With multiple price cuts and increases, feature removals, and options reshuffling in the last months, Tesla has arguably started a price war in the world of EVs, with some rivals understandably cross with the American company’s decisions.
Now, Wall Street veteran and Tesla bull Gary Black of The Future Fund LLC went on CNBC’s Last Call to share his thoughts on the aggressive strategy employed by the Fremont EV maker that recently made the Model Y cheaper than the average cost of a new car or truck in the US.
Black argues that this might not be the best strategy for Tesla, at least for now, adding that the price cuts don’t make a lot of sense.
“I just think the whole price cuts that they put in place don’t make a lot of sense… Every time they cut prices on, say, Model Y, by $1,000, it’s costing them $500 million,” said Gary Black on CNBC’s Last Call. “And really, what they need to do to continue to drive EV adoption is to teach people why an EV is better.”
Communication isn’t one of Tesla’s strong points, but Black thinks that educating the pool of potential customers enticed by the lower prices is what the American electric car manufacturer should be doing, emphasizing the better resale value compared to an internal combustion vehicle, as well as the positive impact for the environment.
“Communicate, educate. So, it’s a lower operating cost, it’s much easier to just plug it in your garage or in a charger rather than go to a filthy, dirty gas station, the technology is better, the autonomy is better, the resale value is better, and you’re doing something for the environment,” he said during the segment.
It’s worth noting that Tesla CEO Elon Musk recently hinted at the possibility that the company could potentially sell cars for zero profit and then earn money from its driving assistance systems.
“Tesla is in a uniquely strong strategic position. Because we’re the only ones making cars that technically, we could sell for zero profit for now and then yield actually tremendous economics in the future through autonomy, no one else can do that,” Musk said. However Tesla’s so-called Full Self-Driving Beta is still considered a Level 2 assistance system, so it’s unclear how this will unfold in the future.
With this being said, Tesla doesn’t only make electric cars and has multiple revenue streams from its energy storage products, Supercharger network, solar, and others.
As always, we’d like to know what you think about this, so after watching the video embedded above, head over to the comments section below to give us your thoughts.
