Demand & Tesla?

If you’ve been following the news, you probably know about Tesla, with much demand from the public for its electric vehicles. However, when there’s demand, there needs to have a supply.

Throughout the last few years or so, Tesla has announced a series of electric vehicles. CEO Elon Musk has unveiled the electric Tesla semi-truck, cybertruck, van, and cars from model 3 to Y, with much demand for especially the model Y. That seems like a good thing from a business perspective. But there’s also another crucial problem.

OK, so this happens often in our daily lives. Imagine you go to the supermarket to buy tomatoes. However, the cashier tells you they have a shortage, and there wouldn’t be any for a few days. For Tesla, this tomato shortage is because they don’t have enough manufacturing lines, hence not enough output, the cars, to satisfy customers’ demand. If customers don’t get what they want, the company could lose their trust. That can lead to severe stock problems, grumpy investors, and overall, not exactly a great day.

So how do we prevent such a thing from happening? To understand that, we need to look at the law of supply and demand. There are two factors here, the buyers, demand and the sellers, supply. Let’s use tomatoes again. Say that you are a farmer harvesting these vegetables. To sell something, the seller should value the exchanged thing, for example, money, a bit more than the original product, tomatoes. It’s the same with the guy who transported the tomatoes. The cashier also values the salary given by the supermarket’s boss more than his work. If that weren’t the case, why would he work there? Wouldn’t it be better if he just stayed home and watched TV?

So that’s supply. What’s demand? It’s buyers who need the product, the tomato buyers who need it for cooking and other purposes. In Tesla’s case, demand is car buyers who use cars to drive to work and do many daily things. Sellers want to have a high price to make more profit. However, as the buyer, people would like to buy in at the lowest price. To satisfy both sides, you need to find the equilibrium price. It’s the ideal price to sell stuff. With low supply and high demands, sellers would like to sell less by raising prices, while buyers want to buy more. Vice versa, more supply means sellers hope to sell. However, demand is low, so the price lowers.

In the case of Tesla, they need to ramp up manufacturing to avoid losing customers. That’s why they ordered the Giga Press, a die casting machine. It works by pouring the molten materials into a die, cooling them down, and removing it from the mold. The Giga Press does that on a large scale and quickly. Currently, Tesla uses it in its Gigafactories to make the rear chassis of its electric vehicles, increasing production.

By using this machine, Tesla can increase supply, therefore, keep the trust of the customers. So when you’re trying to figure out why the price of your tomatoes grew again, you should remember the law of supply and demand. Or should I call it demand and Tesla? That’s the end of this production from the New News Newsminute. Thank you, and tune in next time for more updates and analysis.