Tesla needs to Increase Prices in Shorter Term

A record number of combined number of units of Model X and Model S were delivered by Tesla in the most recent quarter, thought the team was chiefly concentrating on ramping up the production of Model 3. In spite of the record number of deliveries, the Model X and Model S custom design studios project ‘December Delivery’ for fresh orders, and this projection is likely to change to January moderately soon, representing over two month wait for products that are being manufactured and delivered in notable numbers and for years that have been out.

The demand for Model 3 is also off the hooks. The newest report states a number of 455,000 in reservations. And this number is only increasing by minute by unofficial reservation counter for Model 3.

The body line of Model X and Model S is optimized for 2,500 combines units each week. It boils down to approximately 125,000 combined units in a year keeping in mind a production year of 50 weeks. The production rate of Model X and Model S is touching its present limit. On the other hand, Model 3, at present, is lagging a few weeks than its estimated schedule of production, with almost 18 month waiting period.

However, it is not good business strategy to make customers wait for almost 18 months for new cars such as Model 3 or for other models which have been out there in the market for some time now. It’d be better if Tesla raise its costs, in the shorter term. The waiting list is only getting longer and lowering prices will not help the company, neither its shareholders because the company’s vision of transitioning to more sustainable energy is presently restricted by its own production capacity.