Is cutting prices a losing strategy?

[NoseyReporter]

Elon Musk started a price war that Tesla can't win

Tesla has spent the past year slashing its prices to try and drive away the competition. That's a losing strategy.

www.businessinsider.com

I wonder if Elon got the idea from Larry. Larry famously did this with Oracle in the cloud arena. But software is sorta of a build it once sell as many copies as you can space.

Lucid already has joined the battle. Good thing the PIF pockets are deep, but dilution could be worrisome.

 

[joec]

I don’t see Lucid getting into a pricing war. Sure, they are offering various incentives every month, but most of them amount to shuffling around payments to make the car look less expensive. At the end of the day, the price hasn’t gone down by much in reality.

With Gravity they have the option of setting a lower price point out of the gate.

Tesla has slashed the actual bottom line price by tens of thousands. And they’ve done it over several separate cuts, giving the impression they will do it more. I don’t see it ending well for them at all. But what do I know?

Maybe the manufacturing optimizations will cover the loss in the long run?

 

[EXOTIC2]

Y’all realize business insider is an absolute SHILL for the legacy auto makers. They hate eV’s There is so much nonsense in that article it’s cringe worthy. It’s like reading the national inquirer.
Google is your friend..,,,

 

[blueice89]

I honestly think Lucid should keep cutting prices until demand comes in. They need to get their brand out first and then worry about making a profit second. If people aren’t familiar with Lucid they will always play catchup. It’s a hot take but I believe get more butts in the seats of cars and take a loss for it if it means you sell your brand better

 

[BACamster]

I honestly think Lucid should keep cutting prices until demand comes in. They need to get their brand out first and then worry about making a profit second. If people aren’t familiar with Lucid they will always play catchup. It’s a hot take but I believe get more butts in the seats of cars and take a loss for it if it means you sell your brand better

Disagreed. Price cut will hurt the owners because no one will buy their cars. Lucid will cut price to boost demand. Consumers will not buy their cars because they know price will continue to drop. It is a vicious cycle.

 

[SaratogaLefty]

I believe the price cuts are temporary to move stagnant inventory. Having cars sitting around waiting/hoping for a buyer is not a winning strategy. Yes they do need to find a way to move to profitability but that unfortunately is going to take a while. The Gravity will not be the savior since it is most likely a year or more away for first shipments. They need to move the RWD Pure models now!!

 

[Drendino]

Disagreed. Price cut will hurt the owners because no one will buy their cars. Lucid will cut price to boost demand. Consumers will not buy their cars because they know price will continue to drop. It is a vicious cycle.

What auto manufacturer, other than Rivian hasn’t cut prices and/or provided incentives in the last year and a half? I don’t understand why some people feel that it’s not ok for Lucid to adjust to the shit storm, which is our economy right now. I’m not saying that they should get into a price war with Tesla, but they need to do what they need to do to get people into their cars.

 

[Tâm]

What auto manufacturer, other than Rivian hasn’t cut prices and/or provided incentives in the last year and a half? I don’t understand why some people feel that it’s not ok for Lucid to adjust to the shit storm, which is our economy right now. I’m not saying that they should get into a price war with Tesla, but they need to do what they need to do to get people into their cars.

Luxury cars don't need to join the cheapo crowd.

Rolls-Royce don't sell many, only 6,021 last year.

None of its cars are under $300,000.

Its EV version, Spectre, costs $422,750 to start and this dude had to buy 2 to get 1 just delivered now. The other one in 2024.

To Get The First US Rolls-Royce Spectre, Michael Fux Had To Buy Two

Avid car collector Michael Fux is the first person in America with a Rolls-Royce Spectre.

www.motor1.com

 

[borski]

I honestly think Lucid should keep cutting prices until demand comes in. They need to get their brand out first and then worry about making a profit second. If people aren’t familiar with Lucid they will always play catchup. It’s a hot take but I believe get more butts in the seats of cars and take a loss for it if it means you sell your brand better

Nope. Doing so would dilute the brand significantly, actually defeating the purpose. Tesla gets away with it because they were never a luxury brand, just priced like one.

Now they’re pricing roughly where they fit in the market (for the 3/Y I mean), and that market isn’t luxury.

Lucid can’t do that, because their cars cost more to make, at least partially due to more expensive and greater quantity of interior, and because their brand is a *luxury * brand specifically

 

[Tâm]

... Tesla gets away with it because they were never a luxury brand, just priced like one...

Non-Tesla employees (the press, car owners...) have classified Tesla as a luxury brand.

However, I got curious because they wouldn't give my car a car wash after a service appointment so I read manual, literatures and searched in its web site and never found the word "luxury."

The article below seems to imply that Tesla refuses to claim itself as luxury because of its philosophy:

https://www.npr.org/2019/01/31/688180319/teslas-challenge-leaving-behind-the-lap-of-luxury

 

[hydbob]

Non-Tesla employees (the press, car owners...) have classified Tesla as a luxury brand.

However, I got curious because they wouldn't give my car a car wash after a service appointment so I read manual, literatures and searched in its web site and never found the word "luxury."

The article below seems to imply that Tesla refuses to claim itself as luxury because of its philosophy:

https://www.npr.org/2019/01/31/688180319/teslas-challenge-leaving-behind-the-lap-of-luxury

Like @borski said, they are priced like a luxury brand, but I have never met anyone who considers Tesla, a luxury car/brand.

 

[joec]

I believe the price cuts are temporary to move stagnant inventory. Having cars sitting around waiting/hoping for a buyer is not a winning strategy. Yes they do need to find a way to move to profitability but that unfortunately is going to take a while. The Gravity will not be the savior since it is most likely a year or more away for first shipments. They need to move the RWD Pure models now!!

Yes. It’s important to make the distinction between price cuts and incentives. Lucid is offering incentives. Temporary incentives. They change them up every month to experiment with what works and what doesn’t. This is a far cry from what Tesla has been doing, which is slashing prices.

Lucid has to walk that fine line of making sales in rough economic times while not diluting the luxury brand status. There will come a day when Lucid has more affordable cars. Just as there are more affordable Mercedes cars out there. But you don’t turn your flagship “S Class” equivalent into a Yugo and hope to change that perception later.

Tesla is a different company in a different position altogether. They may well get away with the price cuts, since their goal at this point is to sell as many cars as humanly possible.

Lucid couldn’t survive selling that many cars at this stage of their development. They don’t have the infrastructure for it.

 

[Michael]

Lucid’s problem isn’t price it is marketing. They have to open more show rooms and make it easy to test drive. I never bought a Porsche or Mercedes because it was cheep . I was very disappointed that their new COO is another engineer. If they keep trying to make the wheel rounder they will fail. The Saudi money is a mixed blessing. It’s giving them a lot of time but at some point their patience will run out.

As an ex Boston Consulting guy, I know a price driven volume strategy that leads to the low cost position can work. It certainly worked for Texas Instruments in the pocket calculator business and Henry Ford in the early days of the car business. But as Alfred Sloan said in “My years at General Motors” he couldn’t beat Ford at it’s own game and developed a new game based on market segmentation and trading up. Lucid needs to become the Porsche of EV’s. But to do that they have to build a loyal following and do it quickly. I find it hard to believe they haven’t started Lucid Clubs and energized their loyal but small following to start creating noise. But a lot more show rooms followed my more service centers are the next step and it needs to happen soon. The best product is a necessary condition to win the high end nitch game but it isn’t sufficient. The opportunity won’t last and it needs to be taken quickly. I love my GT but don’t want it to become a DeLorean. Mike

 

[xponents]

Lucid’s problem isn’t price it is marketing. They have to open more show rooms and make it easy to test drive. I never bought a Porsche or Mercedes because it was cheep . I was very disappointed that their new COO is another engineer. If they keep trying to make the wheel rounder they will fail. The Saudi money is a mixed blessing. It’s giving them a lot of time but at some point their patience will run out.

As an ex Boston Consulting guy, I know a price driven volume strategy that leads to the low cost position can work. It certainly worked for Texas Instruments in the pocket calculator business and Henry Ford in the early days of the car business. But as Alfred Sloan said in “My years at General Motors” he couldn’t beat Ford at it’s own game and developed a new game based on market segmentation and trading up. Lucid needs to become the Porsche of EV’s. But to do that they have to build a loyal following and do it quickly. I find it hard to believe they haven’t started Lucid Clubs and energized their loyal but small following to start creating noise. But a lot more show rooms followed my more service centers are the next step and it needs to happen soon. The best product is a necessary condition to win the high end nitch game but it isn’t sufficient. The opportunity won’t last and it needs to be taken quickly. I love my GT but don’t want it to become a DeLorean. Mike

I do agree with your club comment. Lucid already engages exceptionally well(they once bought a test drive car to an owner organized event), but we need an official #LucidOwnersClub like porsche has!

Also, delorean's were shit, just saying lol. I would say that having the COO an engineer is the best because he has an understanding of what the people under him are doing.

 

[Bobby]

I do agree with your club comment. Lucid already engages exceptionally well(they once bought a test drive car to an owner organized event), but we need an official #LucidOwnersClub like porsche has!

Also, delorean's were shit, just saying lol. I would say that having the COO an engineer is the best because he has an understanding of what the people under him are doing.

That already exists.

 

[xponents]

That already exists.

Officially? What do they do for the owners in that club? All this time I only saw the hashtag in Lucid event invitations as a reference to owners, nothing official...

 

[hydbob]

I do agree with your club comment. Lucid already engages exceptionally well(they once bought a test drive car to an owner organized event), but we need an official #LucidOwnersClub like porsche has!

Also, delorean's were shit, just saying lol. I would say that having the COO an engineer is the best because he has an understanding of what the people under him are doing.

Soon. Or maybe...

 

[joec]

Yeah. The owners club exists. It’s just beginning to roll out, though. So you’ll hear more about it as time goes on.

 

[Adnillien]

Includes a Lucid Passport

 

[Rogue]

Yeah. The owners club exists. It’s just beginning to roll out, though. So you’ll hear more about it as time goes on.

Who do we have to bribe for a faster invite?