That, but also the aim to serve the mass market rather than the 1%, and therefore the need to produce a car that is profitable when sold for 25k rather than 65k.
Profit? It makes no sense environmentally - the market size is like 10k vehicles, but they need to put up entire production line. Focusing on making 10M cars for 1/3rd price makes much more sense.
Look, cars that have specific features cost more than cars that don't have those features. That's objective. Stocks of companies that are very profitable, like google are more expensive than stocks of companies that are not. That's objective. Right ?
Because they have inanely high profit margins since their cars have something like 1/10th the number of moving parts, making them remarkably cheap to manufacture.
The sales channel representation is one thing - what about the over $1000 part? Maybe Mercedes/BMW also have a pretty nifty % of market share for cars over $35K (say) - that doesn't mean much because there are a ton of choices under that amount. You're still going to see more Fords and Hondas on the road.
What would be the incentive for this? There is still a heavy demand for cars 30k+, why would they stop doing that for a cheaper car when they are selling every car they are producing at a higher profit?
This is currently an issue of manufacturing capacity, accompanied by a demand curve the 3 set in place.
Every manufacturer needs a good revenue source. Unless you are a manufacturer that is making mass market cars like Honda and Toyota, you need to create cars that people will buy if you want to continue making your niche sports cars.
when the Cayenne was introduced, Porsche was ridiculed for making such a big, ugly car compared to their 911s but look how popular they are now.
Manufacturers don't make cars just for the hell of it. They make cars that the market demands, even if it's to the disgust of car enthusiasts.
Setting the goal was not the problem here: the problem was the way they chose to achieve that goal. Building better cars might, rather than doing everything to sell crappy ones, would have had a much better chance for success.
Except that I doubt they'd want their entire output to end up in fleets. The margins are far lower.
The whole trend away from personal ownership of cars is very bad for manufacturers because it changes the buying decision from an emotional one to a carefully calculated business one. People are generally willing to pay far higher margins when emotions are involved.
I suspect they feel they have no choice but to get involved in this trend, and are very unhappy that they're doing this.
I think part of the problem is that safety and fuel economy regulations have made it unprofitable to manufacture basic cars.
But my slightly-conspiratorial view is also that companies want to engage in a kind of "customer indoctrination", where they want to train customers to expect and demand high-margin low-value features, so they can freely cut lower-margin sections of their product line. Sort of like the "starve the beast" approach, but for consumer preferences.
> A vehicle's primary use is take people and objects from point A to B, and do so reliably
Car longevity increased a ton in the last several decades years, and so "something that moves" isn't as central a motivation for new car sales anymore. If they just need something that moves, buyers can find countless used cars that still run and will keep doing so for hundreds of thousands of more miles. It's tough to compete in that space and come away with a worthwhile margin on top of fresh design and manufacturing costs.
So manufacturers, who don't want to scale down sales and production, try to entice buyers with shiny things that aren't available on old models and focus on higher price tiers. And that it coincides with booming tech culture and its fashion/impulse-driven purchase cycles makes it that much easier for them.
Well, the reality is that they also have to create and run a profitable business, as well, which they would have failed at if they started with cheaper vehicles. It seems likely they'll go downmarket eventually, once they have the scale to survive off of the lower margins that come with cheaper cars.
It annoys me about capitalism. There's a massive incentive for manufacturers to cut corners to save $100 on a $30k car, as they sell 10,000 cars and use the $1m to pay themselves a bonus about how great they are.
Almost everyone will want to pay $30,100 for the better product though, but the market can't differentiate on that.
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