Tesla has dropped the prices of its electric vehicles (EVs) and its Full Self-Driving (FSD) software over the past few weeks, reigniting larger discussions about the automaker’s overall pricing strategy. In response to one person criticizing the frequency of Tesla’s price changes, Elon Musk has pointed to the dealership model, noting that most automakers change prices on their vehicles more regularly than consumers may realize.
On Friday, Tesla reduced the price of the Model S, X, and Y by $2,000, after the company cut the price of monthly FSD subscriptions in half earlier this month. On Saturday, Tesla also cut the price of the outright FSD purchase option, to which some consumers and shareholders responded with frustration.
Tesla’s pricing strategy comes down to one key difference from its competitors
Following the news, Omar of Whole Mars Blog noted that he finds Tesla’s pricing strategy incoherent, to which Sawyer Merritt noted that this was one of the rare downsides of the direct-to-consumer sales model, despite the extra pricing transparency.
“I think that if you had a monkey throw shit at a keyboard to come up with a pricing strategy for Tesla it would be more coherent than what we’ve seen,” Omar said on Sunday. “Subscription price will go up once we release FSD. Actually we will cut it. We are raising Model Y prices. Actually now we are lowering them.”
“It’s amusing to follow, but probably confusing to consumers. Should I buy FSD now because the price was cut? Or should I wait for the next FSD price cut and save thousands of dollars?”
In response, Musk noted that the dealership model doesn’t offer the same level of transparency that a direct-to-consumer model offers, with the MSRP on a car often being far from its actual price.
Other cars change prices constantly and often by wide margins via dealer markups and manufacturer/dealer incentives. Only a fool thinks the “MSRP” is the real price.
Tesla prices must change frequently in order to match production with demand.
— Elon Musk (@elonmusk) April 21, 2024
To be sure, last week’s Model S, X, and Y price cuts followed additional price cuts just a few weeks ago, which included the Model 3, and saw some vehicle prices dropping off by as much as $5,000.
Last year, following aggressive price cuts that sent shockwaves through the industry, Musk noted that Tesla would be opting for a high volume of vehicles delivered at slightly lower margins, especially given its future potential for revenue from software and services.
“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” Musk said during the company’s Q1 2023 earnings call. “However, we expect our vehicles, over time, will be able to generate significant profit through autonomy.”
“So we do believe we’re like laying the groundwork here, and then it’s better to ship a large number of cars at a lower margin, and subsequently, harvest that margin in the future as we perfect autonomy. This is an extremely important point.”
What are your thoughts? Let me know at zach@teslarati.com, find me on X at @zacharyvisconti, or send your tips to us at tips@teslarati.com.
Tesla benefits from an incentive program in Texas that has become active following the loss of the $7,500 EV tax credit, which was a significant advantage for EV drivers.
In Texas, the State Commission on Environmental Quality has a grant program for light-duty motor vehicles that are either purchased or leased by consumers.
Referred to as the Light-Duty Motor Vehicle Purchase or Lease Incentive Program (LDPLIP), the program opened on October 13 and provides grants for consumers who want to buy new energy vehicles.
Will Tesla thrive without the EV tax credit? Five reasons why they might
The program allows for grants of up to $2,500 for electric or hydrogen fuel cell vehicles.
These are the eligibility criteria:
- Individuals or entities who purchase or lease an eligible vehicle on or after September 1, 2025, and who apply for or acquire title and registration of the vehicle in Texas
- Applicants must have taken possession of the vehicle before applying
- Applicants must commit to operating and registering the vehicle in Texas for at least one year
Additionally, the car must:
- Be included on the TCEQ Eligible Vehicle List
- Be new and must not have been the subject of any prior retail sale or lease
- Have a gross vehicle weight rating of 10,000 pounds or less
They are awarded on a first-come, first-served basis.
The good news is that Tesla’s entire vehicle lineup, as of October 7, qualifies. Here is what the LDPLIP’s list of qualifying vehicles shows for Tesla:
- Tesla Cybertruck AWD
- Tesla Cybertruck Beast
- Tesla Model S AWD
- Tesla Model S Plaid
- Tesla Model X AWD
- Tesla Model X Plaid
- Tesla Model Y Long Range RWD
- Tesla Model Y Long Range AWD
- Tesla Model Y Performance
- Tesla Model 3 Long Range RWD
- Tesla Model 3 Long Range AWD
- Tesla Model 3 Performance
This list was published during the day of October 7, which is coincidentally the same day Tesla launched its Tesla Model 3 ‘Standard’ and Tesla Model Y ‘Standard.’
We reached out to the program to confirm that these vehicles qualify for that grant, and we will update when we hear back.
With the loss of the Federal EV Tax Credit, local programs are still available to help with the cost of an EV. Although electric cars are affordable, there are benefits to choosing one, especially as these grant programs continue to become available.
The full list of vehicles that qualify for the grant is available here.
Tesla has made a last-ditch effort to secure the $56 billion pay package for CEO Elon Musk, which was approved twice by company shareholders, after a Delaware Chancery Court denied the frontman the payday.
Perhaps one of the biggest issues from a standpoint of being fluent in Tesla-related events has been Musk’s pay package.
It was approved by shareholders once in 2018, and required Musk to oversee various growth tranches that would bring investors value. He completed each of the tranches and was entitled to the pay package.
However, the Delaware Chancery Court decided in January 2024 to rescind the pay package, which Musk had earned, based on a suit filed by a shareholder.
Chancellor Kathaleen McCormick ruled that Tesla’s board lacked independence from Musk when the pay package was approved in 2018, and that it should not be granted.
She called it “an unfathomable sum.”
In response to the pay package’s rejection by Chancellor McCormick, Tesla held a second shareholder vote last year, which once again showed investors were willing to support Musk’s payday. It was approved by shareholders, but it was once again denied by the court.
Today, Tesla attorneys argued to the Delaware Supreme Court that the pay package should be restored because of last year’s vote by shareholders.
Jeffrey Wall, an attorney for Tesla, said (via Reuters):
“This was the most informed stockholder vote in Delaware history. Reaffirming that would resolve this case. Shareholders in 2024 knew exactly what they were voting.”
In a response to the decision by the Delaware courts last year, Tesla proposed a new pay package for Musk in September, which would give him a potentially $1 trillion compensation plan. It would require Musk to help Tesla reach several performance-based growth milestones, including achieving an $8.5 trillion market cap.
Elon Musk’s new pay plan ties trillionaire status to Tesla’s $8.5 trillion valuation
Musk is currently worth $483 billion, making him the richest person in the world. If he were to achieve his pay package tranches, granted the new pay package is passed at the Shareholder Meeting in November, he would easily be the first trillionaire.
News
Tesla makes big move with its Insurance program
Tesla Insurance launched back in late 2019, and it was massive because it was the first time a company aimed to cover its vehicle owners in-house without the need for third-party companies.
Tesla Insurance is heading to a new state for the first time in years, as the company is aiming to launch its in-house coverage platform in Florida.
Tesla Insurance launched back in late 2019, and it was massive because it was the first time a company aimed to cover its vehicle owners in-house without the need for third-party companies.
Tesla Insurance goes live with claims of lower rates by 20-30%
However, it has struggled to expand and only offers insurance in twelve states currently.
Tesla Insurance is available in:
- Arizona
- California
- Colorado
- Illinois
- Maryland
- Minnesota
- Nevada
- Ohio
- Oregon
- Texas
- Utah
- Virginia
In California, Tesla cannot offer real-time insurance or telematics due to regulatory rules.
The company uses a Safety Score to adjust rates based on driving behaviors. The current version, which is called Safety Score Beta v2.2, tracks Hard Braking, Aggressive Turning, Unsafe Following, Excessive Speeding, Late-Night Driving, Forced Autopilot Engagement, and Unbuckled Driving to determine the rate it should charge.
Tesla is working to expand into new markets and has filed applications to launch the program into new U.S. states. Back in 2022, it filed to offer insurance to Florida drivers, but it did not launch.
However, the company just filed to update its Private Passenger Auto program in Florida, according to the insurance site CoverageR.
It would be the first new state to obtain Tesla Insurance since Utah and Maryland launched over three years ago.
Tesla has its eyes on other states, including Georgia, New Jersey, Oregon, and Virginia.
It has also tried to expand to Europe, as it opened an office specifically for Insurance. It was also hiring for Legal Counsel specializing in Insurance on the continent, but nothing ever expanded to an actual offering of vehicle coverage.
Tesla Insurance is an advantage for owners specifically because the company is familiar with its vehicles, the parts, and the repair processes that are required to get a car back on the road.
This was a big reason some drivers switched from the previous providers to the in-house Insurance Tesla was able to offer.
Tesla benefits from new incentive program that’s active after tax credit loss
Tesla’s pay package saga with Elon Musk enters its final chapter
Tesla makes big move with its Insurance program
-
News5 hours agoTesla makes big move with its Insurance program
-
News11 hours agoTesla reportedly places large order for robot parts, hinting that Optimus V3 design is all but finalized
-
News1 week agoTesla FSD (Supervised) V14.1 with Robotaxi-style dropoffs is here
-
News1 week agoTesla all but confirms that affordable Model Y is coming Tuesday
-
Elon Musk10 hours agoStarship’s next chapter: SpaceX eyes tower catch after flawless Flight 11
-
Elon Musk2 weeks agoElon Musk announces ‘Grokipedia’ as Wikipedia alternative from xAI
-
News1 week agoTesla Optimus steals the show during TRON: ARES premiere
-
Elon Musk1 week agoTesla releases cryptic teaser for something massive and it’s coming this week