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Comment by guardiangod | Hacker News Reader

One would expect a widget-manufacturer that is supply-constrained to have flat revenue until new factories are opened, unless you are talking about raising prices to increase profitability. It doesn't seem Tesla is that concerned with short-term profitability.

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If Tesla cars were really in high demand, and supply was the problem then I would expect them to raise prices, thus increasing revenue. They haven't done that, which means Tesla's are probably not as sexy cars as they try to paint them.

An alternate hypothesis is that they are trying to justify the inflated share price by gutting all other EV makers and gobbling up marketshare.

Tesla already has better margins on EV sales than any other automaker. If Tesla price their cars at a level that forces everyone else to lose money on EVs, it makes everyone else's transition from ICE to EV that much harder.

The much-lauded ID.3 (which is a bet-the-company project for VW) was supposed to undercut the Model 3, but the price has been slowly creeping up (and VW has had to massively de-content the base model to hit their price targets). If Tesla forces VW to take a loss on every ID.3, VAG's shares are going to start looking over-valued pretty quickly.

There are many contexts where that's not a good market strategy. Movie theaters don't charge double for the opening night of Avengers movies, for example.

Out of curiosity, why don't they charge double during opening weekend? It seems like that would be a successful strategy.

I don't know, but I'd guess it's a combination of two things:

* It's tricky to message right. Most theaters do some dynamic pricing, with discounts for certain hours or certain days, but stronger or more complicated schemes inevitably start to come across as "we're taking more money out of your wallet just because we know you'll let us".

* Charging too high of a price can shift your market segment. Most movie theaters sell themselves as entertainment for the average Joe, and having special events with $50 tickets really undercuts that.

They are betting on market growth driven by climate change as well as technology advancements that will drive battery prices down. Both are coming, imho.

Companies that raise prices in exceptional situations take a major reputational hit.

The canonical example is snow shovels after a blizzard.

This is not taking advantage of a disaster (taking advantage of people's suffering), this is supply and demand. Supposedly, Tesla's are in high demand and as a 'luxury' good they could charge as much as they wished without consequence to their reputation. Indeed, it may even increase the desirability of their cars. Which begs the question, why haven't they? Instead, they've consistently slashed prices..

For traditional car makers that would be true. There are times where a civic is more expensive than an accord for example. But Tesla is not trying to maximize revenue in the short term. They are trying to convert the world to sustainable transportation.

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