Interest rates and vehicle prices too high, must come down to expand TAM. Future benchmark rate cuts should improve affordability (most people finance and buy a payment), but Tesla will need to navigate burn rate until central bank pivots.
Meanwhile you've got things like the Ioniq 5 that have fun styling, way better interiors, and don't really cost that much more. They're still selling a lot fewer in total numbers than Tesla, but Ioniq 5 + EV6 is around 53,000 vehicles in 2023. Given the shape of the EV landscape and EV sales in general, that's probably a lot of lost sales from Tesla specifically. BMW also started showing up, and they're responsible for another 47,000 sales in 2023.
And then at the high end it looks like the Model X + S sold 17,027 total, which yeah. At that price point those vehicles are just one-trick ponies. They go fast, and that's about it. Meanwhile you've got Lucid Air, Porsche Taycan, Audio e-Tron GT, etc... Taycan + eTron GT sales in the US add up to around 10,000. Lucid only had 6,000 delivers in 2023, but it also only offers a Model S competitor atm.
I'm still a bit surprised how many people, even professionals in the lending space, hold this view that "interest rates must fall!"
We're still relatively low for federal interest rate[0]. Near zero interest rates are not sustainable long term and have lead to a tremendous asset bubble we're still just figuring out the consequences of.
It's a bit frightening that the only solution most companies have to improving their future out look boils down to "wait for rates to drop".
I suspect even if rates do drop again, it will be only for a brief while before it becomes clear that "print free money!" is not a long term viable economic strategy.
With higher rates than before (and more competition), the price is too high, no matter how you shake it.
Because it's mostly high earning white collar professionals or anyone with at least $100k in liquid assets who benefit from an interest rate drop.
If rates drop significantly, then house sale prices skyrocket again because you can take out larger loans with a smaller down payment, and you can leverage yourself to acquire multiple properties. Same with car sales, and any other luxury good.
Securing wage increases takes time, worker organizing, etc. credit affordability is as easy as Chair Powell holding a press conference.
https://www.marketplace.org/2023/02/08/americans-use-of-cred...
https://www.federalreserve.gov/releases/g19/current/default....
My house is still likely to go for more than I paid for it in 2018, even after adjusting for inflation. It should be obvious that housing cannot sustainably rise at above-inflation rates indefinitely.
My prediction is that rates stay the same or even are raised if inflation continues to run hot while unemployment is down.
At those prices I'm not sure how they aren't selling more cars. For the amount of range and functionality you get, that kind of deal blows the competition out of the water; no other EV I'm aware of comes close. (That said, I have no idea if they still made much of a profit off that car or if they were just desperate to clear out space.)
The above mentioned Elon Factor?
I guess it's possible that maybe it's just taken this long to catch up with him though.
My two cents are that it's more important to support the company that's building the best EVs, and the positive impact Tesla has on the world is way bigger than whatever negative effects Elon's tweets are having, but I can definitely relate to folks' discomfort. I wish we had the old Elon back.
I cannot imagine paying $40K for a car, and I'm sure there are millions like me. You may be optimistic on what you think the average person can afford.
https://caredge.com/guides/new-car-price-trends-in-2024
The average new car purchaser may not be the average person, also the average include trucks with tend to be super super expensive.
Funny how things change.
My first new car was a truck, for the very reason that pick-up trucks were generally much cheaper than cars because they were mostly empty space and didn't have so many creature comforts.
Now, trucks are like rolling vacation spas. When my wife's car was side-swiped, the insurance company gave her a huge new truck as a loaner. It had more electronics, more comfortable seating, and more luxury appointments than our living room.
My main point is that if prices have come down a lot, yet Tesla is now selling fewer cars than before, then it seems like there must be other factors in play besides price.
[0] - https://www.reuters.com/business/autos-transportation/byd-ma...
YoY BYD is up 13%.
TSLA sales are down sequentially but more relevantly also YoY.
> 431,000 deliveries would still be a small growth year-over-ear[sic]
The rest of chinas EV market is in Freefall (plant closures) and much of their output is of a quality level you would expect from china.