I wonder in what cases this high-priced, low-volume strategy is the best way to go.

Honestly, I think it works best in the majority of cases.

Two reasons.

#1
It is hard to find a low-priced, high-volume product that makes everyone happy.

#2
A high-priced, low-volume product creates for a niche. This low volume and high price combo also creates a natural scarcity and exclusivity.

I mean, if you charge $200,000 per customer, you only need a few customers, right?

Tesla’s strategy of starting with a high-priced, low-volume product and moving down to more affordable products over time, as underlying technology and manufacturing capabilities advanced. Musk and Eberhard were big believers in this strategy, having seen it play out with a number of electronic devices. “Cellphones, refrigerators, color TV’s, they didn’t start off by making a low-end product for masses,” Eberhard told the paper. “They were relatively expensive, for people who could afford it.”

-Ashley Vance, Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future (Amazon)