Slate makes the cover of Car & Driver magazine!

[E90400K]

Wrap kits easily, it's just sheeting cut to a pattern, the pattern might change with later versions, but real cheap to cut the past pattern. Something big and complicated like the SUV kit might be the first to go, but as long as they can make a profit on it and there is enough demand?

I just see the wrap kit, being it is die-cut, has some cost growth tied to age of the truck. Dies have to be stored and maintained. I bet there is a vendor who will be supplying the wrap kit to Slate, but just as Slates age and dwindle in number due to aging out and accidents, the market may just not be there.

But let's not focus on the wrap; I should have left it out of my first post. Lift kits, lowering kits, electric window kits, etc., all may be hard or expensive to source 10 years out of Slate Truck one-dot-oh.

 

[E90400K]

Those costs drive willingness to sell at certain prices, but not price itself.

Price is determined by the Law (not Theory) of price and demand.

70% is a LOT of margin. Its a 233% markup.

70/100 = 70% margin​

70/30 = 233% markup​

I think you mean supply and demand.

The price of a manufactured good is determined by the costs the manufacturer incurs to make the product and the profit margin the market is willing to accept to acquire the product. The costs the manufacturer incurs, in simple terms, are based on the unit volume at which the market consumes the product. The lower the unit volume, the portion of the fixed costs the manufacturer amortizes over the number of units it produces increases on a per-unit basis. At some point in the formula, the unit volume doesn't support the costs of production to sell the product at a tolerable price.

I bring this up as a topic of discussion (not F-U-D) because some of Slate's business model for sustainability is sale of upfitting kits such as the SUV kit. From my reading of what various Slate executives have said it seems they are counting on near term post sale of upfit kits as part of their profit model. Longer term being 10+ years out for the secondary used market, will there be a better market than typical for used Slates because it can be reconfigured into an SUV, or upfitted with factory suspension kits, windows, etc.? @Luxrage poses that question if there will be a better market for Slate trucks because it can be reconfigured. But if the secondary buyer wants a pickup truck, but can only find a Slate SUV, is he willing to pay more for the Slate and then remove the SUV kit? He could sell the used SUV kit I suppose, but that's a PITA to box and ship, or hopefully find a local buyer. Likewise, if the secondary buyer wants an SUV but can only find a Slate pickup, will he be willing to buy an (possibly) expensive SUV upfit kit from Slate 7 or 10 model years out from the original truck's build date?

An interesting topic.

 

[AZFox]

Lift kits, lowering kits, electric window kits, etc., all may be hard or expensive to source 10 years out of Slate Truck one-dot-oh.

Negative Nelly strikes again!

The exceptionally high markup affords some ability to warehouse excess production that can be sold in the future.

If you can invest $100 and get $233 in the future, that's profitable even if the time period is somewhat long.

Part of the genius of flat-packing the SUV Kits is that it makes them less costly to warehouse.

 

[E90400K]

Negative Nelly strikes again!

The exceptionally high markup affords some ability to warehouse excess production that can be sold in the future.

If you can invest $100 and get $233 in the future, that's profitable even if the time period is somewhat long.

Part of the genius of flat-packing the SUV Kits is that it makes them less costly to warehouse.

They pay tax on inventory at the end of the tax year. No one knows yet what the margins are.

 

[AZFox]

I think you mean supply and demand.

Indeed I did. D'oh!
Typo corrected.

The price of a manufactured good is determined by the costs the manufacturer incurs [...]

Costs don't determine the price, they determine an acceptable minimum price. You're mistaking a tree (cost) as a forest (selling price). Put another way, cost is a factor, but it's certainly not the only factor.

For example, if cost determines price there'd be no such thing as a Loss Leader (pricing below cost to hook the customer)?

An interesting topic.

It is. Finance and Economics are right in my wheelhouse, however they aren't something I want to exhaustively discuss on this site, especially in this thread about a magazine article.

 

[AZFox]

They pay tax on inventory at the end of the tax year.

There's no Federal tax on business inventory.

The Internal Revenue Service taxes something else.

 

[E90400K]

Indeed I did. D'oh!
Typo corrected.



Costs don't determine the price, they determine an acceptable minimum price. You're mistaking a tree (cost) as a forest (selling price). Put another way, cost is a factor, but it's certainly not the only factor.

For example, if cost determines price there'd be no such thing as a Loss Leader (pricing below cost to hook the customer)?



It is. Finance and Economics are right in my wheelhouse, however they aren't something I want to exhaustively discuss on this site, especially in this thread about a magazine article.

Loss leaders are a business strategy construct not an economic production construct.

 

[E90400K]

There's no Federal tax on business inventory.

The Internal Revenue Service taxes something else.

The value of inventory affects the accounting of revenue, revenue is taxed. Managing inventory values affects revenue statements and thus taxable business income. It is looked at in a simplified manner as tax on inventory.

You're becoming as abrasive as the forum's spelling Nazi.

 

[AZFox]

Managing inventory values affects revenue statements

No. Inventory generates revenue when sold.

Inventory management expenses are deductible, so they reduce income tax.

 

[AZFox]

Loss leaders are a business strategy construct not an economic production construct.

I'll let that self-defeating statement stand on its own.

Let's let the thread go back to discussing the article.

 

[danielt1263]

I would think that 10+ years from now, the "upfit kits" for Slate 1.0 will be handled by aftermarket companies producing "OEM" parts. Other than that, everything said sounds about right to me.