TESLA INC 8 Gigafactory in Nevada Tesla\u2019s goal is to lower the prices of the necessary inputs to manufacture its products and thus lower the prices

Tesla inc 8 gigafactory in nevada tesla’s goal is

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TESLA, INC 8Gigafactory in Nevada, Tesla’s goal is to lower the prices of the necessary inputs to manufacture its products and thus lower the prices in the market.Price Elasticity of DemandTesla, Inc is dependent on single source suppliers for the numerous purchased parts used in their products. If there is a change is pricing, labor issues or natural disasters that affect the production of the current models, customers who want to buy a Tesla vehicle because of its luxury and long-lasting battery, with have no substitute of their choice. In this case, pricing is inelastic. On the other hand, if the customer is only looking to reduce their carbon footprint and reduce their dependency on gasoline, there are other options such as Chevy Volt and Nissan LEAF. With Tesla’s Model S cost around $71,000, customers may look towards the Chevy Volt which costs about $33200, the Nissan LEAF with a cost of around $29,900 and regular hybrid cars. This causes the price for electric vehicles to be elastic. In determining the factors that affect consumer responsiveness to price changes, we analyze the availability of substitutes, the passage of time, whether an item is a luxury or a necessity, the definition of the market, and the share of the budget in the consumer’s budget. With an all-electric vehicle that has range, power, and style, Tesla has a differentiated itself from the competition, resulting in lack of suitable substitutes [Vic16]. When Tesla started production of the Roadster in 2009, they were the only ones with an all-electric vehicle. However, by 2016 there are several other all-electric vehicles with battery range close to the Model S battery range. The price has changed from inelastic in 2009 to elastic in 2016. A vehicle itself is a necessity to get to work and other places. On the other hand, owning a Tesla is considered a luxury. The market that Tesla originally targeted was the luxury electric vehicles market. Currently, Tesla is
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TESLA, INC 9trying to broaden their market with the introduction of the Model 3 all-electric vehicle. The Teslaall-electric vehicle has a higher share of the consumer’s market than other all-electric vehicles.Since the beginning of Tesla, Inc, the cost of technology used in their vehicles has decreased allowing the company to lower the prices of their vehicles. This has allowed the company to introduce newer models geared towards the upper middle class instead of only the millionaire class. Although the price of the Model S has remained the same from 2013 to 2016, around $70,000, Tesla is looking to introduce an automobile that is geared towards the middle class, the Model 3. One way that Tesla, Inc. plans to increase its total revenue is by increasing the number of products in its automobile line as well as other products in the renewable energy market.
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