why people do not like Teslas. But, many people might like dollars more than they dislike the quirks of Teslas (or EM), and a $33,440 Model Y is just a screaming deal.

Keep in mind, although the media is blowing up the state of the economy as a being the worst of times, the reality is that unemployment and credit default rates are at near all time lows. If this is what the car market looks like at the near-best of times, what happens if things are no longer best of times?

If I am spending billions ramping up the R2 that I have to sell at upper trim at $60k+ to be positive margin, and Tesla is cranking out infinite Model Ys at $40,940 at margin, I think I don't like the business I am in. Yes, a Model Y is not a R2, but RIVN has to sell 500,000+ R2s a year to be in the money, so the Model Y is competition at that kind of volume.

Can any EV seller other than Tesla survive Tesla's pricing advantage? Other than the Chinese manufacturers, I am not sure...

That is a great deal, but I still can’t afford a $33,400 vehicle with a 6-7% APR and I don’t think I’m alone. That would make the payment around $650 a month. You’re supposed to only spend 10% of your monthly take-home pay on a vehicle. Too rich for my blood. Leasing might work though. Too bad you can’t buy-out a Tesla lease. Some day though, some day. Too bad the $25K Tesla has supposedly been postponed.

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