Re:Will the Model 3 make Tesla a real car company?
by Retric on Thursday July 12, 2018 @10:35AM
(#17515002)
It's eye opening to consider 3-5 year ownership costs in light of what people buying a 3-5 year old used vehicle want.
The problem with cars is they undercut the used SUV market. Which increases depreciation on more profitable SUV's which effectively increases their price.
Ford largely abandoned the sedan market. Every other automaker has been forced to either hybridize or reduce car size. SUVs and trucks are effectively the new sedan, as they have different efficiency requirements, so can support the mobile energy requirements of an early 21st century family. Most of the plug-in hybrids and all-electric cars - the Bolt/Volt, i3, etc - are part of limited runs that are likely sold at a loss to offset the company's more gas-hungry vehicles.
On the other side, cheap cars leave slim margins. In Lee Iacocca's autobiography, he relates Henry Ford Jr telling him that they'd never make money on small cars, in the 1970s gas crisis.