In the ‘70s and ‘80s there was a New York City discount electronics retailer called “Crazy Eddie” whose commercials are forever embedded in the memories of the victims who were exposed to them. The ads, which surveys showed grated on people’s nerves, featured a DJ named Jerry Carroll manically pitching the store’s latest deals and then shouting at viewers: “Crazy Eddie, his prices are in-s-a-a-a-ne!”
Reading up on Tesla’s half dozen or so price cuts so far this year and his latest antics at Twitter, I came to appreciate the many similarities between Elon Musk and Eddie Entar, the controversial retailer responsible for his eponymous stores’ in-your-face marketing and his defiant pricing of electronic goods.
I long perceived Tesla as a premium brand, the Apple of the automotive industry. When it comes to computers, tablets, and wireless phones, I’m so hooked on Apple I wouldn’t even entertain alternative brands. The company for decades has adhered to a standard of excellence and superior customer experience that rivals like Microsoft, Google, and others will never understand, let alone manage to remotely emulate.
Tesla is the only EV manufacturer I take seriously. It’s the only company with the foresight and the commitment to build a national network of reliable superchargers, making it possible for its customers to easily travel considerable distances with minor angst and inconvenience. In West Los Angeles and neighboring Santa Monica and Culver City, I’m guesstimating there are more Tesla superchargers than there are gas pumps.
I don’t respect any automotive manufacturer that sells EVs and looks to the U.S. government and third parties to build a network of chargers to run them. I love the design of Mercedes’ EQS line of electric vehicles, but heck if I’m going to pay more than six figures for a vehicle and rely on public charging stations of questionable reliability and safety. GM and Ford can run all the advertisements they want but driving in LA and the surrounding area Tesla’s superchargers serve as a constant reminder of who’s the serious and committed EV manufacturer.
Elon Musk has squandered Tesla’s image as a premium brand. The company this year has cut its prices about a half dozen times, ranging from a 15% cut on its Model 3 to a 19% cut on its Model X. It also has raised the price on some models, after lowering them.
Premium brands avoid significant price cuts, as it cheapens their image and cachet. When Apple introduces a new iPhone, it doesn’t slash the price of its earlier models. Mercedes cited its robust pricing as the reason for its better-then-expected first quarter earnings. I can’t imagine Tiffany running a buy one diamond ring and get 50% off a second piece of jewelry.
What puzzles me is how Musk gets away with his erratic pricing. A Tesla Model Y at the beginning of the year had a starting price of $65,990. At this writing it had a starting price of $46,990. If I paid $65,990 for a vehicle and you told me that you bought the same vehicle for $19,000 less a few months later, I’d feel like a loser, albeit it a very angry one.
I haven’t shopped at Nordstrom since former CEO Blake Nordstrom died and the retailer went south pretty quickly. But when Blake ran the place, if Nordstrom put an item I purchased on sale, they would refund me the difference, even if I didn’t have a printed receipt. (A Nordstrom salesperson retrieved it electronically.) The policy was among the reasons I shopped at Nordstrom exclusively, and in the days when I was considerably more fashionable, I’m sure I was a very profitable Nordstrom customer.
After GM cut the price on its electric Chevy Bolts last year by 6,000, the company offered to make whole customers who bought the car earlier and paid the higher price. Admittedly, it came with the proviso that customers who received a $6,000 cash rebate had to sign a waiver agreeing not to sue GM for any possible issues, but the cash rebate likely was considerably higher than a Bolt owner would receive from a class action lawsuit.
Musk is running scared because suddenly Tesla is producing more vehicles than it can immediately unload, and higher interest rates and a declining economy could make things much worse. Musk says he is willing to sacrifice profits to maintain market share, and analysts expect more price cuts in the months ahead.
Why anyone would buy a Tesla now when they likely can get an even better price if they hold out?
Buying a Tesla is much like shopping at Boston’s former Filene’s Basement, a discount retailer of high-end brands famed for its pricing strategy. As reported by the New York Times, every article was marked with a tag showing the price and the date the article was put on sale. If the article didn’t sell within 12 days, the priced was reduced by 25 percent. Six selling days later, the price was cut by 50 percent, and after an additional six days, the price was offered at 75 percent off the original price. After six more days – or a total of 30 – if the item remained, it was donated to charity.
Seems to me someone should be able to develop an app that could predict the best times to buy a Tesla.
Musk’s running of Twitter is even more erratic than Tesla’s yo-yo pricing.
Twitter on Thursday began removing blue check marks for users, many of them celebrities, who previously were deemed by the social media company as authentic, notable and active. Musk wanted verified users to use pay an $8 monthly subscription fee, which came with other benefits.
According to the Wall Street Journal, many celebrities balked, including Chrissy Teigen, Mark Hamill, Dionne Warwick and “Seinfeld” actor Jason Alexander. LeBron James, who has nearly 53 million followers and had previously said he wouldn’t pay for a check mark, still has a check mark.
When some tweeters took note, Musk tweeted, “I’m paying for a few personally.”
LeBron James is a billionaire. If Musk is subsidizing his blue check market, anyone with a net worth of less than $1 billion and paying Musk $8 or more for a verification checkmark might want to reexamine their finances.
The Journal also reported that Musk launched a subscription program called Verified Organizations, which costs $1,000 monthly, plus $50 monthly for each affiliate account, such as individual employees. The New York Times and other media outlets have refused to pay for their verification checkmarks, which is comical and telling.
The entrenched media has represented Twitter as being of critical importance and influence, yet the Times refuses to cough up $12,000 to assure its followers its handle is authentic. That wealthy celebrities also refuse suggests that Twitter’s importance possibly has long been exaggerated.
Musk paid $44 billion to acquire the social media site.
Crazy Eddie was convicted and imprisoned on federal fraud charges, and I’m not suggesting that Musk has done anything illegal. That said, Reuters reported that Tesla is under criminal investigation in the U.S. over claims that the company’s electric vehicles can drive themselves. Musk called President Biden “a damp sock puppet,” Twitter responds to media inquiries with a poop emoji, and Musk has shown no loyalty to even those who supported him at great professional cost.
I wonder how long Musk can get away with his behavior.
Crazy Eddie paid for its advertising, but Musk’s gets his for free because being loud, controversial, and obnoxious like those Crazy Eddie commercials generates clicks and buzz. But at some point the media might tire of Musk, EV buyers might shun the Tesla brand to avoid the humiliation of overpaying, and maybe some serious EV manufacturers will emerge and build rival proprietary charging networks.
I’d never bet against Musk, but it won’t surprise me if one late night I turn on the TV and there’s Musk manically hawking discount Teslas and Twitter blue check marks yelling, “My prices are in-s-a-a-a-ne!”
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