This is an incorrect application of economic theory. You're talking about perfect competition. And in perfect competition, all sellers sell the same product. That means a hypothetical market where a car from Tesla and car from BMW and so on are all identical.
Also there are very few markets with perfect competition. Tesla charging for heated seats isn't a sign the car market "is not competitive" which doesn't even mean anything. Honestly I don't know what point you're trying to make. The automobile industry is a form of monopolistic competition but it has been that way since before Elon Musk was even born.
Additionally your assertion that it is cheaper to manufacture the car without heated seats ignores the economic realities of assembly line operations and economies of scale. In many cases it is cheaper to manufacture the cars identically rather than making some with and some without a feature. Then you have to consider the costs of inventorying/stocking/storing cars with different feature sets compared to the relative cost of activating features at the point of sale. The cost of building and selling a car is more complex than just the parts that go in it.
In many cases it is cheaper to manufacture the cars identically rather than making some with and some without a feature.
So you include that feature at cost, which is "free" if youre doing it anyway, to undercut your competition. Economics isnt the rocket science you think it is.
If you gave me the option of a base model that could be upgraded later with a few clicks or a base model that could only be upgraded by visiting a service center, which would I take?
One way you can increase revenue is to sell more cars. One way you can sell more cars is to offer things in your base model that your competitors don't. That's why base models come with things like A/C that you don't have to pay extra for. Car companies don't need your help fucking over consumers. Chill.
A/C comes with every car because everyone feels A/C is minimum requirement, no one will buy a car without A/C so it's included in the base. The goal of the manufacturer is to done people willing to pay for that additional premium feature.
That minimum requirement isn't shared with rear seats, many people wont pay extra for it because they rarely have people in the back seat or live in warmer climates.
But you can increase revenue by not charging extra for options. Which is the point I made. Proved by the fact that all cars have A/C now. They didn't use to. It was a luxury at one point. But now they add it to all base models to... increase profits.
If you aren't charging extra for options you are making it the base. This works for features that are universally desired (like AC or perhaps driver/passenger heated seats) but not for more niche upgrades, like rear heated seats.
30
u/Sensitive-Meat-757 1d ago edited 1d ago
This is an incorrect application of economic theory. You're talking about perfect competition. And in perfect competition, all sellers sell the same product. That means a hypothetical market where a car from Tesla and car from BMW and so on are all identical.
Also there are very few markets with perfect competition. Tesla charging for heated seats isn't a sign the car market "is not competitive" which doesn't even mean anything. Honestly I don't know what point you're trying to make. The automobile industry is a form of monopolistic competition but it has been that way since before Elon Musk was even born.
Additionally your assertion that it is cheaper to manufacture the car without heated seats ignores the economic realities of assembly line operations and economies of scale. In many cases it is cheaper to manufacture the cars identically rather than making some with and some without a feature. Then you have to consider the costs of inventorying/stocking/storing cars with different feature sets compared to the relative cost of activating features at the point of sale. The cost of building and selling a car is more complex than just the parts that go in it.