The company is selling far more lower-margin Tesla Model 3 sedans that higher-margin Model S and Model X vehicles.
Starving the higher-profit vehicles is a bad move that limits Tesla's ability to survive a sales downturn.It should be alarmingly obviously to anyone who has followed Tesla for the past few years that the Model 3, the car maker's lower-priced sedan, is eating the company.
It hasn't worked out that way, mainly because Tesla has been selling more expensive versions of the Model 3. Nonetheless, even the relatively cheap entry level sedans are priced far below the significantly more upscale Model S and Model X. This pattern could continue with the Model Y, a compact crossover SUV that's slated to join Model 3 in the lineup.
I don't think Tesla can allow its high-margin business to collapse, especially given that its cash needs over the next five years could be intense, as it launches the Model Y and commences production at a new factory in China. Of course, "high-margin" is itself speculative; Tesla hasn't posted an annual profit in 15 years of existence.
Sort of. Tesla actually builds some extremely impressive cars. Customer support is off the charts, and the brand is so compelling that it spends pretty much zero on advertising.
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