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I cautioned before yesterday's big Tesla event that the Model 2 (also nicknamed Model Tau) wouldn’t make sense unless it was effectively ready-to-go as it would lead to a lot of cancellations for the Model 3.
The Osbourne Effect occurs when the announcement of a new product leads to cancellations and/or fewer orders for the existing product lineup.
After successful price decreases boosted demand and sparked a strong rally in share prices due to more configurations qualifying for EV tax credits, announcing a $25,000 Tesla for delivery some random day in the future seemed silly at best.
People in Oregon can knock the price of a $43,000 Model 3 to around $28,000 with local and nationwide incentives. Sure, that isn’t nearly everyone. But why would you concede this position?
If demand is healthy enough, and incentives are strong in enough places, announcing anything with smaller margins, that isn’t ready for delivery, will lead to a “cancel-and-wait” consumer mentality. It makes no sense to invite that.
At the end of it, Tesla's share prices would still be down - just maybe it would’ve been three weeks later when the updated timeline for purchasing a Model 3 shrinks and people realize what happened.
Ultimately, I got what I didn’t know I wanted from the event. While I have been anything but a fan of Musk as of late, I saw leaders of a company that are utterly obsessed with efficiency, disrupting the status quo, and who I felt looked unaffected by Musk’s absence as he spends a lot of time at Twitter.
Musk said before that “Tesla is a chain of startups” and that shined through.
I wouldn’t expect a massive rally due to this event - it wasn’t very actionable or forward-looking - but a plunge on no Model Tau feels unnecessary.
