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Tesla’s pricing strategy comes down to one key difference from its competitors

Credit: Tesla

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Tesla’s pricing strategy comes down to one key difference from its competitors, and as the automaker recently cut pricing for the fifth time this year, the method to its madness is being further examined.

Tesla’s most recent price cuts on Friday are a far cry from its most drastic, which came in January after the Model Y was discounted by $13,000, nearly 20 percent on some trim levels.

While legacy automakers are not prone to cut prices by that much, Barron’s notes in a recent article that substantial price cuts for these companies are usually $1,000, and not the $13,000 that Tesla is able to apply to its vehicles because of its dealership model:

“Tesla, of course, doesn’t have a traditional dealer network. It is both car maker and car dealer. That is one reason investors should expect more volatility from Tesla versus its competition. All of its discounts are visible. Dealer-related discounts rarely rise to become investor-level news.”

Tesla customers have a distinct advantage in terms of consumerism, as they avoid basically the most stressful part of car buying, and that’s pricing. All too often, people who are at dealerships to buy a car are stuck wondering if someone else bought the same model for a lesser price, if they should have haggled more, and if there was more negotiating to be done.

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The direct-to-consumer model has changed this.

The dealership model is not the only reason for the price cuts, but it is one major influence. Legacy automakers like Ford and GM are often cutting prices to clear their lots, bringing new vehicles to their inventories, and generating revenue for the larger corporation.

The reasoning for Tesla’s massive price cuts all depends on who you ask. Some analysts will say it is to recapture market share, and Tesla has the ability to control prices to manipulate competitors and consumer interest in their products. Others will say it is to counter weakening demand, although Tesla’s delivery figures increase quarter-over-quarter regularly.

Tesla price cuts have analysts split

Tesla can almost utilize its price cuts as a PR campaign. Meanwhile, an example of a BMW iX being cut by $10,000 without the customer asking was told by auto analyst Mike Ward. These stories do not make it to the media.

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Meanwhile, Tesla’s price cuts apply to everyone and these broad market adjustments make for mass exposure, showing the company reduces prices.

“I assume Tesla’s strategy is based on the assumption of customer retention,” Nicholas Colas of DataTrek said. “Car buyers are a notoriously fickle lot, with only about 50 percent brand loyalty at the next purchase. Maybe a new technology like EVs is different, with higher retention.”

Lower prices will impact Tesla’s margins, which are among the strongest in the industry. However, more important is the retention of its customer base and a growth in sales as it still is only delivering a fraction of what legacy automakers will this year, even if their figures count ICE vehicles.

I’d love to hear from you! If you have any comments, concerns, or questions, please email me at joey@teslarati.com. You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

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Joey has been a journalist covering electric mobility at TESLARATI since August 2019. In his spare time, Joey is playing golf, watching MMA, or cheering on any of his favorite sports teams, including the Baltimore Ravens and Orioles, Miami Heat, Washington Capitals, and Penn State Nittany Lions. You can get in touch with joey at joey@teslarati.com. He is also on X @KlenderJoey. If you're looking for great Tesla accessories, check out shop.teslarati.com

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Tesla adjusts one key detail of Robotaxi operations in Austin

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Tesla is adjusting one key detail of Robotaxi operations in Austin: service hours.

Tesla’s Robotaxi platform in Austin has been active since late June and has been running smoothly since then. It has its limits, as Tesla has set hours that Robotaxis can operate, as well as a distinct Service Area, also known as a geofence, which has expanded three times already.

While the geofence is currently approximately 170 square miles in size, Tesla has recently enabled freeway drives, which also necessitated an adjustment to the company’s strategy with its “Safety Monitors.”

Tesla explains why Robotaxis now have safety monitors in the driver’s seat

Traditionally, they sit in the passenger’s seat. During highway driving, they move to the driver’s seat.

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These are just a few adjustments that have been made over the past two and a half months. Now, Tesla is adjusting the service hours of Robotaxi operation in Austin, but only slightly.

Tesla will now operate its Robotaxi ride-hailing service from 6 a.m. to 2 a.m., extending the hours by two hours. It previously shut down at midnight.

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Tesla has implemented a variety of safeguards to ensure riders and drivers are safe during Robotaxi rides, and they have made it a point to adjust things when they feel confident that it will not cause any issues.

Many people have been critical of Robotaxi, especially because a person sits in the front of the car.

However, an accident or some type of mistake could do more damage to the autonomous travel sector than anything else. This would not just impact Tesla, but any company operating an autonomous ride-hailing service in the country.

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Tesla Model Y ownership two weeks in: what I love and what I don’t

With any new car, I don’t really find things I dislike within the first few months; the novelty of a shiny new vehicle usually wears off eventually.

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Credit: Tesla

I am officially two weeks into Tesla ownership, having picked up my Model Y Long Range All-Wheel-Drive on Saturday, August 30. I have many things I really love, and I’ll do my best to come up with a few things I don’t, although I find that to be very difficult currently.

With any new car, I don’t really find things I dislike within the first few months; the novelty of a shiny new vehicle usually wears off eventually. In the past, I’ve had a car I only kept for nine months, but I loved it for the first two months. I am sure down the road, some things about the Tesla will bother me, but right now, I don’t have too much to complain about.

As for the things I love, I’ll try to keep it to just five, and as I continue to write about my ownership experience in the coming months, I’ll see if these things change.

A Quick Rundown

In the two weeks I have had my new Model Y, I have driven 783 miles. I have driven it manually, used Full Self-Driving, navigated tight city streets in Baltimore, and driven spiritedly on the winding back roads of Pennsylvania.

I traded my ICE vehicle for a Tesla Model Y: here’s how it went

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I have had the opportunity to put it to the test in a variety of ways, and I feel like I have a great idea of this car and how it handles and drives just two weeks in.

What I Love About My Tesla Model Y

I am only going to pick a handful of things, but do not take this list as a complete one. I truly have so many things I love about this car, but I want to mention the ones that are not necessarily “novelties.” I love the A/C seats, but it’s not something I feel deserves a mention here, because it would not likely sway someone to consider the car.

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Instead, I want to highlight what I feel are things that truly set the Model Y apart from cars I’ve had in the past.

Tesla Full Self-Driving

Available on all Teslas, Full Self-Driving is something I use every day. It is not only a convenience thing, but it is also truly a fun feature to track improvements, and it’s been fun to show a lot of my friends who are not familiar with its capabilities just how safe and impressive it is.

My Fiancè and I have watched Full Self-Driving make slight changes in performance in the two weeks we’ve been using it. I tracked one instance on a Pennsylvania back road when the car stopped at an “Except Right Turn” Stop Sign. Initially, the car stopped, holding up traffic behind it. Just days later, FSD proceeded through that same Stop Sign cautiously, but without coming to a complete stop, which is the proper way to navigate through it.

This quick adjustment was very impressive, and it even caught the attention of my better half. I will say it has been very fun to watch her fall in love with this car after being very reluctant to watch me get rid of our Bronco Sport.

The Handling

Tesla refined the suspension with the new Model Y, and you can surely feel it. Coming from a larger SUV, I did miss being able to really push the limits of my car on a beautiful, sunny, and warm day, and the winding roads of Pennsylvania are calling me for a drive.

The way this car hugs turns and genuinely puts a smile on my face when I’m pushing it. Dare I say I like driving it more than I like it driving me?

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Interior Storage

One of my biggest complaints about my Bronco Sport was that, despite being an SUV, it felt smaller than it was supposed to be. I had trouble fitting golf bags and luggage in the back without having other storage options. It led me to install a roof rack and get a cargo container. I would have to put longer clubs in the back seat so the bags could lie without clubs getting bent.

I don’t seem to have a significant problem with this in the Model Y. Plus, the frunk and the additional cargo under the floor of the trunk are great for bags and other things. It offers 10 cubic feet more of space with the seats down than the Bronco Sport does.

The Entertainment

Not only is the sound system in this car absolutely unbelievable, but I also really enjoy the Tesla Theater, which is really something that has revolutionized how we spend our time in the car.

Charging at the Superchargers has become a new way for us to spend time together. Even if it’s just 30 minutes, my Fiancé’s busy work schedule at the hospital means we don’t get to spend as much time together as we would like. The charging lets us go grab a snack, watch a movie or show in the car, and just be with each other.

It’s honestly my favorite thing about the car so far, that we’ve both truly enjoyed what it has done for us. It put a smile on my face to hear her say, “It’s just so much fun to be in this car” last night when we met friends for dinner.

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What I Don’t Love

I’m just going to get nitpicky here, because I don’t have much to complain about.

The Paint

I love the Diamond Black, and it gets so many compliments. However, it sure does get dirty fast. I feel like I’m going to have to invest in a car wash membership or set aside time each week to clean it. This is not a Tesla-specific problem, of course.

Climate Control

Another “first-world problem,” but sometimes I do have trouble getting the A/C to go right where I need it. I feel like, to feel the air, I have to put the fan speed to 7 or higher.

Swing Mode has been a real savior in this sense, but my Fiancè sometimes complains that my cold air will hit her when she’s already freezing. I think this is just something I need to get used to, as the vents are significantly different than any other car. It’s really not that bad, but it is worth mentioning that we’ve both said we are still adjusting to it early on.

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Cybertruck

Tesla brings closure to head-scratching Cybertruck trim

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(Credit: Tesla)

Tesla has ended the production and sale of a Cybertruck trim level that had many people scratching their heads. The move comes after slow sales on the trim, as many Cybertruck buyers opted for other configurations that seemed to be a better value for the money.

On Friday, Tesla officially brought closure to the Long Range Rear-Wheel-Drive configuration of the Cybertruck, a build that was introduced earlier this year at a lower price point than its All-Wheel-Drive counterparts, but missed many of the key features that made the Cybertruck, the Cybertruck.

Tesla Cybertruck RWD production in full swing at Giga Texas

Rolling the variant out at a price of $69,990, only $10,000 less than that of the All-Wheel-Drive configuration. However, it was also void of many other things:

  • Single Motor
  • Textile Seats instead of Leather
  • 7-Speaker Audio System instead of 15-Speakers
  • No Rear Touchscreen
  • No Powered Tonneau Cover for Truck Bed
  • No 120v/240v outlets

For $79,990, just $10,000 more, owners could receive all of these premium features, plus a more capable All-Wheel-Drive powertrain, which truly made this Rear-Wheel-Drive build of the Cybertruck a sitting duck for criticism.

It was simply not enough meat for the price, and demand was evidently low. From those I spoke to, orders were few and far between; people simply found more value in the All-Wheel-Drive configuration based solely on the additional motor. Adding all the premium interior and functionality features made it a no-brainer.

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In a way, it seems Tesla was overly optimistic about the Rear-Wheel-Drive configuration of the Cybertruck, but even after it was launched, plenty of loyal fans were confused by it:

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The Cybertruck is a great vehicle, and it is among the best vehicles in the company’s lineup. However, it really missed a price point for the Rear-Wheel-Drive configuration that was effective enough to drive people toward it. Many said they would have considered it if Tesla could have brought the price down into the high $40,000 or low $50,000 range.

I took a Tesla Cybertruck weekend Demo Drive – Here’s what I learned

It seems it just did not have the appeal to keep up. Now, Tesla has the All-Wheel-Drive and Cyberbeast for $72,490 and $114,990, respectively.

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