Slate starting price isn't set yet says CEO (per Insideevs interview)

[cadblu]

Not quite... She said they are having a meeting "next week" with suppliers. That implies to me that a more precise price might be coming out by next month. 🤞

There is a definite limit on how much you can beat up key suppliers on price and delivery before they back away from the table. We know that Slate is trying to develop long term relationships with its supply chain. But consider that there is inherent risk in a product that is still under development to lock in price / delivery terms with the supply base. That said, Slate cannot be thinking too long of a term at this point. It would be prudent to lock in terms of 12-18 months to gage how well they are meeting PUCs (production unit costs), and then adjust from there.

 

[E90400K]

I think they can to a point and/or maybe for a while. But who knows what that point is or how long that is?

Demand for something new and shiny (okay, maybe not shiny) can be fairly inelastic since it has the intrinsic value of being "first" and different. A lot of industries, including autos, know this and make "founders editions" for the people who will just pay basically whatever they ask. Or dealers just mark cars up outright when they know demand exceeds supply. This seems to almost always be the case at launch.

But eventually demand becomes more elastic as the hype fades, competition comes in, or people view the purchase as more discretionary. The product then really has to sell on its own merits, appeal to enough people, and fend off competition to succeed. Price becomes more important here, to your point, since a lot of demand is tied to price, and that will affect how many they sell.

The real trick is selling something for the most amount of money to the right person at the right time. There are actually some studies about this happening in the world in various industries, but I don't want to completely derail this thread. That said, I do think Slate's price will probably need to fluctuate a bit as Slate's COGS and the market evolves. They're not selling Costco hotdogs.

And that is where I see the direct-to-consumer sales model as problematic. If the website price continues to fluctuate, it could stagnate sales. My opinion is Slate is going to choose a price based on its expected sales volume over some determined amount of time and material, labor and indirect costs to get to that volume. They will need to hit a pretty exact number within a cost window so they can build confidence in the consumer that the price will not drastically adjust.

 

[E90400K]

I wonder is Barman ever reads any of these posts and laughs at us.

 

[ScooterAsheville]

I wonder is Barman ever reads any of these posts and laughs at us.

I suspect she barely has time to eat. And probably frequently asks herself, "I took this job why?"

 

[E90400K]

I suspect she barely has time to eat. And probably frequently asks herself, "I took this job why?"

It's very interesting to me, her taking the CEO position. She seems to be a seasoned auto executive and is maybe late 50's(?). Probably found herself without a job near the end of her career and probably has a very good retirement portfolio set in place. If Slate is not successful, she took her best shot at RE: Manufacturing's pipe dream, who could blame her because the formula just didn't (wasn't going to) play. If Slate hits it big, she walks away in 5 years and $40M in her pocket(?).

Neat position she is probably in.

 

[Sandman614]

Instead of providing those you link to an article that says it's not rational to opt for fudge cake when you're on a diet.

And this is why I'm opting out of continuing this conversation. The article lists some key economic assumptions used when coming up with things like the "law" of supply and demand. Maybe try to tackle basic literacy before diving in to macro economics.

 

[ScooterAsheville]

Economics is called the "dismal science" for a reason. Perchance AI will finally crack the code.

 

[smack daddy]

I think they can to a point and/or maybe for a while. But who knows what that point is or how long that is?

Demand for something new and shiny (okay, maybe not shiny) can be fairly inelastic since it has the intrinsic value of being "first" and different. A lot of industries, including autos, know this and make "founders editions" for the people who will just pay basically whatever they ask. Or dealers just mark cars up outright when they know demand exceeds supply. This seems to almost always be the case at launch.

But eventually demand becomes more elastic as the hype fades, competition comes in, or people view the purchase as more discretionary. The product then really has to sell on its own merits, appeal to enough people, and fend off competition to succeed. Price becomes more important here, to your point, since a lot of demand is tied to price, and that will affect how many they sell.

The real trick is selling something for the most amount of money to the right person at the right time. There are actually some studies about this happening in the world in various industries, but I don't want to completely derail this thread. That said, I do think Slate's price will probably need to fluctuate a bit as Slate's COGS and the market evolves. They're not selling Costco hotdogs.

Actually they are 70% profit on accessories the more trucks they sell the larger the profit on the other stuff the less trucks the less accessories

 

[smack daddy]

Actually they are 70% profit on accessories the more trucks they sell the larger the profit on the other stuff the less trucks the less accessories

Just like the play stations and x boxes they lose money on the console to make it up on the games and stuff

 

[Letas]

And this is why I'm opting out of continuing this conversation. The article lists some key economic assumptions used when coming up with things like the "law" of supply and demand. Maybe try to tackle basic literacy before diving in to macro economics.

This entire discussion has been around microeconomics, not macro. A bit silly to call out one’s literacy and jumble two very different disciplines in the same breath.

Back to the thread. The selling price of the Truck is the single most important decision Slate will make, and it is not an understatement to say it largely determines their future. The company is in a tough spot, having already set an anchor point (under 20k, now $27,500 w/o tax credit) and trying to build a unique value proposition. Setting a price now would be silly.

 

[cadblu]

I think they can to a point and/or maybe for a while. But who knows what that point is or how long that is?

A lot of industries, including autos, know this and make "founders editions" for the people who will just pay basically whatever they ask. Or dealers just mark cars up outright when they know demand exceeds supply. This seems to almost always be the case at launch.

But eventually demand becomes more elastic as the hype fades, competition comes in, or people view the purchase as more discretionary. The product then really has to sell on its own merits, appeal to enough people, and fend off competition to succeed. Price becomes more important here, to your point, since a lot of demand is tied to price, and that will affect how many they sell.

The real trick is selling something for the most amount of money to the right person at the right time. There are actually some studies about this happening in the world in various industries, but I don't want to completely derail this thread. That said, I do think Slate's price will probably need to fluctuate a bit as Slate's COGS and the market evolves. They're not selling Costco hotdogs.

Just look to Tesla's price volatility for a real-world example. Prices on their Model S fluctuated wildly over the past decade, often multiple times per year as much as $5,000 to $10,000 at a time. And, when EV's was the hottest thing not too long ago, there was always the threat of a price increase looming in the background. I recall being told, "lock in now before another price increase." It worked. But I lost my lunch one day when I saw the price drop by $10K overnight.

Back to Slate, I wonder if a soft threat of a price increase, or a "lock in price" for early reservation holders will boost new reservations. All that needs to happen is to start some kind of rumor about pending increases on a truck in the "mid-twenties." But this might be difficult with a lot of new offerings in the EV market coming later this year, and recent price cuts by Hyundai, Kia, and Nissan who would be thrilled to pull customers away from Slate.

 

[AZFox]

And this is why I'm opting out of continuing this conversation. The article lists some key economic assumptions used when coming up with things like the "law" of supply and demand. Maybe try to tackle basic literacy before diving in to macro economics.

Correct me if I'm wrong, but your point appears to be that the economic laws of supply and demand aren't actually laws because assumptions.

If so, the article doesn't make your point.

From the article:

The Bottom Line​

Economics is complex. It's influenced by many interconnected factors. To better analyze and predict outcomes, economists rely on assumptions in their models to isolate specific variables and test particular theories. Different branches of economics use distinct sets of assumptions to explain how individuals and businesses allocate scarce resources, giving these models structure and predictive power.​

The article says there are critics of assumptions, which is true, but it does NOT say anything anywhere near your assertion (as I understand it) that the laws of supply and demand aren't actually laws.

What makes a law a law is its predictive ability, and the laws of supply and demand are not just a "nice theory" because they have demonstrable predictive capabilities.

So when I say there's an equilibrium price that is between too low (so as to cause a shortage) and too high (so as to cause a surplus) it has meaning.

I'm asserting that Slate Auto needs to price the Blank Slate at or below the market equilibrium price because I believe a surplus would hurt the company, both in the short run and in the long run, more than a shortage would.