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

[Letas]

Every EV startup has operated at a loss at startup. Only Tesla has turned a profit. Even traditional automakers typically operate their EV wings at a loss.

The question comes - how long can a startup incinerate money on their way to profitability? All the other automakers have done relatively high-cost / low volume vehicles to start and then moved on to the lower cost / high volume vehicles to turn a profit. Slate is skipping the first step where everyone loses their shirt as a means to garner attention, but I'm thinking they'll also actually need to turn a small profit on each vehicle right out of the gate. They can't sell each one for a loss and make up for it in volume.

I think they'll have no problem selling their first few thousand trucks - even the Cybertruck did this - but whether there is the appetite for 100k Slates a year... well I guess we'll just have to wait and see.

Slate has claimed that they will be cash-flow positive by 2027. Impressive if they achieve it, even moreso than hitting production targets they have set.

 

[AZFox]

Your market clearing price has to make a worthwhile profit.

Harsh reality: it doesn't.

Profit is based on manufacturing cost.

This is correct.

Pretending higher parts cost magically allows you to raise the price and still sell the same number of units is, however, not correct.

 

[Tom Sawyer]

PS: If you asked me how it's going to go for Slate, I'd shrug and say "dunno". I don't have a narrative. Not a negative nelly or hater. Not a rabid fanboy. Just an observer of the auto industry cheering for an underdog that's trying something fascinating.

 

[E90400K]

Yep, 2019 wasn't all profitable, only the last quarter. 2020 was the first profitable full year for Tesla.

We're talking about Tesla here as a case study, but there are other large pieces of the puzzle that are much different for Slate that may change the trajectory for profitability for better or worse:

• No (or very few) ZEV credits to sell
• Much lower projected per-vehicle cost vs. expensive initial flagships of other brands
• Much lower CAPEX for factory due to no paint
• No investment in charging network
• Little to no investment in proprietary tech, mostly commodity parts
• Little to no investment in service center buildings, outsourced repairs.

Two comments:

• No (or very few) ZEV credits to sell - I made a comment related to this issue in the battery size choice thread regarding Slate's ability to meet California's CARB Advanced Clean Car II regulations. Those regulations state that a BEV in order to achieve value (i.e. credit against the requirements) requires the BEV have a minimum range of 200 miles. Since the 52.7kWh Slate only reaches 150 miles on a full charge the question is can Slate sell the standard battery Truck in California. The impact seems to be either Slate will not be able to sell ZEV credits to other manufacturers (i.e. generate revenue) or it will incur a $10,000 fine per vehicle (as I understand the regs). If Slate is forced to sell the 84.3kWh Truck, will enough California's see the value in the big-battery version to buy it? One can only assume California will be a major market for Slate

• Little to no investment in service center buildings, outsourced repairs. - This is the big question. Will the customer service offered by RepairPal meet Slate's customer's expectations? Tesla, Rivian, and Lucid all have branded store front locations. Apparently, Slate will have no such facilities. Has Slate provided any details on how we customers are actually going to take delivery of our Trucks? I've not seen specifics other than, "Slate has partnered with a national logistics and distribution partner making picking up your Slate friction free in most areas. For an additional fee, your Slate can be dropped off right at your door.

I think Slate was counting on the tax credit more than Barman leads on about it. Having $7,500 of the planned cost structure/margin being footed by taxpayers now out of the equation of the endeavor HAS to impact the economics of the business plan profitability.

 

[E90400K]

Harsh reality: it doesn't.



This is correct.

Pretending higher parts cost magically allows you to raise the price and still sell the same number of units is, however, not correct.

Nice economic theory about equilibriums and all, but regardless of surplus or demand or neither (never happens that way), in the end the company needs to make a profit on a unit basis. Controlling material, labor and indirect costs is critical to profitability.

What is difficult with the direct-to-consumer sales model is price (affected by demand). With the franchise dealership sales models, the Manufacturer can adjust the actual sales price without affecting the advertised MSRP. The actual price is adjusted at the sales transaction by the dealership based on either manufacturer's incentives, dealership's incentives or a combination of both. If Slate tries to adjust the website MSRP (lower, due to lower demand) the customers who bought at the previous higher price get pissed. We saw this with Tesla about two years ago. That instills some level of consumer un-confidence as the prospective customer is now trained to (possibly) wait for a downward adjustment to the website MSRP. The other benefit of the dealership franchise model is real estate. Places to park unsold inventory is built into the sales price. Again, Tesla is finding this out as well, as indicated by the numerous stories on the Web about thousands of unsold parked Cybertrucks at various locations across the country at shutter shopping malls and office buildings. Tesla has to lease that space.

 

[AZFox]

Nice economic theory about equilibriums and all

The economic laws of supply and demand are not a "nice theory".

in the end the company needs to make a profit on a unit basis. Controlling material, labor and indirect costs is critical to profitability.

This is true.

What isn't true is that the Universe owes them profitability.

This is not pessimism. I think there's a good chance they'll pull it off, and I'm rooting for that to happen.

 

[Sandman614]

The economic laws of supply and demand are not a "nice theory".

I mean this is far from the point of this thread but economic "laws" are built on a myriad of assumptions such as perfectly competitive markets and rational decision makers, which rarely translate to the actual real world.

 

[AZFox]

If Slate tries to adjust the website MSRP (lower, due to lower demand) the customers who bought at the previous higher price get pissed.

I addressed that in this post where I wrote

If they price too high (above market equilibrium), they'll end up with surplus Truck inventory to deal with, which costs money and damages the company's reputation.​

They need to figure out a price that will move 150K trucks per year and not charge more.

 

[AZFox]

I mean this is far from the point of this thread but economic "laws" are built on a myriad of assumptions such as perfectly competitive markets and rational decision makers, which rarely translate to the actual real world.

Really?

Does this mean you think Slate Auto can raise the price based on cost and still sell the same number of Blank Slates?

 

[E90400K]

The economic laws of supply and demand are not a "nice theory".



This is true.

What isn't true is that the Universe owes them profitability.

This is not pessimism. I think there's a good chance they'll pull it off, and I'm rooting for that to happen.

Me too. Just like I still root for Tesla.

 

[E90400K]

I addressed that in this post where I wrote

If they price too high (above market equilibrium), they'll end up with surplus Truck inventory to deal with, which costs money and damages the company's reputation.​

They need to figure out a price that will move 150K trucks per year and not charge more.

I agree 100%, but if they can't do it at a profit, the price is not material. At some point they need to be profitable. The price point at which 150,000 units sell during their fiscal year may not be a dollar value that allows them to operate at a profit.

 

[E90400K]

The CEO says the price is not yet set. That's pretty much understood at this point, but Slate and her specificallt have set the EXPECTATION that the price is "mid-twenties (thousands)".

 

[Yukon Cornelius]

The bottom line is this is supposed to be a very cheap, basic vehicle. The competition is not other electric vehicles but all other vehicles in it's price class. This is who they have to price against:
Cheapest New Cars (Cars.com)
1. 2026 Hyundai Venue SE: $22,150
2. 2026 Chevrolet Trax LS: $23,495
3. 2026 Kia K4 LX: $23,535
4. 2026 Nissan Sentra S: $23,845
5. 2026 Hyundai Elantra SE: $23,870
6. 2026 Toyota Corolla LE: $24,120
7. 2026 Volkswagen Jetta S: $25,270
8. 2026 Mazda3 2.5 S: $25,785
9. 2026 Honda Civic LX: $25,890
10. 2026 Buick Envista Preferred: $26,495

If they cannot wedge themselves in this list, I don't think they are going to succeed. This is especially true since the Slate is so feature poor in baseline trim. One of the big selling features of all electric vehicles is powertrain simplicity and minimal maintenance cost. That is something they need to capitalize on for sales.

 

[AZFox]

I agree 100%, but if they can't do it at a profit, the price is not material. At some point they need to be profitable. The price point at which 150,000 units sell during their fiscal year may not be a dollar value that allows them to operate at a profit.

I think it will.

By that I mean there's a possibility they could indeed achieve positive cash flow on Blank Slates, as promised, by the end of next year at a price that moves 150K units.

If not, they're not doomed.

They're playing a long game. I have a feeling accessories will make them a lot of money in the long run.

 

[AZFox]

This is who they have to price against:
Cheapest New Cars (Cars.com)
1. 2026 Hyundai Venue SE: $22,150
2. 2026 Chevrolet Trax LS: $23,495
3. 2026 Kia K4 LX: $23,535
4. 2026 Nissan Sentra S: $23,845
5. 2026 Hyundai Elantra SE: $23,870
6. 2026 Toyota Corolla LE: $24,120
7. 2026 Volkswagen Jetta S: $25,270
8. 2026 Mazda3 2.5 S: $25,785
9. 2026 Honda Civic LX: $25,890
10. 2026 Buick Envista Preferred: $26,495

If they cannot wedge themselves in this list, I don't think they are going to succeed.

Americans love pickups.