Tesla Drops Prices, Potentially Ramps Fleet Sales to Rentals
There’s never any shortage of topics to discuss about Tesla – whether it’s nattering about Musk’s behavior, the company stock price, or its hands-off driving aids allegedly causing a pile-up on a busy motorway.
This morning, a pundit tweeted they saw beaucoup de Tesla sitting idle at a Hertz location, suggesting the company may be stuffing rental channels in a bid to inflate sales. In quick succession, it then became clear that Tesla has slashed prices on all its models – big time.
First, the rental situation. According to Twitter user @PolitiReality, a host of (several hundred, by their estimation) Tesla Model 3 and Model Y vehicles were seen at a Hertz outlet in Boston, lined up side-by-each in a covered parking facility. They all appear to be plated and, judging by the signage, are definitely at an airport. The photographer went on to say they spoke with an attendant who suggested they were being “given to everyone” but that “50 percent of them” were being returned by renters. We’ll take those numbers with hefty grains of salt but there’s no denying the rows of idle Tesla cars.
Building on that story, the company has also apparently gone on a major price-slashing spree for all its models. In fact, prices for certain trims of the Model Y seem to have dropped by over 20 percent, with others like the rear-wheel drive Model 3 now stickered at $43,990. Spendy examples like the six-figure Model X have also had roughly 10 percent hacked from their prices, and a zoomy Model S Plaid can now be purchased for $114,900 compared to its previous sticker of $135,900.
Speculation is rampant this pricing change has much to do with the newfangled EV credit system, a rebate structure with byzantine sets of tiers, and a whole lotta math. The upshot is that Tesla could be restructuring their prices around these credits in a bid to move more metal. The same objective could also be accomplished by flooding the rental market with cars.
The irony should not be lost on anyone. After years of needling legacy automakers for this type of sales puffery, it seems Tesla is now feeding from the very same trough. Of course, this goes completely unnoticed by wittering Musk apologists, one of which actually tweeted “Doesn’t matter what you call it, its [sic] cars tesla [sic] sold. I call it $ in the bank! Whether Hertz is successful is not on Tesla.”
That noise you are hearing is us smacking our collective foreheads in exasperation and disbelief.
What these rabidly blind fans fail to acknowledge is a truism every other gearhead, including all of you in the B&B, has figured out for years: Stuffing the rental channel and laying money on the hood is a sure-fire way to tank the value of a vehicle. Detroit automakers, GM in particular, used to be the leaders in this particular race to the bottom. Shedding that behavior has helped those companies immediately.
So no, fanbois, while it might be “$ in the bank” in the short term, gains of this type often come at the expense of resale value, potentially having an effect on how much customers are willing to pay for a new one down the road – and the cycle continues. The adults in the room understand this. We also understand that EV competition is much tougher than it was even just a couple of years ago; for wide swaths of customers, Tesla is no longer the default choice for an electric car.
TTAC once had a GM Deathwatch, y'know.
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Matthew buys, sells, fixes, & races cars. As a human index of auto & auction knowledge, he is fond of making money and offering loud opinions.
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