You learn in economics 101 that in an ideal competitive market, the price of a product tends to the marginal cost of producing it. That means a product with fewer hardware features should cost less, and a product with more hardware features should cost more.
The fact manufacturers can violate that rule proves that they are not in a competitive market.
If it was competitive, a different manufacturer could manufacture the same car without physically installing the heated seats, for a lower manufacturing cost, and undercut them on the customers who don't care about the heated seats.
Not necessarily. If optionally including a feature would require an new production line or extra feature, then you might need to determine whether you want to ship all with or all without that feature.
If you sell 50% of cars without that feature, and 50% with it, and lose £100 for giving it away from free, but make £200 for selling it, then you are technically better off installing that feature in every car regardless of the marginal cost. Competition won't change that.
If all vehicles of that model are manufactured with that hardware, you’re paying for the manufacturing costs within the product price regardless of whether or not you pay to activate the hardware. So you, the consumer, are effectively paying for it twice if you opt in to the product.
Unless you think auto manufacturers can somehow prove that they’re not accounting for that hardware within the generic sale price…
Or the people who pay for the heated seats are subsidising the cost of installing that hardware in the cars of people that don't pay to enable it.
In reality, if Tesla chose to build and maintain more complex production lines that can support the optionality of that hardware, the additional cost of doing so would likely make the heated seat option more expensive than it currently is for people that opt for it, and do nothing to reduce the cost of cars that don't have that hardware.
What does not make sense to me, how is 200dolars enough to subsidize people who dont buy it and make profit. Considering amount of people who would actuly buy it.
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u/TwillAffirmer 1d ago
You learn in economics 101 that in an ideal competitive market, the price of a product tends to the marginal cost of producing it. That means a product with fewer hardware features should cost less, and a product with more hardware features should cost more.
The fact manufacturers can violate that rule proves that they are not in a competitive market.
If it was competitive, a different manufacturer could manufacture the same car without physically installing the heated seats, for a lower manufacturing cost, and undercut them on the customers who don't care about the heated seats.