Demand for all new cars has gone down the drain. And Tesla has responded by discounting prices for their cars across the board. They’ve dropped the price of the Model 3 buy $2000. They slashed the price of the Model X by $5000.
But that’s not the story I want to focus on today. I’ve basically said all I care to say about these discounts already. If you want to know exactly how much each model has been discounted, every single EV news website has already reported on it.
One thing about this discount really does not sit right with me. After all the fuss Elon made trying to reopen the Fremont factory, I was under the impression that demand for Teslas must be fairly high. I’ve been saying repeatedly that Tesla is in a better position than anyone to whether this storm. But with record job losses, the storm certainly is far from past.
Obviously, in the worst economic downturn we’ve seen since the great depression, demand for new cars will go down. Tesla has no choice but to drop prices to account for this low demand. But the fact that this move comes just two weeks after they defied orders and reopened their Fremont factory leaves a bad taste in my mouth.
That’s not to say that I disagree with Tesla’s reasons for reopening the factory. It did seem unfair that they were the only auto manufacturer in the US that had not been allowed to resume operations. And if the shutdown order was illegal, as they claim, Tesla had every right to resume operations.
But it also seems like while they had every right to reopen, did they really need to? The demand is obviously low. They only needed to wait one more week to resume operations. I think this price drop shows that Tesla really didn’t need to resume operations since people aren’t buying their cars anyway.
Which brings me to my main point, why did Tesla make such a fuss about reopening the factory? I think making a fuss was the point. They likely had other things in mind, like restarting production to please investors, or to ensure their employees could make rent.
But I think now that Tesla defied county orders to make the news. Tesla doesn’t do any paid for direct marketing. They tout this fact as if to imply that every person who buys a Tesla heard about it from a friend. But in reality, they just have other ways to market themselves. While the decision to reopen the Fremont factory was very controversial, any publicity is good publicity. Tesla knows how to play the media like Donald Trump.
I don’t think this is a new theory. And I don’t fully believe that Tesla would go through all the trouble just to make the news. But I absolutely believe that Tesla played up this whole situation for that purpose.
Maybe I’m wrong and demand for new Teslas is actually consistent. They could be making this move based on expectations for future demand. All the Tesla ultra-fanboys arguing that they did this out of goodwill might be right. We’ll have to wait for Q2 sales numbers to find out. But the timing of everything just does not feel right to me.