Tesla is now selling Powerwalls practically at cost in certain regions in response to California’s devastating fires.
I want to lead into this with an explanation of what that headline means for anyone not in the business world. Imagine you have a product, let’s say a retail business.
Your store has needs.
You need to pay the rent, pay employees, pay for product supplies, etc.
You buy products at wholesale, add costs for various reasons, and then try to make a profit on sales.
If you sell your products for the same price you bought them, there is no profit.
You make no money.
Keeping all of that in mind, some of Elon Musk’s recent tweets are fascinating, especially in the context of the ongoing debate between Tesla fans and Tesla short sellers as well as Tesla’s well known efforts to remain profitable.
When it comes to people in need, Elon often thinks with his heart and not his business head. Most recently, he made the decision to lower the prices of Tesla Solar + Powerwall by $1000.
An initial assumption a cynical person might make is that this is a marketing ploy.
However, for certain reasons, that doesn’t seem to make sense. Tesla has been supply limited on the Powerwall for a long time, according to various reports, and the basics of “supply & demand” indicate that the company shouldn’t be dropping prices on a supply-constrained product like that.
Further, Elon noted in another tweet that Powerwall shipments to places outside of California would be delayed so that Tesla could prioritize deliveries to people affected by the California fires, again indicating that Tesla is supply constrained rather than demand constrained, and shouldn’t be lowering prices from a business perspective at the moment.