The announced price increase of Tesel was just a bluff. Sales fall rapidly, inventory increases, prices will go down again

You can think what you want about Elon Musk, but as a marketing guru you have to respect him, even if you hate him otherwise. This was also a smart move on his part, but it didn’t work. And now it explodes.

I rely on the fact that I am not a “racist”, I do not box and label people, and we are always willing to judge them based on what they do, how they behave. So while I have plenty of reasons to look down on Tesla co-founder (albeit more de jure than de facto) and boss Elon Musk, I can appreciate his abilities.

By far the biggest one is marketing. He is a person who – despite many previously unfulfilled promises – can paint dozens of things with beautiful colors and sell them in a way and at prices that people would not pay anyone else. Some of his steps are quite straightforward and readable, others more thoughtful. Just like the one he committed at the end of March.

Already at the beginning of the year, Tesla mostly discounted its cars and openly warned that its sales growth would not be the same as in previous years. In general, nothing surprising, the electric car market is treading on the spot. And even though Tesla is primarily Tesla and not a manufacturer of electric cars, she couldn’t miss it. But then, at the end of March, something unexpected happened – Tesla suddenly announced a general increase in the price of its models starting this April.

A number of people took that as a sign of a sales surge that Tesla is reacting to as it always does, but the folks at Investor’s Business Daily weren’t entirely convinced that others were getting it right. What if it’s the exact opposite? What if Musk just “musks” (in this case he also masks, here the reality) and increases the price at the moment when sales go down? It doesn’t seem to make sense, but think twice – if you tell people on March 20th that you will increase the price on April 1st, what will those who plan to buy later do? Well, they’re going to the dealership to “save” so they’ll help Tesla inflate its key quarterly numbers.

We don’t know to what extent it worked, to some extent it certainly did, but it wasn’t enough to shoot down the miserable reality. Tesla announced its quarterly sales results yesterday and they are pretty lousy. According to data compiled by Bloomberg, the market expected around 450,000 cars sold, but in reality there were only 386,810. This is a dramatic difference and a significant quarter-on-quarter (compared to 484 thousand) and year-on-year (compared to 423 thousand) decline.

Some analysts tend to blame it on closed factories, but that is nonsense. The company produced 433,371 cars, so it doesn’t have a problem with production, it has a problem with demand, and it has almost 50,000 more cars in stock. The bluff didn’t work, and Musk has no choice but to back down – if he wants to shake up the rampant inventory, he’ll have to lower the price and cancel the announced increase in price, which actually happened. It probably won’t happen right away, but let’s wait for the first opportunity when it’s not completely embarrassing. Week? Two? We’ll see.

So Musk didn’t score this time, but I still appreciate his idea – to inflate sales by raising prices is definitely smarter than by discounting. But where there is nothing, only discounts will help. And they can only pass Tesla by a miracle under the circumstances.

In particular, Tesla is unable to sell the Model 3 in large enough quantities despite many marketing gimmicks. Let’s wait for more discounts. Photo: Tesla

Sources: Tesla, according to data compiled by Bloomberg, IBD

Peter Miller

All articles on Autoforum.cz are comments expressing the editor’s or author’s opinion. Except for articles marked as advertising, the content is not sponsored or similarly influenced by third parties.