Stock Brokers - Somebody Help Me

[johnpico]

I was watching a stock show this morning and the stock brokers were saying that Tesla lowering prices would hurt Tesla and the other car manufacturers equally.

I do not understand how they came to that conclusion.

All of the manufacturers effectively lower "prices", insofar as their factory profit is concerned, on a weekly basis.

Every week Automotive News publishes various "incentives" to both dealers and customers. I assume those "incentives" reduce the factories' share of profit had the vehicles been sold without any incentives.

When Tesla lowers prices, I would presume that the difference between the original price and the new price comes out of monies that would otherwise have gone to Tesla.

So, unless the factories eliminate incentives to dealers and incentives to customers, if they have to lower the prices of their vehicles an additional amount, in order to meet Tesla's prices, it would seem to me that Tesla lowering prices would hurt the factories more than Tesla and not hurt both equally because Tesla is not paying additional incentives to customers or dealers.

If my reasoning is in error, please tell me how.

Thanks for any help you can give me with understanding the issue.

PS: Do you agree with the stock brokers and that Tesla lowering prices hurts Tesla as much as it hurts the factories?

[steve_biegler]

Stock brokers don't understand the car business, never have, never will.