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Tesla's Secret Strategy For Pricing Its Vehicles

Tesla has a secret and simple strategy in how it prices its vehicles. Here's what it is.


Tesla's Secret Pricing Strategy

Tesla has a secret pricing strategy for its vehicles. This strategy is very simple and may surprise you. One of the key metrics to look at when it comes to the price of vehicles is what is the average market price for a vehicle.

The key metric to look at is the average price for a new vehicle in the U.S. For the Tesla Model 3 RWD - the standard range Model 3, there is about a $300 disparity between its cost and the average vehicle price in the U.S.

The Tesla Model 3 has tracked very closely to this number the past few years without much variation at all. This is a unique strategy in the automotive world and is going to get some scrutiny after Tesla missed on Q4, 2022 deliveries.

Elon Musk may get flack for raising the price of the Model 3, however, with the average price of vehicles in the U.S. increasing, it makes sense to do this. When the Model 3 came out, around 2017, the average price for a new vehicle in the U.S. was about $34,944.

The base price of the Model 3 today is $46,990 -vs- $47,692 for the U.S. average. Tesla also does things differently than traditional automakers. They have a no-haggle price and you simply order online and wait to go get your car after you buy it.

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Future Pricing of Tesla Vehicles

To think about Tesla's pricing and the future pricing of its vehicles, look at the average price of a new vehicle in the U.S. You can also use this to understand the pricing of Tesla's premium vehicles.

* The Model 3 is about equal with the average U.S. car price.
* The Model S is about 2 times the average U.S. car price.

For upcoming vehicles:

* The generation 3 vehicle will be about 1/2 the average U.S. car price.
* The Cybertruck will be about equal with the average U.S. large truck price.

Will Tesla need to break this pattern to sell more vehicles as new factories ramp? Possibly. It still has very affordable models in the Model 3 long range and the Model Y standard range. Both of these were temporarily discontinued due to long wait times. I see these coming back in 2023.

This is a fair pricing strategy. EVs are superior to gas cars and hybrid cars with less maintenance and being more fuel efficient. Not only that, the life of an EV results in decreased emissions over time, which is good for the planet.

Do you think Tesla's pricing strategy is secret? Is the way Tesla prices its vehicles fair?

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot