teslamotorclub: S70D investor implications part 1

Someone should inform the Wall Street Journal they cited a very biased (probably fake) hedge fund manager, who spends his entire day ranting about Tesla on Twitter and talking with himself via another Twitter account , as an authority for an article.

Tesla to Upgrade Slower-Selling Version of Model S - WSJ

The 70D will likey sell very well. I'd be willing to bet Tesla is going to offer anyone who owns a 60kwh Model S to upgrade to the 70D. The 70D will be very relevant when Tesla begins to promote the CPO program. The 60KwH Model S will likely be $35,000 $45,000 after 3 years, and will depreciate at a very slow rate, because of the warranty.
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felt like I stumbled onto the set of fox news reading the comments section of that WSJ article.
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drinkerofkoolaid said: ?

Someone should inform the Wall Street Journal they cited a very biased (probably fake) hedge fund manager, who spends his entire day ranting about Tesla on Twitter and talking with himself via another Twitter account , as an authority for an article.

Tesla to Upgrade Slower-Selling Version of Model S - WSJ

The 70D will likey sell very well. I'd be willing to bet Tesla is going to offer anyone who owns a 60kwh Model S to upgrade to the 70D. The 70D will be very relevant when Tesla begins to promote the CPO program. The 60KwH Model S will likely be $35,000 $45,000 after 3 years, and will depreciate at a very slow rate, because of the warranty.
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The word "likely" has bitten me many times. Those darn beanie-babies...

I like the 70D over the 85D because, number one, I don't need those extra miles. And I bet many people don't as well. In fact, how many 85D owners would rather have a 70D for $10K less? I bet a good number. 70D may sell very well and may erode, somewhat, the 85D buyer base.
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Hogfighter said: ?

The reason for the 70D has nothing to do with demand. It's commonality with the Model X. There's no way Tesla would offer a vehicle with less than 200 mile range, and the 60kw battery pack would approach that in the X. Same with the front end...why not make every vehicle offered a 4WD?
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Nice theory, but here's an alternate explanation to consider that will affect short term value of TSLA...
The release of the 70D means that Tesla has raised the minimum mileage of Model S to 240 miles. I expect the minimum miles of Model X to be 240 at least too. Why? Because 240 is the new Tesla minimum, which leapfrogs the proposed 200 mile range of upcoming competitive cars.

Remember when Elon said Model 3 will have 200 "real-world" miles? He meant 240 mile range so that you can realistically go 200 miles. I personally expect to see all Tesla vehicles including Model 3 with starting ranges of about 240 miles. Zoooommm, Tesla has once again left the competition in the dust.

Another implication of 240 miles for Model 3 is that the basic model is slated to begin at about $35,000. Something positive is happening in battery technology if Tesla can offer 240 mile range in a car that has a basic price of $35,000.
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Here is my theory. Panasonic has increased production of batteries quite a lot over the last couple years. I think they are in fact being "capacity binned". That is, the spec for the P85 is X kWh, and panasonic downmarkets the cells which are functional but don't meet spec. eventually, the factory output has produced too many lower capacity cells and TM is working with them to put them to use.

After all, why go into home storage right now? Really, battery overproduction of lower density cells, or weakening model S demand are the only theories that make sense. The 70D is about making a use for the lower density cells. Since the "60" class has unused space in the pack, you can simply fill it up with lower density cells. I will be very curious about the first 70D pack breakdown to see if the cell count has gone up.

So the good cells, call it 60% of production goes into 85 class cars. The other 40% is going to the 70D and home storage. This theory replaces the "70D is using awesome new batteries". I think its the less awesome. This theory predicts we will not see a 100kWh class any time soon, which Elon has already said is true.
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I think the first published supercharge on a 70D could tell us a lot about what is inside the battery. Maybe someone who takes a 70D for a "Test Drive" can do a "Test SuperCharge" as well and post it here. Thank you in advance.

Edit, sorry mods wrong thread for this discussion.

On topic: nice to see we are still holding green
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Just got an email regarding an event at the factory store in the 17th: Double Black - Dual Motor TourTesla invites you to learn more about our digital all-wheel drive system as part of our Dual Motor Tour. Along with the chance to experience the performance of Model S 85D and P85D, we are also pleased to offer you the opportunity to drive the all-new 70D. Uniting ultimate road handling and great value, the new All-wheel drive Model S 70D has a 0-60 time of 5.2 seconds and a 250 mile range at 65 mph. Navigation, Trip Planner, Range Assurance, and Supercharging come standard. DatesFriday, April 17th �Sunday, April 19thLocationTesla Factory Store(Open in Google Maps)Time10am � 4:30pmTesla specialists will be on hand during our Tech Talk sessions to answer questions and discuss our groundbreaking vehicles, and you�ll also be able to take a tour of the Tesla production line. Your drive will last approximately 20-30 minutes, but plan about two hours for the entire experience. You are welcome to bring guests to enjoy the event with you. Double Black begins in Fremont on April 17th. Spaces are limited. Register today. RSVP TESLA3500 Deer Creek Road | Palo Alto, CA 94304Privacy Policy | Unsubscribe

Notice the 250 mile claim?
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Something I didn't consider yet is that the Model S 70D now being the base model at $75,000 means that the Model X will also get a bump in base price versus what we had originally projected it to be. When the Model S was $69,900 I had been assuming the Model X would start around $74,900. Now I think the Model X will start around $79,900, and many technologies in the Model S will be standard in Model X like navigation. ASP will still be much higher... it just portends well for revenues out to EOY 2015.
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sub said: ?

Just got an email regarding an event at the factory store in the 17th: Double Black - Dual Motor Tour Tesla invites you to learn more about our digital all-wheel drive system as part of our Dual Motor Tour. ...

Notice the 250 mile claim?
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If it's all about Tesla's Dual Motor vehicles, I'm hoping they show of the Model X, which only comes with dual motors.

As for the 250 mile claim, Tesla has been doing that sort of thing for a while, e.g. 300 miles at 55 mph.
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Room_A113 said: ?

If it's all about Tesla's Dual Motor vehicles, I'm hoping they show of the Model X, which only comes with dual motors.

As for the 250 mile claim, Tesla has been doing that sort of thing for a while, e.g. 300 miles at 55 mph.
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I would have to double check but I thought I saw on the website it was 240 miles 65mph. I would like to go to this event, I will see what the wife says. I'll need to leave the checkbook at home though.
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250 mile range at 65 mph, 240 mile EPA. And another blog reference for 240 mile at 65 mph that is probably a mistake.
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austinEV said: ?

Here is my theory. Panasonic has increased production of batteries quite a lot over the last couple years. I think they are in fact being "capacity binned". That is, the spec for the P85 is X kWh, and panasonic downmarkets the cells which are functional but don't meet spec. eventually, the factory output has produced too many lower capacity cells and TM is working with them to put them to use.

After all, why go into home storage right now? Really, battery overproduction of lower density cells, or weakening model S demand are the only theories that make sense. The 70D is about making a use for the lower density cells. Since the "60" class has unused space in the pack, you can simply fill it up with lower density cells. I will be very curious about the first 70D pack breakdown to see if the cell count has gone up.

So the good cells, call it 60% of production goes into 85 class cars. The other 40% is going to the 70D and home storage. This theory replaces the "70D is using awesome new batteries". I think its the less awesome. This theory predicts we will not see a 100kWh class any time soon, which Elon has already said is true.
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This is a pretty dismal theory. It amounts to saying that Tesla does not have any new higher density technology to roll out. Plus it has a surplus of cells with lots of capacity variation per cell such that it has to cull out second and dump them into low margin products. This could be the new bear thesis: Tesla is demand constrained with a surplus of bad cells it must dump.

This theory assumes that while Panasonic has ramped up production, it has not also refined its process to reduce variability, basically that Panasonic fails at total quality management. If so, the Japanese manufacturer should hang its face in shame.

Furthermore, the range does not scale so well. 270�70�85 = 222 < 240, but 208�70�60 = 242. So it is more like scaling up from a 60 pack with higher density cells than scaling down from a 85 pack with lower density cells.

My theory is that both Tesla and Panasonic have learned something about making batteries over the last three years. The process quality has improved, reducing seconds. The efficiency has improved, reducing the manufacturing cost. And the chemistry has made at least modest gains over three years, resulting in cells with at least 17% more energy density. Note that doubling in ten years would suggest a 23% gain in three years. So a mere 17% is a little subpar. So under my theory, Tesla does have a modestly higher density cell to roll out. It will take time to ramp up production, meanwhile other uses for existing cell line capacity must be found. That is why it is time to get into stationary. But in the near term Tesla is supply constrained for the new highER density. So what should Tesla do with the first 1 GWh of this new supply? What product would deliver the highest incremental profit on this first 1 GWh of supply? It may seem counterintuitive to many in the market, but feeding this supply into 70D will deliver 2 to 3 times as much incremental profit as putting it into any of the 85 kWh products. I have been working this out on my own mathematical model. I do not have the time to detail that model here, but I would encourage other analytical people to try out their own modelling. By far the 70D is the most profitable vehicle for this new highly constrained supply.

I would challenge anyone to come up with a pro forma showing that putting the new supply into the P85D or 85D would result on higher incremental returns than the 70D. I'm sure Musk would like to see this too as it would imply that Tesla just made a stupid mistake launching the 70D. BTW, it's even harder to make the pro forma case for a P100D. It's much more profitable per kWh just to put higher density cells into a lighter 85 pack than to pack 100 kWh into a pack. Again I invite people to work through their own math and prove me wrong.

For Tesla investors, this is a curious opportunity. Because the 70D move is counterintuitive, the market will not understand it correctly and misprint it in the short run. So I think we have yet another opportunity to beat the market on an information advantage. So I would not expect the stock price to go much higher on this in the short run. But the impact of the 70D will be felt in the next two quarters. So we've got an opening to buy before the market comprehends just how genius the 70D move is.
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Anecdotally, it seems people that are stepping down from an 85 to a 70D are not lowering the price paid.

They are replacing kWh with options. Pano roof ,premium paint, next gen seats, air suspension, high fidelity sound system etc.
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RobStark said: ?

Anecdotally, it seems people that are stepping down from an 85 to a 70D are not lowering the price paid.

They are replacing kWh with options. Pano roof ,premium paint, next gen seats, air suspension, high fidelity sound system etc.
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And that's very good news to TSLA shareholders. Options have a much better gross margin than basic cars.
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vgrinshpun said: ?

I have a theory what could be the big announcement at the Thursday's press conference, aside from improvements to the Energy App that I described in my previous post (this part was covered in Elon's tweet about range anxiety).

This CNBC interview with James Albertine of Stifel has some very interesting information about the Thursday�s press conference. Here are the significant quotes:

(About Thursday�s press conference) �I think this is very important opportunity for Tesla to draw attention back to where they stand, from competitive stand point, with regards to range.� �When we were at the factory last week, one of the things we saw was transition from the 4[SUP]th[/SUP] generation to the 5[SUP]th[/SUP] generation of battery cell production technology. We think that they are going to show that they further extended their leadership as it relates to range. Quite frankly we think that this is most important catalyst for 2015.

Here is my interpretation what was said in this interview.

I think that transition from the 4[SUP]th[/SUP] t0 5[SUP]th[/SUP] generation of battery production technology relates to transition from D version of battery packs to E version. For those not familiar E version battery packs started to ship around December (VINS of approx. 56,000)

According to this TM thread E battery packs maintain high (higher than earlier variants of the pack) charging rate up to a higher state of charge. One explanation for this would be that TM tweaked composition of the battery so it can take higher charging rate longer. The other is that E-battery has bigger capacity than the previous variants.

So it seems that, similar to how they retrospectively released information about the auto-pilot hardware, TM shipped all cars with E pack with a slightly bigger battery (same 7104 cells but each having about 10% higher capacity). Utilization of this additional capacity will be enabled via a software release.

The reason that James Albertine assigns such significance to this, I believe, is that for D cars the range could be extended to hit symbolically important 300 miles EPA. I think that this will be accomplished via combination of increase capacity of the battery (additional 27 miles) and improved efficiency of the control of power electronics (via software changes) as well as improved efficiency of the motor, particularly at very low power consumption levels as in coasting (additional 3 miles of range). so the total EPA rating would be 270+27+3=300.

There is some level of speculation involved in this (on my part, as I believe James Albertine was not speculating, but pretty much conveyed the facts as he knows them), but the potential impact of hitting the 300 miles of EPA range could be very significant (the most important catalyst for 2015 in Albertine�s analysis).
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So is this prediction looking more accurate with the 70d unveil?
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jhm said: ?

This is a pretty dismal theory. It amounts to saying that Tesla does not have any new higher density technology to roll out. Plus it has a surplus of cells with lots of capacity variation per cell such that it has to cull out second and dump them into low margin products. This could be the new bear thesis: Tesla is demand constrained with a surplus of bad cells it must dump.

This theory assumes that while Panasonic has ramped up production, it has not also refined its process to reduce variability, basically that Panasonic fails at total quality management. If so, the Japanese manufacturer should hang its face in shame.

Furthermore, the range does not scale so well. 270�70�85 = 222 < 240, but 208�70�60 = 242. So it is more like scaling up from a 60 pack with higher density cells than scaling down from a 85 pack with lower density cells.

My theory is that both Tesla and Panasonic have learned something about making batteries over the last three years. The process quality has improved, reducing seconds. The efficiency has improved, reducing the manufacturing cost. And the chemistry has made at least modest gains over three years, resulting in cells with at least 17% more energy density. Note that doubling in ten years would suggest a 23% gain in three years. So a mere 17% is a little subpar. So under my theory, Tesla does have a modestly higher density cell to roll out. It will take time to ramp up production, meanwhile other uses for existing cell line capacity must be found. That is why it is time to get into stationary. But in the near term Tesla is supply constrained for the new highER density. So what should Tesla do with the first 1 GWh of this new supply? What product would deliver the highest incremental profit on this first 1 GWh of supply? It may seem counterintuitive to many in the market, but feeding this supply into 70D will deliver 2 to 3 times as much incremental profit as putting it into any of the 85 kWh products. I have been working this out on my own mathematical model. I do not have the time to detail that model here, but I would encourage other analytical people to try out their own modelling. By far the 70D is the most profitable vehicle for this new highly constrained supply.

I would challenge anyone to come up with a pro forma showing that putting the new supply into the P85D or 85D would result on higher incremental returns than the 70D. I'm sure Musk would like to see this too as it would imply that Tesla just made a stupid mistake launching the 70D. BTW, it's even harder to make the pro forma case for a P100D. It's much more profitable per kWh just to put higher density cells into a lighter 85 pack than to pack 100 kWh into a pack. Again I invite people to work through their own math and prove me wrong.

For Tesla investors, this is a curious opportunity. Because the 70D move is counterintuitive, the market will not understand it correctly and misprint it in the short run. So I think we have yet another opportunity to beat the market on an information advantage. So I would not expect the stock price to go much higher on this in the short run. But the impact of the 70D will be felt in the next two quarters. So we've got an opening to buy before the market comprehends just how genius the 70D move is.
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I have the same theory as jhm, see my post in the Tesla cuts "60kWh Model..." thread for additional musings on the subject..
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And yet the 70D to me seems like a much better bargain than all previous Model S versions.
It's a bit of the best of both worlds really. Big enough battery, dual motor, AWD, better standard equipment, SC included as standard, and even with a few options a far better deal than the 85, especially the standard.
I think Tesla could/should drop the S85 completely as I suppose from now on it will see the least sales of the remaining variants. Plus, it would streamline production (no more single motor/dual motor differentiation).
Would be a nice lineup: 70D, 85D, P85D
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Yes, I see it as a writing on a wall: S85 is about to be axed.
They just need to empty inventory of RWD only parts before they do that.
The next thing to go will be 85kWh battery. If not before then with Model X launch, tesla will replace 85 with 100kWh battery.

Not much sense in introducing a new model with same battery as the model introduced 4 years before it. Not after continuous talk about batteries getting better with time.
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WarpedOne said: ?

Yes, I see it as a writing on a wall: S85 is about to be axed.
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That's what it looks like. But they would sell better if they kept the RWD option for S. X is OK to have AWD in all variations.
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But they would sell better if they kept the RWD option for S.
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Why? What is it that you loose with dual motors?
Model 3 will have a RWD option, S being more upmarket does not need it.
Also, Model S can't really sell better - they still sell every car they make, 2 month before they actually make it.
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Safe to talk about an upcoming S100D yet? Or still too speculative?

Edit: I suggest stretching some investigative dendrites, if the theory of 70D being partly due to a better battery chemistry, the move from 222 mi expected to 240 mi means a significant step from current battery chemistry. So its not the E generation. It could be the F.

First person who drives a 70D, check the battery. If it is later-than-E, the rumor has merit.
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WarpedOne said: ?

Why? What is it that you loose with dual motors?
Model 3 will have a RWD option, S being more upmarket does not need it.
Also, Model S can't really sell better - they still sell every car they make, 2 month before they actually make it.
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I've posted this to other thread:

1. Lower price
2. Only one motor means less maintenance
3. Larger frunk

I think they are still trying to sell more, not less in the future
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Panu said: ?

I've posted this to other thread:

1. Lower price
2. Only one motor means less maintenance
3. Larger frunk

I think they are still trying to sell more, not less in the future
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What maintenance?

With two motors one can go offline and you can drive with the other.

Subaru sells 940k AWD units per year, other than BRZ AWD is all they sell. I don't think Tesla will have a problem selling all the AWD units they can make.

Better highway range, better traction for better safety even in temperate weather, and again peace of mind knowing even if one drivetrain goes offline you still have the other one to keep car functional.
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WarpedOne said: ?

Yes, I see it as a writing on a wall: S85 is about to be axed.
They just need to empty inventory of RWD only parts before they do that.
The next thing to go will be 85kWh battery. If not before then with Model X launch, tesla will replace 85 with 100kWh battery.

Not much sense in introducing a new model with same battery as the model introduced 4 years before it. Not after continuous talk about batteries getting better with time.
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Agree with every word you say here. If you asked me a few days ago (pre-70D) I would have been more sceptical in higher kWh options as Elon has repeatedly said they will not do that on tne short term. But the 70D really makes a difference here and the Model X launch looks like the obvious spot for a 100-110kwh pack.
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RobStark said: ?

What maintenance?
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Of course it's a more complex car when it has two motors. This means more places where it can break and more places to at least check (and maybe repair) when you take the car to annual service.

Tesla has been advertising that there is less maintenance because there are less moving parts. Now they are adding moving parts.
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Tesla has been advertising that there is less maintenance because there are less moving parts. Now they are adding moving parts.
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Powered liftgate adds more moving parts than another motor infront.
Lower price is something tesla does not need. They are upping the price from the start together with higher and higher production.

Lower price will come with Model E. Model S will need to move to higher praces to make room for it.
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RobStark said: ?

What maintenance?

With two motors one can go offline and you can drive with the other.

Subaru sells 940k AWD units per year, other than BRZ AWD is all they sell. I don't think Tesla will have a problem selling all the AWD units they can make.

Better highway range, better traction for better safety even in temperate weather, and again peace of mind knowing even if one drivetrain goes offline you still have the other one to keep car functional.
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You're right with regards to maintenance (there is none). However, points 1 and 3 are still valid. And besides, some people just love the RWD because of how it feels when you drive it. It would be a good thing for Tesla to keep selling a RWD version.

However, this will depend on the cost VS benefits balance for them, I think.
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slcuervo said: ?

You're right with regards to maintenance (there is none).
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I find it hard to believe that some people seriously think that servicing and maintaining two motors is the same amount of work as maintaining one motor.
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There first needs to be a required maintenance. Drive units are zero-maintenance, two times zero is still zero.

Replacing a broken drive unit is not maintenance.
It is true that having two drive-units per car will increase the number of cars that have drive-unit problems.
But at the same time it will decrease the number of cars that were undrivable due to a drive unit malfunction. End user wins.
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WarpedOne said: ?

There first needs to be a required maintenance. Drive units are zero-maintenance, two times zero is still zero.

Replacing a broken drive unit is not maintenance.
It is true that having two drive-units per car will increase the number of cars that have drive-unit problems.
But at the same time it will decrease the number of cars that were undrivable due to a drive unit malfunction. End user wins.
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What do they do in Model S annual service if they don't even check the drive units and drivetrains?

Of course replacing a broken drive unit is a lot of �� after warranty period and now there is two that can break.
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What do they do in Model S annual service if they don't even check the drive units and drivetrains?
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Who says they don't check it?
Going with a single drive-train just that service will have one unit less to look at is ...
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I thought you said. But good that we now agree that there is more work at annual service with D. In these inspections they can find something that needs to be repaired -> more work and cost.

I still wonder why we even need to discuss this...
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Annual service checkup is not maintenance.
Maintenance is something you need to do for something not to stop working. Replacing filters, oil, coolant, etc is maintenance. Looking at computer logs is checkup.
Drive unit will continue to work one looks at the logs or not.

We are disusing this because some people are clearly full of misconceptions.
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You may call the additional work and repair cost whatever you like. I have no problem calling it with any kind of name. I'm not sure why the name should matter. What I'm talking about is cost.
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Panu said: ?

I find it hard to believe that some people seriously think that servicing and maintaining two motors is the same amount of work as maintaining one motor.
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But is there any maintenance on the electric motor? As far as I know, Tesla never performs any maintenance operations on the drive unit... Am I wrong?
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slcuervo said: ?

But is there any maintenance on the electric motor? As far as I know, Tesla never performs any maintenance operations on the drive unit... Am I wrong?
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You are probably right as WarpedOne said. Maintenance is probably not the right term. Instead it is inspection, repair and replacement.
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Was there any Elon interview related to the 70D release?
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The 70D will probably do wonders for the Model S sales in Norway since even with some equipment it is still below 600k NOK which I'm guessing is a limit on how much middle class people spend on cars. Well technically 500k is the limit, but it has 4WD, and longer range and suddenly it's pushed to 600k
Still quite a few with lots of kids prefer the RWD due to the frunk. Using the rear seats you need somewhere to put a smallish stroller and certain models just fit in the frunk, while with 4WD you need to use the rear trunk as the frunk is too small. Still some of those families will propably by happy with a lightly used RWD car so I'm guessing the CPO program will work nicely in Norway as well.

Cobos
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just published an article on SA about the impact of the 70D - Seeking Alpha PRO Alerts Article - Early Look for Subscribers | Seeking Alpha - I'll publish a summary here once it goes live to the public tomorrow. But the idea is to calculate how many extra cars can Tesla make and deliver based on what % of sales the 70D takes and how much extra money will it make Tesla. It also calculates if Tesla used all those batteries for storage, how much extra money does that mean.
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WarpedOne said: ?

There first needs to be a required maintenance. Drive units are zero-maintenance, two times zero is still zero.
But at the same time it will decrease the number of cars that were undrivable due to a drive unit malfunction. End user wins.
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I also like riding in a dual prop plane over a single prop plane.
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I think the theme for the Q1 ER could very likely be - how can Tesla improve efficiencies to offset the huge R&D expenses. 70D is part of this. So is the home battery as a new revenue stream.
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GregTexas said: ?

I also like riding in a dual prop plane over a single prop plane.
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Honestly, if one of your 2 motors goes out the car is going to throw a "pull over safely". I doubt you will just drive on your merry way until you can get it serviced.
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austinEV said: ?

Honestly, if one of your 2 motors goes out the car is going to throw a "pull over safely". I doubt you will just drive on your merry way until you can get it serviced.
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According to Elon, yes you can just drive on your merry way.

I guess we should eliminate the AC unit to reduce maintenance,cost and the possibility of something going wrong.

Ditto for power liftgate, power windows, power locks, Tesla handles, power adjustable seats, pano roof, and maybe the touchscreen for knobs and dials.

Maybe the Chinese Government had it right all along and we should all sell our Teslas and get electric bikes.

BTW Just as there are Luddites that "prefer" RWD there are also Luddites that prefer the "feel" of a manual transmission. So should Tesla add a Fast & Furious RWD 6 seed manual Drifter special?
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GregTexas said: ?

I also like riding in a dual prop plane over a single prop plane.
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"The purpose of the second engine is to get you to the crash site quicker." -- Anon.
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RobStark said: ?

According to Elon, yes you can just drive on your merry way.

I guess we should eliminate the AC unit to reduce maintenance,cost and the possibility of something going wrong.

Ditto for power liftgate, power windows, power locks, Tesla handles, power adjustable seats, pano roof, and maybe the touchscreen for knobs and dials.

Maybe the Chinese Government had it right all along and we should all sell our Teslas and get electric bikes.

BTW Just as there are Luddites that "prefer" RWD there are also Luddites that prefer the "feel" of a manual transmission. So should Tesla add a Fast & Furious RWD 6 seed manual Drifter special?
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Firstly, I am not saying that 2 motors is bad because I care about having the absolute minimum number of moving parts, but you may be responding to others that are suggesting that.

What I am saying is that for your Dual to drive from point A to point B, I HIGHLY suspect you will need to have a 100% working drive train. TM could maybe have their software accomodate a front motor go out and just use the back, but are seriously suggesting that the car would just drive with only a front motor? It isn't designed to do that, it won't have the right driving characteristics, range will be a mystery, power super low etc. And that assumes that one of the motors failed in such a way that it is still freely turning, which may not be the case. If I was designing the car and I sensed that one of the two motors was not working, I would throw the "pull over" warning and not let it start again, just like it does for electrical faults. the alternative idea, that the car will keep driving with one motor mysteriously dead, its just too unsafe to contemplate.
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WarpedOne said: ?

Yes, I see it as a writing on a wall: S85 is about to be axed.
They just need to empty inventory of RWD only parts before they do that.
The next thing to go will be 85kWh battery. If not before then with Model X launch, tesla will replace 85 with 100kWh battery.

Not much sense in introducing a new model with same battery as the model introduced 4 years before it. Not after continuous talk about batteries getting better with time.
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Yeah, the useful purpose the standard S serves at this point is to show what a better deal the new line up is. I got my 85 last month and am in shock to see it obsoleted so damn quickly! As a shareholder, I love it. As a new buyer, I wish I had known what the new options would be.
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jhm said: ?

Yeah, the useful purpose the standard S serves at this point is to show what a better deal the new line up is. I got my 85 last month and am in shock to see it obsoleted so damn quickly! As a shareholder, I love it. As a new buyer, I wish I had known what the new options would be.
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Tesla really is developing at a lot faster pace than what is common in that industry.
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daniel Ox9EFD said: ?

Safe to talk about an upcoming S100D yet? Or still too speculative?

Edit: I suggest stretching some investigative dendrites, if the theory of 70D being partly due to a better battery chemistry, the move from 222 mi expected to 240 mi means a significant step from current battery chemistry. So its not the E generation. It could be the F.

First person who drives a 70D, check the battery. If it is later-than-E, the rumor has merit.
Click to expand...

I'll bite. The problem I have with the 100D is that the new supply is too constrained so there is more profit to be had deploying the limited supply to other version. This is just a temporary issue. We will know that they are no longer constrained on the new supply once the 100D or P100D is introduced in the Model S. I do expect the Model X to take precedence on this.

A secondary concern I have with the P100D is that performance may suffer. First off putting higher density cells into the the P85D, shall we call it P85Dhd, will make the car lighter and improve acceleration and cornering. By contrast, the P100D would be a heavier car with slower acceleration and poorer handling. If you were to put the two in a race that does not challenge range limits, the P85Dhd would win, just as the the P85Dhd would win against the P85D. The caveat here of course is that some new technology does not compensate for the weight difference. For example, if the 100 pack could deliver more power, then perhaps enhancements in inverter and motors could lead to better acceleration in spite of the added weight, but this does not help with cornering. So maybe some additional technology could make this work, but I suspect high performance drivers would prefer the lighter P85Dhd to the P100D. An interesting exception to this would be a special Autobahn version, where the performance objective is to be able to sustain peak cruising speeds. So the buyer would give up offline acceleration for top speed and range at top speeds, hence the label, Model S P100D Autobahn. Such developments could be really cool, but it would take a few year and Tesla may well have bigger, more profitable markets to address in that time.

So there you have it: Tesla is supply constrained all over again, and really cool ideas will have to wait until more profitable opportunities have been seized. That's why the S100D will have to wait.
�

I've posted updated chart, along with some very surprising information on actual range of 70D in the "Tesla cuts 60kWh Model..." thread.
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dalalsid said: ?

just published an article on SA about the impact of the 70D - Seeking Alpha PRO Alerts Article - Early Look for Subscribers | Seeking Alpha - I'll publish a summary here once it goes live to the public tomorrow. But the idea is to calculate how many extra cars can Tesla make and deliver based on what % of sales the 70D takes and how much extra money will it make Tesla. It also calculates if Tesla used all those batteries for storage, how much extra money does that mean.
Click to expand...

It sounds like you took up my challenge to build your own model for how the 70D adds incremental profit. I look forward to reading this. Good luck.
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WarpedOne said: ?

Also, Model S can't really sell better - they still sell every car they make, 2 month before they actually make it.
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Well, maybe it can.

If Tesla is still being limited by batteries instead of something else in their factory or supply chain, moving a bunch of customers to 70s instead of 85s would increase their production capability - they can build 6 70Ds with the same number of cells as 5 85Ds.

Combined with people mostly giving the money back to Tesla in higher margin options, this could be a substantial increase to Tesla's sales/profit margin.
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Saghost said: ?

Well, maybe it can.

If Tesla is still being limited by batteries instead of something else in their factory or supply chain, moving a bunch of customers to 70s instead of 85s would increase their production capability - they can build 6 70Ds with the same number of cells as 5 85Ds.

Combined with people mostly giving the money back to Tesla in higher margin options, this could be a substantial increase to Tesla's sales/profit margin.
Click to expand...

Right you are. As long as they are battery supply constrained they will net the most profit by selling many units even if the ASP is lower.
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jhm said: ?

It sounds like you took up my challenge to build your own model for how the 70D adds incremental profit. I look forward to reading this. Good luck.
Click to expand...

I didn't know the challenge existed. I mean yes
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jhm said: ?

A secondary concern I have with the P100D is that performance may suffer. First off putting higher density cells into the the P85D, shall we call it P85Dhd, will make the car lighter and improve acceleration and cornering. By contrast, the P100D would be a heavier car with slower acceleration and poorer handling. If you were to put the two in a race that does not challenge range limits, the P85Dhd would win, just as the the P85Dhd would win against the P85D. The caveat here of course is that some new technology does not compensate for the weight difference. For example, if the 100 pack could deliver more power, then perhaps enhancements in inverter and motors could lead to better acceleration in spite of the added weight, but this does not help with cornering. So maybe some additional technology could make this work, but I suspect high performance drivers would prefer the lighter P85Dhd to the P100D.
Click to expand...

Given that the current P85Ds aren't delivering anywhere near the maximum power Tesla told us the motors (and presumably inverters) are capable of, I don't know why you think the putative P100D would need some other technology to be faster; with comparable battery technology it should have ~20% higher power output capability, and if folks are right that the current cars are only producing ~360-400 kW on a sustained basis, the motors have headroom to absorb it all (above ~40 mph, anyway.)

Whether performance below that speed would be equal depends on how much torque the car has in reserve now - something not clearly established yet on P85Ds, though the P85 could spin the rear tires pretty well with TC disabled.
Walter
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Saghost said: ?

Given that the current P85Ds aren't delivering anywhere near the maximum power Tesla told us the motors (and presumably inverters) are capable of, I don't know why you think the putative P100D would need some other technology to be faster; with comparable battery technology it should have ~20% higher power output capability, and if folks are right that the current cars are only producing ~360-400 kW on a sustained basis, the motors have headroom to absorb it all (above ~40 mph, anyway.)

Whether performance below that speed would be equal depends on how much torque the car has in reserve now - something not clearly established yet on P85Ds, though the P85 could spin the rear tires pretty well with TC disabled.
Walter
Click to expand...

Yeah, you could be right if current battery power is the limiting factor. If something else is the limiting factor, then it would need to be addressed.

When Tesla really wants to get serious about performance, they'll make a new Roadster.
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jhm said: ?

Yeah, you could be right if current battery power is the limiting factor. If something else is the limiting factor, then it would need to be addressed.

When Tesla really wants to get serious about performance, they'll make a new Roadster.
Click to expand...

With about 900 horsepower from four of the new smaller "221 hp" motors driving each wheel independently through four gearboxes and half shafts (possibly just three, one for each rear and one for both fronts to keep things lighter?) and a lightweight high output pack in the 50-60 kWh range to help keep the car light?

I'm sure it would be a lot of fun. I guess I need to win the lottery quick, before Tesla gets around to announcing it.
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Saghost said: ?

Well, maybe it can.

If Tesla is still being limited by batteries instead of something else in their factory or supply chain, moving a bunch of customers to 70s instead of 85s would increase their production capability - they can build 6 70Ds with the same number of cells as 5 85Ds.

Combined with people mostly giving the money back to Tesla in higher margin options, this could be a substantial increase to Tesla's sales/profit margin.
Click to expand...

I too am wondering about the financial impact of this move.

I think it would depend on the physical difference of the 70D and 85D vehicles. Is it just in the number of cells in the battery pack, or is there something else?

The 70D and 85D appear to have the same motors and inverter system. The difference is that the 85 battery pack can deliver more energy to the motors than the 70 pack. There also may be a difference in software. They major difference, I'm guessing, is only in the number of cells in the battery pack.

The 85D is a 10k premium over the 70D. 10k is a lot of extra money for roughly 20% more cells in the battery. The margin must be pretty high for that upgrade.

On the other hand, if what Saghost speculates is true, and Tesla can sell 1 extra 70D, that might more than make up for losses in 85D sales. This also makes sense in that it slightly increases the total number of EVs on the road.

I find the 70D compelling in a way that the S60 was not, because it does meet the 200 miles + 20% safety buffer that Elon mentioned as what he thought was a baseline minimum. I know that I would not have been completely happy with the 208 miles EPA range of the S60. I would have no regrets about 240 miles EPA range on the 70D.
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Johan said: ?

Right you are. As long as they are battery supply constrained they will net the most profit by selling many units even if the ASP is lower.
Click to expand...

ASP is revenue per vehicle, and optimizing that matters when Tesla is primarily constrained by unit production per week. Another metric, revenue per kWh, becomes more important when Tesla is primarily constrained by its battery supply.

So just considering base revenue plus $10k we get the following revenue per kWh:
Ver. @ price... base + option = rev per kWh
60... @ $70k.... $1167 + 167 = 1333
70D @ $75k... $1071 + 143 = 1214
85... @ $80k.... $ 941 + 118 = 1059
85D @ $85k... $1000 + 118 = 1118
100D @ $95k... $ 950 + 100 = 1050
P85D @ $105.. $1235 + 118 = 1353
P100D @ $115. $1150 + 100 = 1250

So we see when Tesla wants to maximize it's revenue given its battery supply. The P85D and standard 60 lead the line up. Unfortunately, uptake of the 60 was too slight. If customers were choosing the 85 over the 60 just to get a reasonable range, then Tesla would lose $274 revenue per kWh. This may not seem like much but on a base of 1 GWh, that is a loss of $274M in sales. Moreover, GM on option revenue is likely around 50% while GM on base revenue is likely closer to 25%. So on a gross profit basis, even more was being lost when customers chose the 85 over the 60. So one could rightly be concerned that the 85 was cannabalizing profit from the 60. This is precisely why the 70D is so important. Customers are enthusiastic about the 70D in a way that was lacking for the 60. So unit sales for the 70D should be much higher than for the 60. Moreover, when customers choose the 70D over the 85, Tesla gains $155 revenue per kWh. And choosing the 70D over even the 85D is a gain of $96 revenue per kWh. So one need not worry that the 70D might "cannabalize" the revenue of 85 or 85D. So long as Tesla is constrained in battery supply we actually do want as many customers as possible to choose the 70D over anything but the P85D.

Now I've also thrown in some hypothetical 100D and P100D versions at a spread of $10k to their 85D counterparts. You can play around with your own pricing ideas for these version, but here we see the easy potential for 100 versions to reduce revenue per kWh by about $100. Given that Tesla wants to sell on order of 4.5 GWh worth of batteries this year, giving up about $100 per kWh on everything but the P85D leaves around $300M in revenue and perhaps $100M in profit on the table. So the 70D very well could add as much as $1 EPS, while introducing 100D and P100D prematurely could destroy as much as $1 EPS. So we really do want people to buy either the P85D or 70D according to their means, and if they really can't decide between either at least they should buy the 85D. This is a truly excellent new line up for customers and shareholders alike.

Now consider this if the new Model S line is priced around $1200 per kWh with a GM of 30%. That is gross profit of $360/kWh. This gives us a major clue about how Tesla may need to price stationary IF stationary is drawing on the same supply as automotive. This is a big IF. It may well be wrong, but just for kicks lets see what it may imply. Under this condition, the profit per kWh needs also be $360; otherwise, Tesla should put the supply in cars and get a better return. So let's say at this point Tesla's cost per kWh is $170 and to round our the package with other added value components is $20 per kWh. Then the selling price should be around $5500 for a 10 kWh home storage device. I'm not so sure that will fly. Even at Gigafactory prices of $100/kWh, you still can't get around the $360 profit hurdle. So the only way I see stationary working is if the battery supply for stationary is obsolete for automotive use. So this is direct contradiction to our big IF. Stationary becomes a wonderful business for making use of production line of cells that have become obsolete for automotive. As Tesla plows ahead with advancing battery technology, the stationary market aids with planned obsolescence over the life of cell lines. Perhaps profit of $60/ kWh is attractive and a 10 kWh home battery can be priced attractively at $2500. We shall see on April 30.

Planned obsolescence for automotive cells has interesting implications for introduction of new cells into an existing line of vehicles. Tesla may not be able to convert each product at the same time. Thus, Tesla must determine which products to upgrade first. Wherever it is introduced it will decrease the cost of the vehicle and may make modest performance gains. So the prudent choice for upgrade is the version where the performance gains will boost sales the most and help customers migrate to products with higher revenue per kWh. The 70D masterfully does both of these. The boost of range from 208 miles for the 60 to 240 to 250 miles for the 70D is most compelling. And the fact that D and SC are thrown in as well solidly justifies the $5k increase in price while making the car a true road trip worthy vehicle. This is the kind of repackaging that is going to drive unit sales where they were lacking. As pointed out above this move pushes customers into products with higher revenue per kWh, while the cost reduction in batteries improves the GM at the same time. I predict that the next Model S to get higher density batteries will be the P85D because it will improve performance and continue to upsale the 85D. Lastly the 85D will be upgraded and the 85 dropped. So long as Tesla is cell constrained it is unprofitable to introduce the P100D or something 100D, but these make sense once there is a surplus of new cells and there is a need to increase ASP. As long as the P100D is not on the market we know that Tesla is certainly not demand constrained.
�

Finally the missing tweet

This is why we had to wait

�

Strange. Did they cut colors at the last minute then? And somehow black and different black passed the too similar test?
�

Note June delivery

Couple of questions on marketing tactics

Answer

My take on marketing: No doubt gas savings are true, but in this case it might be an idea not to push the truth in this way as it seems to backfire.
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Auzie said: ?

My take on marketing: No doubt gas savings are true, but in this case it might be an idea not to push the truth in this way as it seems to backfire.
Click to expand...

Agreed. If you are interested in a model S you will know this already, or believe it when it is explained to you. Pushing it this way feeds bears.
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jhm said: ?

So long as Tesla is cell constrained it is unprofitable to introduce the P100D or something 100D, but these make sense once there is a surplus of new cells and there is a need to increase ASP.
Click to expand...

Do we have a source that confirms that Tesla is cell constrained? It has been repeated a few times in the forum as truth but I'm not aware with the source of it.

If this isn't true then the whole point is moot. Tesla might be using new batteries that are cheaper to produce and thus improving margin on the cars despite the higher capacities.
�

austinEV said: ?

Agreed. If you are interested in a model S you will know this already, or believe it when it is explained to you. Pushing it this way feeds bears.
Click to expand...

Yeah, I'm not so sure about this either. Imagine of Ford advertised the new Focus as

$15,000*
*After 5 years of gas savings compared to the 2010 Focus

If they really want to push the message maybe they could put it this way:

The Tesla Model S 70D: $75,000 (ca. 57,000 after tax breaks and gas savings over 5 years)
�

austinEV said: ?

Strange. Did they cut colors at the last minute then? And somehow black and different black passed the too similar test?
Click to expand...

Take a look at the Design Studio this morning; the color range has been slashed:
Solid black
Titanium metallic (aka "warm silver")
Midnight silver metallic
Obsidian black metallic
Deep metallic blue (aka "ocean blue")
Pearl white multi-coat
Red multi-coat

So farewell to one of the two no-cost options, white, and to all the original 2012 colors except black and pearl white.
�

A lot of EV manufacturers will include the fed tax credit in the price, even though many consumers of the lower EV vehicles won't be able to claim the full $7500 credit.

http://www.smartusa.com/models/electric-drive/overview.aspx The smart ED even quotes "as low as" $12.490 for their ED price, as they include a $5k price reduction drop for taking their $80 a month extended battery insurance/maintenance/warranty program. If they included Musk's gas savings estimate as well, they could quote the car as costing only $2490 :love:

However, I still don't like including the gas savings bit because their calculations do not fit many customers. Someone like me who currently drives a 42 mpg vehicle 7000 miles a year won't even come close to that gas savings number.
�

jhm said: ?

It sounds like you took up my challenge to build your own model for how the 70D adds incremental profit. I look forward to reading this. Good luck.
Click to expand...

here is my table from the article - Genius Of The Tesla 70D: Sell More Cars, Use Fewer Batteries - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

70kWh % 85kWhn % Extra Batteries Available (MWh) No of extra cars at same ratio %extra cars Extra Revenue M (100k ASP - 90k ASP) Extra Gross Profit (at 25%) No. of additional 10kWh home storage units Revenue at 10000 each (NYSE:M) Extra Gross Profit (at 50%)
20 80 25 305 0.61 31 7.75 2500 25 12.5
30 70 100 1242 2.48 122 30.5 10000 100 50
40 60 175 2215 4.43 214 53.5 17500 175 87.5
50 50 250 3226 6.45 306 76.5 25000 250 125
60 40 325 4276 8.55 399 99.75 32500 325 162.5
70 30 400 5369 10.74 492 123 40000 400 200
80 20 475 6507 13.01 586 146.5 47500 475 237.5

�

dalalsid said: ?

here is my table from the article - Genius Of The Tesla 70D: Sell More Cars, Use Fewer Batteries - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

70kWh % 85kWhn % Extra Batteries Available (MWh) No of extra cars at same ratio %extra cars Extra Revenue M (100k ASP - 90k ASP) Extra Gross Profit (at 25%) No. of additional 10kWh home storage units Revenue at 10000 each (NYSE:M) Extra Gross Profit (at 50%)
20 80 25 305 0.61 31 7.75 2500 25 12.5
30 70 100 1242 2.48 122 30.5 10000 100 50
40 60 175 2215 4.43 214 53.5 17500 175 87.5
50 50 250 3226 6.45 306 76.5 25000 250 125
60 40 325 4276 8.55 399 99.75 32500 325 162.5
70 30 400 5369 10.74 492 123 40000 400 200
80 20 475 6507 13.01 586 146.5 47500 475 237.5
Click to expand...

Great article! By principle I haven't loggedin to SA for over a year but your article was worth it
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Johan said: ?

Great article! By principle I haven't loggedin to SA for over a year but your article was worth it
Click to expand...

Thanks!
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dalalsid said: ?

here is my table from the article - Genius Of The Tesla 70D: Sell More Cars, Use Fewer Batteries - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

70kWh % 85kWhn % Extra Batteries Available (MWh) No of extra cars at same ratio %extra cars Extra Revenue M (100k ASP - 90k ASP) Extra Gross Profit (at 25%) No. of additional 10kWh home storage units Revenue at 10000 each (NYSE:M) Extra Gross Profit (at 50%)
20 80 25 305 0.61 31 7.75 2500 25 12.5
30 70 100 1242 2.48 122 30.5 10000 100 50
40 60 175 2215 4.43 214 53.5 17500 175 87.5
50 50 250 3226 6.45 306 76.5 25000 250 125
60 40 325 4276 8.55 399 99.75 32500 325 162.5
70 30 400 5369 10.74 492 123 40000 400 200
80 20 475 6507 13.01 586 146.5 47500 475 237.5
Click to expand...

Great article, thank you.

A new model is quite a nice surprise from Tesla. I will not be surprised if 70D outsells all other Tesla models this year.

Reading comments on SA Tesla related articles reinforces my Tesla investment expectations. Usual bears with usual well worn out and discredited arguments are often bordering on comical.
�

Auzie said: ?

Great article, thank you.

A new model is quite a nice surprise from Tesla. I will not be surprised if 70D outsells all other Tesla models this year.

Reading comments on SA Tesla related articles reinforces my Tesla investment expectations. Usual bears with usual well worn out and discredited arguments are often bordering on comical.
Click to expand...

Thanks! Yeah it is fun to read comments and often frustrating. But as an author I hadn't posted anything for a long time now and I was getting argument withdrawal.
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WarpedOne said: ?

Why? What is it that you loose with dual motors?
Click to expand...

You lose storage space in the frunk. You lose the quietest ride. You lose some freeway speed acceleration (since the car is heavier). It isn't a no trade off change.
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austinEV said: ?

Honestly, if one of your 2 motors goes out the car is going to throw a "pull over safely". I doubt you will just drive on your merry way until you can get it serviced.
Click to expand...

no, it throws a "Car needs service - power reduced". It'll still drive there.
�

When did you make your last post before this one?

dalalsid said: ?

Thanks! Yeah it is fun to read comments and often frustrating. But as an author I hadn't posted anything for a long time now and I was getting argument withdrawal.
Click to expand...

- - - Updated - - -

So basically your assumption is TM is battery supply constrained?

dalalsid said: ?

here is my table from the article - Genius Of The Tesla 70D: Sell More Cars, Use Fewer Batteries - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha

70kWh %
85kWhn %
Extra Batteries Available (MWh)
No of extra cars at same ratio
%extra cars
Extra Revenue M (100k ASP - 90k ASP)
Extra Gross Profit (at 25%)
No. of additional 10kWh home storage units
Revenue at 10000 each (NYSE:M)
Extra Gross Profit (at 50%)

20
80
25
305
0.61
31
7.75
2500
25
12.5

30
70
100
1242
2.48
122
30.5
10000
100
50

40
60
175
2215
4.43
214
53.5
17500
175
87.5

50
50
250
3226
6.45
306
76.5
25000
250
125

60
40
325
4276
8.55
399
99.75
32500
325
162.5

70
30
400
5369
10.74
492
123
40000
400
200

80
20
475
6507
13.01
586
146.5
47500
475
237.5

Click to expand...

�

maoing said: ?

So basically your assumption is TM is battery supply constrained?
Click to expand...

Is there a source for this or is it a totally unsubstantiated assumption?

A lot of members are repeating it as if it was fact but I find it HIGHLY unlikely. Why would they be launching a battery intensive new product line if batteries were an issue?! It makes NO sense and would mean a huge management misstep.

To me it's more likely that they will use the stationary storage to absorb SURPLUS of OLD batteries. The NEW battery packs MIGHT be constrained in the short term though, but no information I've seen so far points to that.
�

I doubt that 70D was introduced due to battery supply constraint.

70D is likely to open up demand and enable Tesla to make more cars with less batteries.
�

Maoing, i made my last sa post sometime last year, probably October. It is not so much that they are battery constrained add opposed to them being able to meet demand (which I don't think is declining) with the resources they have.
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RobStark said: ?

Anecdotally, it seems people that are stepping down from an 85 to a 70D are not lowering the price paid.

They are replacing kWh with options. Pano roof ,premium paint, next gen seats, air suspension, high fidelity sound system etc.
Click to expand...

Because they have allready committed themselves to price tag.
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Auzie said: ?

I doubt that 70D was introduced due to battery supply constraint.

70D is likely to open up demand and enable Tesla to make more cars with less batteries.
Click to expand...

Auzie, I agree with your second sentence. Particularly, selling more cars with fewer batteries is exactly what you want to do when your battery supply is constrained at least for the short run.
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Gtoffo said: ?

Is there a source for this or is it a totally unsubstantiated assumption?

A lot of members are repeating it as if it was fact but I find it HIGHLY unlikely. Why would they be launching a battery intensive new product line if batteries were an issue?! It makes NO sense and would mean a huge management misstep.

To me it's more likely that they will use the stationary storage to absorb SURPLUS of OLD batteries. The NEW battery packs MIGHT be constrained in the short term though, but no information I've seen so far points to that.
Click to expand...

Yes, I'd like to see confirmation on this as well. My theory wirks out the consequences of a new cell which for at least the short run. So it is clearly a conditional thesis. While we may or may not get direct confirmation from Tesla on this--they like to hold their cards close to their chest these days--we can at least look at their behavior to see for clues. When Tesla is moving to increase ASP, this behavior is consistent with being unit constrained, e.g., the Fremont plant cannot ramp up cars per week. When Tesla is moving to sell more revenue per kWh, this is consistent with being cell constrained, at least for some kinds of cells, maybe not all. When Tesla moves to cut prices of existing models, this is consistent with being demand constrained. When Tesla is moving to offer new products or enhanced capabilities of existing products, this is consistent with an appetite to grow into new segments and markets.

So what I see with the 70D is not a price cut nor an attempt to raise ASP. It brings a new product with enhanced capabilities to a market segment that is more price sensitive and value oriented than buyers of the P85D; moreover, it optimizes revenue per kWh over the midline 85 and 85D. So this move is not consistent with being unit or demand constrained. But it is consistent with an appetite to grow into a value segment of buyers and being cell constrained on whatever kind of cell they are putting into the 70D and might want to put into other vehicles like the Model X. Once the Model S 100D or higher is announced, we'll know we're past the cell constraint.

So, yes, I would love to hear Musk confirm or set aside my hypothesis, but for the time being I must know the tree by its fruit.

We also need to wonder if Tesla will have new cells for the Model X. If so, then it may make sense to also introduce that to lower value version of the Model S. This helps Tesla manage the ramp up in production. If there is so much demand for high end Model X versions than the 70D can be sacrificed with longer wait times. OTOH, if sell supply exceeds demand for the Model X, then more 70D can be pushed out. The game is still about maximizing revenue per the new cell supply, while maintaining solid demand for the new cell so Panasonic can scale up with confidence.
�

My view is that the 60 wasn't well received by the public and the 70D looks to be a more compelling car for basically the same price. Plus due to added weight and drag for the model X the 60 battery would be even less compelling. Battery constraints could be the issue, but with the price/car ratio getting better I wold expect more overall demand, even if 25% of orders are the 70.

we will see soon with the quarterly call
�

30seconds said: ?

My view is that the 60 wasn't well received by the public and the 70D looks to be a more compelling car for basically the same price. Plus due to added weight and drag for the model X the 60 battery would be even less compelling. Battery constraints could be the issue, but with the price/car ratio getting better I wold expect more overall demand, even if 25% of orders are the 70.

we will see soon with the quarterly call
Click to expand...

I agree. I think sales for the 70D to 2 to 3 times that of 60 and 85 combined. The 85D also is a more powerful and compelling vehicle than when it was first issued (0-60 went from 5.2s to 4.4s!), so I expect sales to be about 1.5 higher than before. And finally I'd expect P85D sales to remain about the same. All told we need to go from 10,030 in Q1 to about 13,500 Model S in each of the remaining quarters. I think this line up can do it.

This is a real great line up. I wish it had been in place in January when I ordered my 85. At the time, the only rationale for the 85D was to get AWD, which I did not need. The 85D was not much quicker than the 85. If I had to make my choice today I'm not sure if I would order a 70D or a 85D, but I would be more eager to buy either one, while I was willing to pass on the 60 for a year. Moreover, I would have given serious consideration to both, and that is a very good thing from a marketing point of view. I also believe people will pretty much spend what they are willing to spend. So the choice between 70D and 85D would not have made much difference in revenue. I would buy a nicely optioned 70D or a more thinly optioned 85D. It's all about getting the car that makes me happiest for the money I am willing to pay.

So under this new line up, I do expect to see ASP to drop a little, maybe $4K to $8K, while units sales go up 35%. The decline in ASP is not due to "cannibalization", however. It is simply due to selling more cars in the $75k to $90k range, options included. For example, suppose the old ASP was $100 and the ASP on 35% incremental sales is $85. Then the new ASP is $96 = (100 + 0.35�85)/1.35, meanwhile revenue is up about 30%.

So I'm excited to see how this plays out. I guess we'll see some impact in Q2, but the full impact will be in Q3.
�

jhm said: ?

I agree. I think sales for the 70D to 2 to 3 times that of 60 and 85 combined. The 85D also is a more powerful and compelling vehicle than when it was first issued (0-60 went from 5.2s to 4.4s!), so I expect sales to be about 1.5 higher than before. And finally I'd expect P85D sales to remain about the same. All told we need to go from 10,030 in Q1 to about 13,500 Model S in each of the remaining quarters. I think this line up can do it.

This is a real great line up. I wish it had been in place in January when I ordered my 85. At the time, the only rationale for the 85D was to get AWD, which I did not need. The 85D was not much quicker than the 85. If I had to make my choice today I'm not sure if I would order a 70D or a 85D, but I would be more eager to buy either one, while I was willing to pass on the 60 for a year. Moreover, I would have given serious consideration to both, and that is a very good thing from a marketing point of view. I also believe people will pretty much spend what they are willing to spend. So the choice between 70D and 85D would not have made much difference in revenue. I would buy a nicely optioned 70D or a more thinly optioned 85D. It's all about getting the car that makes me happiest for the money I am willing to pay.

So under this new line up, I do expect to see ASP to drop a little, maybe $4K to $8K, while units sales go up 35%. The decline in ASP is not due to "cannibalization", however. It is simply due to selling more cars in the $75k to $90k range, options included. For example, suppose the old ASP was $100 and the ASP on 35% incremental sales is $85. Then the new ASP is $96 = (100 + 0.35�85)/1.35, meanwhile revenue is up about 30%.

So I'm excited to see how this plays out. I guess we'll see some impact in Q2, but the full impact will be in Q3.
Click to expand...

Agreed, the announcement of the 70D was the first real sign from Tesla that they are able to start moving up the demand curve. Very encouraging.
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jhm said: ?

I agree. I think sales for the 70D to 2 to 3 times that of 60 and 85 combined. The 85D also is a more powerful and compelling vehicle than when it was first issued (0-60 went from 5.2s to 4.4s!), so I expect sales to be about 1.5 higher than before. And finally I'd expect P85D sales to remain about the same. All told we need to go from 10,030 in Q1 to about 13,500 Model S in each of the remaining quarters. I think this line up can do it.

This is a real great line up. I wish it had been in place in January when I ordered my 85. At the time, the only rationale for the 85D was to get AWD, which I did not need. The 85D was not much quicker than the 85. If I had to make my choice today I'm not sure if I would order a 70D or a 85D, but I would be more eager to buy either one, while I was willing to pass on the 60 for a year. Moreover, I would have given serious consideration to both, and that is a very good thing from a marketing point of view. I also believe people will pretty much spend what they are willing to spend. So the choice between 70D and 85D would not have made much difference in revenue. I would buy a nicely optioned 70D or a more thinly optioned 85D. It's all about getting the car that makes me happiest for the money I am willing to pay.

So under this new line up, I do expect to see ASP to drop a little, maybe $4K to $8K, while units sales go up 35%. The decline in ASP is not due to "cannibalization", however. It is simply due to selling more cars in the $75k to $90k range, options included. For example, suppose the old ASP was $100 and the ASP on 35% incremental sales is $85. Then the new ASP is $96 = (100 + 0.35�85)/1.35, meanwhile revenue is up about 30%.

So I'm excited to see how this plays out. I guess we'll see some impact in Q2, but the full impact will be in Q3.
Click to expand...

JHM,
I mirrored your feelings in another thread: this is a great lineup of cars. The 70D is a really compelling entry point, complete with supercharger access, the 85D is a near supercar with its amazing acceleration, and the P85D is the most affordable supercar on the market (which also happens to be economical to maintain and feed). Add autopilot and you have strong reasons for early adapters to move up much sooner than they would otherwise. There's not a weak car in the lineup. Here in Hawaii, we're seeing used 40kwh and 60kwh Teslas being scooped up by former Leaf drivers.
�

teslamotorclub

Thứ Ba, 31 tháng 1, 2017

S70D investor implications part 1

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70kWh %	85kWhn %	Extra Batteries Available (MWh)	No of extra cars at same ratio	%extra cars	Extra Revenue M (100k ASP - 90k ASP)	Extra Gross Profit (at 25%)	No. of additional 10kWh home storage units	Revenue at 10000 each (NYSE:M)	Extra Gross Profit (at 50%)
20	80	25	305	0.61	31	7.75	2500	25	12.5
30	70	100	1242	2.48	122	30.5	10000	100	50
40	60	175	2215	4.43	214	53.5	17500	175	87.5
50	50	250	3226	6.45	306	76.5	25000	250	125
60	40	325	4276	8.55	399	99.75	32500	325	162.5
70	30	400	5369	10.74	492	123	40000	400	200
80	20	475	6507	13.01	586	146.5	47500	475	237.5