Elon Musk detailed Tesla's aggressive pricing strategy last month.
Tesla's cash and securities reached $21.1 billion at the end of the third quarter. The company has enough money to fund its product roadmap, capacity expansion plans, and other expenses. CEO Elon Musk said he would like to push the company's rapid growth even if it means profits take a hit.
There is no denying that the new pricing strategy is aggressive. In the last few days, the electric vehicle community has seenTesla go for its competitors by giving its current vehicle lineup significantly lower starting prices. This was evident with the price reductions that the Model Y received.
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We should have seen these Tesla $TSLA price cuts coming!!
Here’s a clip of @elonmusk saying what he’d do heading into a recession from when he joined our spaces on 12/22 pic.twitter.com/AvPOXp9JY3
— StockMKTNewz - Evan (@StockMKTNewz) January 13, 2023
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It's difficult to argue against the notion that the EV maker now has some legitimate rivals, despite the fact that the company's pricing strategies have so far not been driven by the momentum of competitors. In China, companies like BYD are putting pressure on vehicles like the Model 3. Last month, Musk provided an early explanation about the company's new pricing strategy.
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Musk said that he would like to push the company's rapid growth even if it meant that the company's profits would take a hit. The strategy would likely be proven correct, according to the CEO. Do you want to grow unit volume at a lower rate or do you want to grow at a steady rate? My inclination would be to keep growing. During a recession, my bias would be to say, "Okay, let's grow fast as we can without putting the company at risk."
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If the cash position is okay, I think that is still the right move. Musk made comments about the cash position of the company. During the third quarter of 2022, the company saw $2.2 billion increase in cash and securities, as it has been growing its war chest over the years. The cash and securities of the company reached $21.1 billion,at the end of the third quarter. The free cash flow of $3.3 billion was what drove this.
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According to the Q3 2022 Update Letter, the company has enough money to fund its product roadmap, long-term capacity expansion plans, and other expenses. Considering the company's increasingly ambitious goals, such as hitting 20 million vehicles per year by the end of the decade, this bode well for them. The full Musk session can be seen here.