Auto & Transportation

Tesla has cut prices again. This time, it dropped 70,000. Model Y standard battery life version, now only sold for 276,000 yuan. This makes those who have just bought a car and have not had time to get the license, and those who have bought a Tesla for 1 million, what do they think? The prices are cut again and again, and the sentiment is infuriated. There is also another group of people who are very excited. Excited for the substantial price reduction, and excited for the cheap order, the official website for car booking was paralyzed.

What is Tesla doing? Tesla said that I just follow business logic and do two things.

The first thing is open source.

Autonomous driving technology is open source. Seven years ago, Musk publicly announced that all Tesla patents would be disclosed free of charge. Many people were surprised by Musk's behavior and couldn't understand it.

What is open source? Open source code. Open source means open, everyone can use it. Anyone can get the source code of the software, modify or even re-development on this basis. This saves a lot of development time for some new car companies entering the market. Although many car companies are Tesla’s rivals today, perhaps some of the technologies they are using are those that Tesla once researched.

Why did Tesla do this? Isn't this helping your competitors? Indeed, there is a lot of competition in the electric car camp, but as a whole camp, they also have one of the biggest opponents outside the circle: fuel vehicles.

Musk said: "The purpose of Tesla's existence is to accelerate the arrival of sustainable transportation." "Tesla will not file patent lawsuits against those who use our technology in good faith." His purpose is to realize the popularization of electric vehicles. To occupy the market of fuel vehicles.

In order to achieve this goal and to speed up the process, because Tesla is going faster in self-driving technology, then open source and help more other electric car companies to speed up research and development. Even if you don't buy my Tesla, everyone's awareness and desire to buy electric vehicles will increase. The charging piles, government policies, overall environmental support and adaptation speed will accelerate. In this way, it is more beneficial for the entire electric vehicle camp to occupy the market.

Taking the charging system alone is a socialization project, it is difficult to complete the layout of the entire charging network by Tesla's own efforts. Therefore, doing so is the Internet spirit of mutual benefit, open sharing, and for more competitors to enter the market and expand the electric vehicle camp. Behind the generosity is the logic of business.

The second thing is to keep cutting prices.

Use open source to make fuel vehicles outside the circle. What about the competition in that circle? At this time, it will have a higher market share than anyone else.

Tesla's pricing strategy is called "skimming pricing." We are no strangers to this pricing method. When Procter & Gamble entered China, a bottle of Head & Shoulders shampoo sold for 28 bottles. In 1988, a monthly salary was only 120 yuan, and 28 yuan was enough to buy vegetables for a month. For example, Nokia's mobile phones, Sony's color TVs, and Galanz's microwave ovens were all luxury items when they were launched.

First set a high price for the new product to stimulate some consumers' desire for novelty, and make some high profits from them like skimming the fat layer of milk. Reduce the price again, skim off the grease layer by layer, to adapt to the needs of the public and gain a larger market share. Occupy future competitive advantages by gaining greater market share. This is called skimming pricing.

Tesla has gained its own scale advantage by continuously cutting prices. Every time, the shipment volume will increase, and the scale will increase. As output and shipments increase, fixed costs are diluted. For example, if a production line invests 10 million yuan, if it can produce 1,000 products, each cost is 10,000 yuan; if 10,000 pieces are produced, each cost is 1,000 yuan; if 100,000 pieces are produced, each cost is 100 yuan.

The cost of each vehicle is reduced, and a greater pricing advantage is obtained. Price reduction-scale-pricing power, continuous loop gains. Diluted over and over again and layer by layer, Tesla may have a chance to not lose money, but what about other companies with small output? They can't do it. Therefore, Tesla has gained a comparative advantage in the competition.

However, the constant price cuts also make those car owners who buy at high prices particularly angry. Doesn't Tesla care? care. But no way. Tesla’s logic is that when you bought it, the price I sold to you was indeed the cheapest price that could be sold at that time. With the improvement of our ability and the increase of our scale, we now calculate the cost, which is lower than before, so we can sell it cheaper.

These two things seem difficult to understand. One set is aimed at competition outside the circle, and the other is aimed at the inside circle. There is a reasonable business logic behind it. All are reasonable. The business world has its own rules of operation, and business has never stopped moving forward. In this era, entrepreneurs and entrepreneurs will continue to choose a variety of styles in order to move into the future. In this process, there are sacrifices and gains.

Whether it is anger or excitement, what we can do is to understand business, gain insight into the nature of business, follow the direction of business evolution, and follow the trend.