Musk said that Tesla is going to launch an affordable car. Is it because of poor performance that it has to rely on low - priced cars to grab market share?
Recently, Tesla has been having a tough time. Its performance has been continuously declining. Under such circumstances, Elon Musk announced that Tesla would launch an affordable car. Facing the current performance decline, is Musk trying to capture the market with an affordable car?
1. Did Musk say that Tesla will launch an affordable car?
According to Jiemian News, Tesla recently released its second - quarter financial report. During the earnings conference call, Musk revealed that the company would launch an affordable electric vehicle that the market had long been anticipating.
According to Cailian Press, when responding to a question from an analyst, Musk pointed out that this affordable car would be a new version of the Model Y. Tesla revealed in its financial report that the company had started the initial production of this model in June and expected to begin mass - production in the second half of this year.
Lars Moravy, the vice - president of Tesla's engineering, added that the production capacity of the new model would not increase significantly until the end of the year. Given that the U.S. electric vehicle tax credit will be cancelled on September 30 this year, Tesla will vigorously sell its existing models in the third quarter to avoid complex supply problems. More affordable models will be launched in the market in the fourth quarter.
The sales of Tesla's main models are facing pressure, which may be one of the reasons for its launch of affordable models.
On July 24, the latest data released by the European Automobile Manufacturers Association showed that in June, the number of new car registrations of Tesla in Europe was 34,781, compared with 45,087 in the same period last year, a year - on - year decline of 22.9%. This is the sixth consecutive month of decline in Tesla's sales in Europe.
The data released by Tesla at the beginning of July showed that in the global market, there had been a year - on - year decline in delivery volume for two consecutive quarters. The delivery data released by Tesla showed that in the second quarter, the company's delivery volume was 384,122, a decrease of about 13.5% compared with the same period last year. Among them, the total delivery volume of the main models, Model 3/Y, was 373,728. This is also the second consecutive quarter of year - on - year decline in Tesla's delivery volume.
2. Is Tesla with poor performance trying to capture the market with low - priced models?
Facing Musk's major move to launch more affordable models, one can't help but wonder what this move really means. Is it really because of poor performance and trying to capture the market with low - priced cars?
Firstly, in recent years, Tesla has been facing unprecedented challenges. With the increasingly fierce market competition and the continuous change of consumer demand, its existing models are gradually showing signs of aging. Although early products such as the Model S and Model X once led the trend, they no longer have absolute freshness and competitiveness in the market. Especially the main volume - selling model, the Model Y, although still maintaining a certain sales volume, is struggling when facing the siege of many emerging brands. Taking the Model Y as an example, although it has undergone some upgrades, in terms of exterior design and interior configuration, it has become a bit outdated compared with the newly - entered competitor models. Consumers' aesthetic concepts are constantly changing, and their pursuit of the technological sense and comfort of cars is increasing. If Tesla cannot update its models in time, it is easy to be at a disadvantage in the competition. This lag in models directly leads to the decline of Tesla's attractiveness, which in turn affects the overall performance level.
Secondly, when choosing how to expand its product line, Tesla did not blindly invest in the research and development of completely new models but chose a more practical path - to transform and upgrade the existing successful Model Y. This strategy may seem simple, but it actually contains profound meaning. By leveraging the existing platform and technological accumulation, Tesla can significantly reduce development costs and production risks. At the same time, the optimization and improvement of existing models can also respond to market demand more quickly and shorten the market - entry cycle. Specifically, the development based on the Model Y means that many core components such as the battery pack and drive system can be shared, thus spreading the fixed costs. In addition, the maturity of supply - chain management also provides a strong guarantee for mass production. This way of "putting new wine in old bottles" not only saves time and money but also ensures the quality stability and reliability of new products. For Musk, who pursues maximum efficiency, this is a cost - effective business.
Thirdly, looking back, Tesla once dominated the electric vehicle market with its first - mover advantage. At that time, whether in terms of technological innovation or brand influence, it left other competitors far behind. However, the good times did not last long. With the accelerated transformation of traditional automakers and the rise of new car - making forces, the market pattern has changed dramatically. Now, almost every mainstream automaker has its own electric vehicle plan, and some have even surpassed Tesla in specific market segments. Especially in the Chinese market, local brands such as BYD, Li Auto, and Wenjie have grown rapidly. They not only have obvious advantages in cost - performance but also are comparable in intelligent configuration and service experience. In the European and U.S. domestic markets, giants such as Volkswagen and Ford have also started to strengthen their electrification strategies, trying to regain their lost ground. Facing such a siege, Tesla must re - examine its competitive strategy and find a different way to survive.
Fourthly, against this background, Musk's proposal to launch an affordable car has important strategic significance. In the short term, low - priced cars can quickly attract more price - sensitive consumers and help Tesla stabilize its sales. In the current context of many uncertainties in the global economy, consumers' purchasing power has been affected to a certain extent, and price has become an important factor influencing consumers' car - buying decisions. By launching affordable cars, Tesla can cover a wider range of consumer groups, especially those who were previously deterred by the price threshold.
In the long term, Musk's current decisive adoption of lower - priced models can not only help Tesla stabilize its sales but also has positive significance for further opening up the markets in developing countries and forming more advantages. In developing countries such as India and Brazil, the automobile market has great potential, but consumers' purchasing power is relatively limited. If Tesla can launch affordable models, it is expected to quickly open up the situation in these markets and seize market share, which may be Musk's real purpose.
This article is from the WeChat public account "Jianghan Vision Observation". Author: Jianghan Vision Observation. Republished by 36Kr with permission.