Tweet

James

2 Jan, 11 tweets, 3 min read

1/Tesla cars offer incredible VALUE.

Value is defined as benefits (perceived or otherwise) divided by PRICE.

So...the more benefit the customer perceives from the product, the higher the perceived value. Similarly, the lower the price, the higher the perceived value.

2/ A strong brand enables a company to price its product high while maintaining high perceived value.

What happens when you combine a strong brand + best-in-class features, technology & performance - at a LOWER price than similarly-sized and positioned cars?

Market shr ⏫

3/ This is what has happened in every market Tesla has entered. Of course, bears will argue about "X" market and "Y" period of time (Norway, bro).

Its easy to blend markets & products & market shares & get everything & everyone all confused.

4/ Alas, this thread isn't about market share. It's about VALUE. The recent launch of MiC Model Y is a perfect example of why Tesla is winning in China, and why the German big 3 are so screwed. I'll use BMW as my example, but BMW, Audi & Mercedes are competitive with each other..

5/ ...and so the principle applies to all 3. Why did I choose BMW? Because they're EV laggards, and bc it was easier for me to navigate their Chinese website (😅).

Here is how the AWD LR MiC Model Y compares to similarly-priced crossover BMWs.

Green = BMW wins
Red = M-Y wins

6/ As you can see, the Tesla offers incredible value for money. And these comparables are but the tip of the iceberg. Many other features that come standard on the Tesla are either not available or cost extra on the BMW:

Some examples:

7/

- Automatic transmission
- Heated rear seats
- Heated steering wheel
- Sport seats
- Keyless entry
- WiFi
- Parking assist
- Phone wireless charging

Not to mention.. Tesla also offers FREE OTA software updates that keep adding features and improving the car after purchase.

8/ So what are the Germans to do? What can they do? If they lower price or throw in some of these features for free, they lose margin and earn less cash. They're already strapped with debt and have to somehow invest in their long-term survival (EV) while generating cash from...

9/...their legacy businesses. Should they just do nothing and ignore Tesla? We see the specs...we know from the US market how this plays out. Should they perhaps launch a compelling EV to compete? They're nowhere close to Tesla on (range + performance)/price...and Tesla isn't...

10/...exactly slowing down.

As the premium market in China grows and Tesla is still ramping production, the OEMs may be able to weather the storm for a year or two. As Tesla hits a 5-6k weekly production rate of a Model Y in Q3-Q4 21, it will start to hurt.

$TSLA $TSLAQ

We didnt even discuss the other obvious benefits of owning a Tesla vs an OEM car:

Fuel savings
Maintenance
Convenience
Less depreciation
Regulatory impact
Etc.

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More from @TSLAFanMtl

James

@TSLAFanMtl

2 Jan

1/ To close out 2020, 5 tweets with 5 points:

5 best $TSLA things of 2020 (no particular order):

1. Launch of Fremont Model Y (STILL only selling AWD in NA)
2. MiC Model 3 production & strong sales
3. FSD Beta
4. Progress of Gigas Berlin & Austin construction
5. 4680 Battery

2/

Top 5 $TSLA surprises in 2020 (no particular order):

1. Model S Plaid
2. Kato road hidden battery factory
3. Single-piece cast underbody for Model Y from Giga Press
4. FSD/autopilot core re-write
5. Gigafactory USA x 2 (Austin)

3/ Top 5 stupid $TSLAQ statements of 2020 (no particular order).

$TSLA:

1. Is "structurally unprofitable"
2. Has no technological moat
3. Loses $ on every car sold

.....

Read 6 tweets

James

@TSLAFanMtl

7 Dec 20

Tesla's strategy is on full display, right now:

1. Build new factory, localize the supply chain, eliminate import tarrifs, reduce transit costs
2. Serve latent/pent-up demand in the market from local production
3. Keep increasing volume and dropping costs with scale.

4. Cut price as costs decline, keeping margins stable - and widening the addressable market
5. Keep improving FSD --> this increases penetration. Increase price --> this increases perceived value
6. Leverage increased software revenue to support further price decreases

7. Introduce a new model from the new GF which is most popular in the local market to maximize domestic consumption:

Austin = Cybertruk (serving mainly USA)
Berlin = Hatchback sedan (serving mainly EU)
China = Compact sedan (serving mainly APAC)

Read 7 tweets

James

@TSLAFanMtl

14 Oct 20

1/Time to debunk some "Tesla is failing in EU" FUD.

First, bulls & bears, let's all agree on one thing = it takes supply to make sales. Fewer cars built = fewer potential cars sold. Simple, right? cannot sell what they do not have. Agree? Good. Let's move on.

2/Let's also consider what is being sold in Europe.

Model 3
Model S
Model X

is not selling Model Y in Europe.

Model Y is being sold exclusively in NA until Giga Berlin comes online for EU consumption, and Giga Shanghai's Model Y line comes online for China consumption.

3/ Next, let's discuss where Tesla builds their cars.

Fremont = S/3/X/Y
Giga Shanghai = 3 for China sales only

Next, let's discuss which production lines make the cars in Fremont;

GA 1/2 = Only S & X
GA 3 = Only M-3
GA 4 = Only M-Y

I am sure we all agree on these facts.

Read 13 tweets

James

@TSLAFanMtl

12 Jul 20

1/There are always many questions raised when $TSLA decreases price. Bears immediately jump to demand concerns, but the truth is, pricing strategy and pricing decisions are not *ever* the result of a single factor. Marketers understand this
Allow me to elaborate in this thread.

2/ Pricing strategy is driven by many things:

1. Corporate objectives (ex: high margin/niche products vs. mass market/market share)
2. Market size & opportunity for the specific product
3. Competitive product offerings
4. Product manufacturing cost
5. Brand/perceived value

3/ So let's explore the recent Model Y price cut. Some $TSLAQ may speculate that Model Y demand has gone to zero & the order backlog has been depleted.

Lets first remember that Model Y is only shipping to NA, and only AWD/Performance variants.

Lets also remember that...

Read 15 tweets

James

@TSLAFanMtl

26 Apr 20

1/Fascinating read from resident $TSLAQ intellect and conspirary theorist Montana Skeptic; a man with 1) a remarkable track record of being consistently wrong on everything $TSLA and 2) an impressive ability to sound convincing in the process.

seekingalpha.com/amp/article/43…

2/The latest take? $TSLA will be successful in China. So successful, in fact, that they will soon hit 5k/week production from GF3 phase 1 and this will increase when Phase 2 is complete. The long term plan, per Montana, is to export MiC $TSLA vehicles to other Asian countries.

3/The problem, according to Montana, is threefold: 1) The agremeent with China won't allow $TSLA to repatriate any profits from Chinese operations. This, of course, is nonsense. As a fully owned foreign enterprise, $TSLA's profits can be repatriated without prial approval.

Read 15 tweets

James

@TSLAFanMtl

16 Feb 20

THREAD

1/ Toyota stands for quality, reliable affordable cars. Their business strategy is simple: 🔺️ volume production, 🔻 ASP - good value for the consumer.

What if a competitor launches a disruptive product with the potential to be more reliable, affordable & better value?

2/ And what happens if the auto industry (except Toyota and few others) recognize this and start to invest in this disruptive technology...moving it from 2-3% market share (current) to a number significantly higher, reducing costs & bringing price close to parity with hybrid/gas?

3/ This is exactly what will happen in the next 5-10 years. EVs will become less expensive, more convenient, more reliable than hybrid/gas cars, and Toyota/others will never be able to recuperate.

So instead of showing leadership and investing in the future, what does Toyota do?

Read 11 tweets

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