Tesla reverses course on low-cost strategy

In the midst of chaos, Tesla announced, then canceled, through Elon Musk, a partnership with the ultra-discount chain Costco in Taiwan.

Tesla is caught between a rock and a hard place with China. Its relationship is complex, and it’s clear how much Elon Musk is expending energy and arguments (all of which remain undisclosed) to improve the business model within the Chinese empire. Supercomputers, MegaPack battery factory, autonomous driving, insurance, zero-interest loans, etc. The balance is fragile, but Tesla seems to be riding a good wave as the relationship with the central power appears positive, especially with the prospect of Donald Trump potentially returning to power in the United States at the end of the year.

The conflict is also dragging on between Russia and Ukraine, impacting global trade, including the suffering economy of China. It would therefore be in the interest of the United States and China to find common ground. And in this delicate balance, the news surrounding Taiwan, a territory claimed by China for decades, is unwelcome.

Backtracking

Since Elon Musk cannot be aware of every commercial agreement in the world, Tesla Taiwan announced earlier this week a distribution agreement with the American ultra-low-cost giant, CostCo, where you can shop and order everything at unbeatable prices. This surprising connection gave the impression that Tesla was compelled to explore all avenues to sell its cars, even at the risk of tarnishing its image.

In reality, Tesla did not lower the price of its cars, but CostCo, through undisclosed agreements, would have received them for less and was supposed to sweeten the deal with gifts, accessories, and charging mileage at its supermarket parking lots.

In an 8-word tweet, Elon Musk himself announced the termination of this commercial program, simply stating that he had not approved it. No more comments, but the decision is final. The reasons are likely to remain unknown, but they seem significant enough for the CEO to intervene personally.

For CostCo, this is a major setback, and reprisals should not be long in coming.

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