Nov 20, 2012
Jeeps17 ... in the next two to three weeks.
Existing reservation holders will NOT be affected, as long as they finalize their order (when their turn comes) within an "fair, predetermined timeframe".
First I heard of this, but it was posted by Nick Kinkaid on the new Tesla bulletin board...
http://www.teslamotors.com/en_CA/forum/forums/it-true-there-will-be-model-s-price-increase-near-future
I wonder what those new option packages will be...�
Nov 20, 2012
contaygious whoa glad I got my price locked�
Nov 20, 2012
mitch672 And for those of us that have very high reservation numbers, who won't even be asked to "configure" until 1st or 2nd quarter of 2013, what does it mean? I'm not paying a penny over $92,000 for my Model S
�
Nov 20, 2012
action7981 Nothing, anyone with a current reservation or anyone that reserves before the new pricing is announced will not be affected. Unless of cource you decide you just have to have one of the new options :wink:
Given the current reservations count the price increase will most likely take place 3rd Qtr 2013. My guess is it's going to relate to Model S 1.5.
So the question is, is there going to be a big jump in reservations over the next couple of weeks as people lock in the price or is it going to maintain it's current daily rate with some people figuring they will add a month or two to their wait time and get Model S 1.5?�
Nov 20, 2012
mitch672 The only option that would interest me is all wheel drive, there's nothing else I would change, other than if that becomes a possible future option.. But of course it depends on the cost as well.�
Nov 20, 2012
RDoc Hmm ... for those of us with Model X reservations, this seems a bit ominous.�
Nov 20, 2012
ckessel Why? The X pricing has never even been released. How would you know if it goes up or not?�
Nov 20, 2012
Rodolfo Paiz
It means they will send you an email with the new pricing and choices, and they will ask you to configure and finalize "within a fair, predetermined timeframe". Meaning, they will tell you how long you have to make your choices. As long as you abide by the time frame they give you, you will not be subject to the price increase.�
Nov 20, 2012
Grendal This makes perfect sense. Original pricing was based on the plans from over 2 years ago. Tesla has clearly said they want to have 25% margins. A lot of people on blogs and commenting on articles have said they didn't think that Tesla could keep those margins. The simple solution that every business makes is to raise prices until you are meeting your profit margins. Tesla has a good idea of costs now that they have hired people and bought equipment to make their cars. I don't expect the increase to be a significant one and the lower end will porbably be hit the hardest.
This might be a result of the aluminum price increase.
Remember that this happened with the Roadster too.
It will only effect those purchasing a car that they will receive nine months from now.�
Nov 20, 2012
beck.christopher I wonder what these new options will be, hopefully they announce a center console instead of the empty space.�
Nov 20, 2012
kevincwelch I'm glad that Tesla is not increasing the price for existing reservation holders, and I suspect that this "fair, predetermined timeframe" is 30 days from receiving your "It's Time to Build..." email.
The obvious question pertains to what is driving the price increase.
Also, as you stated, I'm curious if we lock-in if we will be able to get any of these options. Maybe I want to nix the sunroof for the center console...who knows?�
Nov 20, 2012
Norbert It doesn't say anything about "new" options, only that the line between standard/optional will change, and the pricing. Unless I'm missing something.�
Nov 20, 2012
tdiggity There might be some good from this. You might be able to get heated seats without the nappa leather, for example.�
Nov 20, 2012
Grendal Alcoa jacked up their prices on aluminum?�
Nov 20, 2012
tdiggity The price of the Model S has been the same price since they announced it (1+ years?), I believe? Inflation, cost of business, etc.�
Nov 20, 2012
kevincwelch True. I misinterpreted the bulletin wording.�
Nov 20, 2012
Lyon Even though I'm logged into My Tesla it won't let me see that, says permission denied.�
Nov 20, 2012
derekt75 Here are some guesses:
1) After building a bunch of Model Ss, they're finding it hard to achieve the gross margins they were expecting.
2) With the reservation rate currently exceeding their build capacity, they realized they could make more money by charging more. The reservation rate might drop, but when you're limited by capacity, not reservations, that doesn't matter as much.
3) They'd prefer some more short term cash at the expense of long term cash. If you hear prices are going up, you might be more tempted to send them $5k today rather than waiting.
4) Inflation.
5) After seeing what options people are buying, and what options people are asking for, they've decided to restructure things anyway. While restructuring, they figure they can get some more revenue.
6) Now that the $7500 tax credit seems safe for a couple years (thanks to Obama), they don't have to worry as much that the US gov't will cause an effective price hike that makes them noncompetitive.
I suspect it's some combination of the above. Given all the reasons to do it, and the scarcity of reasons not to (lower long term demand that they couldn't satisfy anyway), I think it seems quite sensible. If the reservation rate plummets in the next few months, they can always roll back their decision with little lasting harm.�
Nov 20, 2012
Lloyd Yep, Me too.�
Nov 20, 2012
derekt75 I get this problem all the time on TeslaMotors.com.
Right after you log in, try clicking on the link again. Sometimes that works for me, sometimes it doesn't.
- - - Updated - - -
Oh, this is odd: the bulletin board now shows as empty.
http://www.teslamotors.com/en_CA/forums/inside-tesla/tesla-bulletin-board
Earlier today, it had a half dozen questions and answers on it, including the price increase one.�
Nov 20, 2012
Orthonos I am denied as well. Perhaps it wasn't meant to be released yet, and was an accident?�
Nov 20, 2012
efusco Wanna guess? I know they'll change up the optioning, but I'm guessing a comparably optioned out Model S will be ~$2500 more under the new price plan. Fairly random guess, but it's ~5% above base.�
Nov 20, 2012
vfx When they announced a price increase on the Roadster they went from an order of one or two a day to 50 in one week.�
Nov 20, 2012
Lyon So I got through on my computer at home. Here's the text of the announcement:
IS IT TRUE THERE WILL BE A MODEL S PRICE INCREASE IN THE NEAR FUTURE?
[email�protected].. | NOVEMBER 20, 2012
Yes, we will be announcing a Model S price increase in the near future. However, there are a few very important points to understand about the upcoming price increase:
The price increase will not apply to anyone with an existing reservation prior to the effective date of the price increase and who also configures their car and finalizes their order within a fair, predefined timeframe.
There will be a few "options package" changes as part of the price increase (meaning some things that are currently considered standard equipment may become part of an optional package going forward). These changes will not apply to anyone with an existing Model S reservation prior to the effective date of the price increase who also configures their car and finalizes their order within a fair, predefined timeframe.
All reservation holders who have "deferred" will receive an email regarding the price increase and will have the opportunity to keep current pricing and options packages by finalizing their configuration and order within a fair, predefined time frame, similar to those who did not defer.
This price increase is planned to be announced with full details, effective dates, pricing and options packages in the next two to three weeks. We are starting to hear rumors about "a price increase coming soon" and want to assure current reservation holders that the price increase will not affect them as long as they configure and finalize their order within a fair, predefined time frame after being invited to configure their Model S. If a test drive is all that is holding you back from configuring your car, please make an appointment at a Tesla store near you.�
Nov 20, 2012
jerry33 I sure hope they don't raise the price to where i can't afford it. I'm not in a position to finalize right now and it will be a few more months before I am. This is really disappointing.�
Nov 20, 2012
tdiggity How much was that increase?�
Nov 20, 2012
Grendal "Model S reservation prior to the effective date of the price increase who also configures their car and finalizes their order within a fair, predefined timeframe."
It doesn't seem like they intend to screw you on this. I'm pretty sure you'll be able to get your "few more months."�
Nov 20, 2012
jerry33 Given that they said "All reservation holders who have "deferred" will receive an email regarding the price increase and will have the opportunity to keep current pricing and options packages by finalizing their configuration and order within a fair, predefined time frame, similar to those who did not defer."
I'd guess that the fair and reasonable timeframe is 30 days from when the send the price increase notice. I only just got the finalize email last week, so I haven't done anything with it yet.�
Nov 20, 2012
constraint Battery prices should decrease cost over time so its disheartening to see the price going up. My guess is there has been a lot of extra overtime paid out to employee's because they under estimated production costs.�
Nov 20, 2012
tomanik Price increase of $2500. But the cara will come with 4 years of free servicing.....
:biggrin:�
Nov 20, 2012
Doug_G I suspect that's a big part of it.�
Nov 20, 2012
gg_got_a_tesla Wonder what more they can strip out of the barebones 40 kWh sub-$50K car... Or, is that price level not going to hold anymore?!�
Nov 20, 2012
SoCalGuy Fisker did this in December 2011 - there was such a backlash by deposit holders of them 'bullying' customers into locking in their orders, that they ultimately extended the grace period until March 2012. I personally am not a fan of this - after selling cars for just a month or two, they're going to raise prices? Give people a chance to get more word of mouth data on the car and then raise the price if need be (9+ months of deliveries).�
Nov 20, 2012
RDoc Because the Model X was announced to be about the same price as a similar Model S. Presumably the Model X when it comes out will be about the same price as a Model S at that point. With the price increase it will be higher than when the Model X was announced. Or not. Perhaps they'll offer a lower price to early reservationists. Or not.�
Nov 20, 2012
dsm363 I hope that's part of it. Then that would take that issue off of the table.�
Nov 20, 2012
Grendal I'd expect not. The 40 kWh car has to have the lowest profit margin of all the versions. Tesla needed to come out with that price to keep Elon's promises but they successfully did that and now they need to be realistic. If 40 kWh cars have about 20% of the sales then that means that they are willing to take a margin hit on only 2500 to 3000 cars.
And I still think it had something to do with the price increase on aluminum.
My guess would be $2500 increase on each base model. That's about 5%.�
Nov 20, 2012
AnOutsider In general, aren't there price increases every model year? They're honoring the quoted price on all current reservationists AND new ones up to the point they announce the change. That's going to be something like 15k cars at the original price and well into 2013.
If you have a reservation, what's there to worry about?�
Nov 20, 2012
Zythryn If they are grandfathering in current reservation holders, then the price increase will be hitting deliveries made around next August or so. This is nothing unusual in the auto business, is it?�
Nov 20, 2012
Grendal I hope the Gen III stays at $30K base price but I'm not counting on it.�
Nov 20, 2012
AnOutsider Well, they are SHOOTING for that, so I imagine all the prep work is going into making that happen. Will probably increase in the next year though, or get stripped down.�
Nov 20, 2012
doug This is the main question. The current margin on the 40kWh car must be slim given how Tesla seems to be disincentivizing it. Any change would have the greatest proportional effect on that car. Goes to show what a great deal it currently is.�
Nov 20, 2012
josh Roadster went from $100K to $130K... hopefully not of that magnitude. Or, maybe, hopefully for everyone here, a big jump, as it would increase the resale value of your asset (assuming the market bears the new price).�
Nov 20, 2012
jkirkebo I don't have a good feeling about the timing this time, releasing this info a few weeks before european pricing will be announced. I suspect we will see the price increase immediately over here...�
Nov 20, 2012
DrComputer Well, not quite true. The Roadster went through several price increases from $92K to $99K and then to $109K for the 2.0. They added the Sport option for the 2.0 and 2.5.�
Nov 20, 2012
richkae I think this is a good idea.�
Nov 20, 2012
josh Yeah, sorry, you're right, my memory is failing. $92K -> $109K (+options...)�
Nov 20, 2012
Oyvind.H Totally agree. This seems to be coordinated with the release of EU-prices. Maybe this is why we still have no EU-prices? I am all in favour of Tesla making money, but if we`re talking about more than a few percent I`ll be very disappointed. I made my reservation this summer, and they state in their information that current reservation holders won`t be affected. But when prices are not released, they`ll shurely jack up the EU prices immediately and by that affecting current reservation holders.....�
Nov 20, 2012
Bardlebee This is a shame, I guess I don't share the sentiment about the price increase everyone else does. Coming from the perspective of someone who planned to reserve next year, if this increase is something to the tune of 10k or more, I may just wait for Gen 3 or wait even longer to reserve. I know it may be great for the company, but just giving my 2 cents. I want a Tesla, I want one real bad, but I am not willing to stick so much money out there that I could use to pay off my house�
Nov 20, 2012
49er I hate this announcement. There are no "good" reasons for this IMO.
I expect the average selling price for Gen III will be $50k. Base price will be $40k after federal tax credit. I don't see Tesla beating Chevrolet on pricing.�
Nov 20, 2012
Bardlebee
Considering most commenters and the general naive public think the Model S is for the rich and 1% (never to consider the several variable as to why the price is high for now) this will not help their case with them.�
Nov 20, 2012
vfx The price rise I mentioned upthread was the first one 92 to 98. A lot of fence sitters jumped off.�
Nov 20, 2012
mitch672 I reserved on July 2nd, 2012. At the time the only estimate of delivery they could give me is "Spring 2013".
Given all of the delays and where they are now, I'm not sure when I'll see "P10010", but I expect it could be even later than their estimate... They have been overly optimistic on delivery so far, and I don't see that trend ending, but I hope it will as a TSLA shareholder. How long can they keep putting in tremendous overtime and 7 day work weeks? They can't work any harder, their going to have to work smarter, but building cars is hard work.�
Nov 20, 2012
49er Agreed.
What happened to the mission of making EVs mainstream? Raising prices hurts that mission. The car is already 2-3x the cost of the average car sold in the U.S.
If it's not a profit-optimization issue but rather a cost issue, then that's no consolation. I'm increasingly confident that GenIII will come in at $40k after tax credit, and the attractive configurations (i.e. range of 250+ miles) will be $50k+.�
Nov 20, 2012
SteveG3 just wondering about this price increase... is it possible that they can slightly tweak the battery size at this point... i.e. could the 40 and 60kwh have been under revision this year to go toward 45 and 65kwh when production on these actually begins. I'm not an engineer, perhaps this would be a fundamental change that would take substantial spending and considerably more than a timeline of 6 months or a year.
I suggest a battery increase because it would bring the not yet released 5 cycle EPA range numbers for the two smaller batteries close to the 160 and 230 miles Tesla got at 55 mph. coupling this with a price increase would avoid stubbing toes of people who bought 85kwh battery. (I'd be assuming few thousand who already reserved 40's and 60's would be getting a free upgrade).
fwiw, I very much like the idea someone suggested of $2500 increase, and inclusion of service plan.
this may just be my wishful thinking that they really show value for the price increase... things are going so very well with the current value proposition of the car.�
Nov 21, 2012
hcsharp Tesla is raising the price because they can. Simple supply and demand. Look at the acceleration rate of reservations (as opposed to simply the rate of reservations). You don't have to be a rocket scientist to see that they probably won't be able to meet demand in a year, which is about when the increase will kick in.
I also predict most Gen III cars will sell for 50k or more with a target base price of 39 - 40k. Demand will be so high at that point there's no reason to price it lower. Several of my friends have made S reservations, but I've talked to at least 100 people who say they are waiting for "the mass market EV" from Tesla.�
Nov 21, 2012
49er They have supply and demand in their favor now. Heck, they had 10k reservations before they delivered their first Model S! The reservation book is still full with early adopters, EV fans, and auto enthusiasts. Fast forward a year from now when those reservations have been filled, and I don't see Tesla selling 40k units/year (20k Model S and an additional 20k Model X) at an average selling price of $70k. I expect Model S prices to come down in 12 - 18 months once the reservation backlog thins out.�
Nov 21, 2012
Citizen-T Agree with the comments above about supply and demand. At current reservation rates they would need to exceed planned production by quite a bit just to maintain the backlog. With the trouble that they are having meeting planned production this seems incredibly unlikely in the near term.
If they can't build enough cars and the backlog keeps growing they are gong to find themselves in a position where they are leaving money on the table. Eventually, people are going to go elsewhere for a car because the wait is too long. They need to balance the price so that it only attracts the number of reservation holders that they can handle.
They misjudged the market; it says this car is too cheap. This has been obvious to me for some time (see the private sales that have taken place), but the fact that we have so far surpassed the expected demand has solidified it in my mind. Think about it, the plan was 20k cars: 10k from U.S. and 10k from overseas; but the U.S. market is signaling that it can handle 20k all by itself! What is Tesla to do? Not sell outside the U.S. until they can produce 40k a year? That's not optimal. They need to raise the price to reduce demand to a reasonable level where they can have any hope of meeting it.
This is a good thing. For a counter example see the insane leasing available for a Volt. You think they are doing that because they want to do society a favor? GM misjudged the market too; but, in their case they need to lower the price to raise demand to a level where their factory isn't sitting idle.
This is just good management from my perspective.
P. S. Let's take a sec and praise Tesla on their transparency with this one. We asked for communication whether it's good news or bad, and that's what we got.�
Nov 21, 2012
tdiggity Just putting this out there...
If anyone wants to defer but doesn't want to risk the price increase, we can trade spots! I'm ready to pull the trigger but have P12,400.�
Nov 21, 2012
CapitalistOppressor Normal inflation would increase the price of a ~$30k car by ~$2k in 2015 anyways.
As to possible reasons, I am in the "all of the above" camp.
We are talking a timeframe of ~2 years from the time the original pricing was announced to when this policy is likely to take effect. General inflation is an issue, but so is commodity price inflation. And Tesla DOES know more about their real cost structure now, and Tesla DOES need to hit their gross margins, and it's clear that demand is likely higher than their capacity to produce cars. And it's well known at this point that the market is skewing heavily towards the higher end, and Tesla needs to cater to the needs of their actual customers as opposed to the theoretical ones they planned around in 2010.�
Nov 21, 2012
kevincwelch Although I am curious as to what is driving the price increase, it is not surprising at all that the cost is going to go up -- hopefully in the short run. As an earlier poster pointed out, making EVs available to the mainstream requires manufacturers to lower the prices on the automobiles. However, unless one of the giants (GM, Ford, etc. ) comes out with an EV that has 200+ miles of range, Tesla needs the capital to invest in research as well as be prepared to take some losses on mainstream EVs that are perhaps worth more than their selling point.
I've been a part of this camp, so I do see some of the hypocrisy in saying this, but we can't have it both ways. Tesla reached out and in black and white told us that we should expect some changes. The description of those changes was a little vague, but at least they are preparing us. So, it seems as though we should be acknowledging Tesla for being a better communicator in this situation.
In terms of the timing of this announcement, I do find it a little odd that it is coming that this time. Holidays. No price yet for EU models. Regular production has not occurred yet. Model S has been out there (realistically) only a couple of months. Personally, I would have waited until 2013 to make the announcement.
I don't think everyone who has a reservation should be granted the 2012 price. If this were the case, I could defer for 9 months and take possession in Dec 2013. What I do think needs to occur is for Tesla to specifically state how long reservation owners have to lock-in before they are subject to the price changes. Is it 30 days? 45 days? 90 days? I suspect it is 30 days, but it would be nice if it were 90 days. I doubt it, though.
I can't imagine any major jumps in price point. Maybe the service will be included now. I agree that the 40 kWh version probably can't go up in price, but a 5% price increase in 60 kWh and 85 kWh versions wouldn't be unreasonable. Add heated seats to the options. Maybe supercharging will now be an option for all models. Time will tell.�
Nov 21, 2012
HFh Swapping is possible, but Tesla needs a good (and legitimate) story.�
Nov 21, 2012
Norbert It does have some humor to it.
Now that the production is approaching target rates, the 'critics' increasingly focused their doubts (aka FUD) on the question of "continued demand" and the market size at certain price levels.
Tesla's answer: we'll raise prices.�
Nov 21, 2012
AnOutsider Just what I was thinking. Just like GeorgeB said... People say they want the news, good or bad... until they get the news, and it's bad.�
Nov 21, 2012
beck.christopher Anyone want to swap? I am ready to order now. I got res#13613�
Nov 21, 2012
ElSupreme Am I the only one that thinks that this price increase (I aliken to a model year bump) is going to come with the Tech package, X years of 3G, and service wrapped up into the car, standard supercharging on 60kWh.
I think they will add some options to the 'base' car and increase the price with it. I don't think this is just a simple cash grab. I think they want to avoid backlash, like say from $600 annual service visits. Decrease their supply chain complexity, standard tech package. And force some profitable options, standard tech package. I expect a ~$7000k increase in price (maybe $5k on the 85kWh). Add 3G to the base price of the car so they don't have to worry about monthly billing, and credit checks. Same thing for service, you get your money up front, and you get all the data you need by having everybody bring in their cars.
I do think that Tesla might up the price of the performance package. And that could be just a pure cash grab. It seems to be a really popular option, and if you price it too high, people will still get the regular 85kWh (you might loose a small number to M or AMG) so you don't really lose that many customers.�
Nov 21, 2012
dsm363 They certainly have gotten a lot of feedback about pricing and options over the last year so think this is a good thing. Raise the price, include things that people expect (service, connectivity..etc) and make those charges 'disappear' into the cost of the car.�
Nov 21, 2012
Zextraterrestrial They could break up options packages and make something like headlights separate from the nav or add some new options like ACC�
Nov 21, 2012
dsm363 And make those options when possible available to current owners (for a price that includes a nice margin for Tesla) too..�
Nov 21, 2012
Jeeps17 Indeed, I hope that v1.0 S owners will be able to add things like parking sensors if/when they become available, barring major technical issues.
ACC / pre-collision systems / powered folding mirrors (this list could go on) would potentially be worth $$$ for a substantial number of people, IMHO.�
Nov 21, 2012
Jaff I'm not sure this is a fair comment 49er...
The Model S, like the Roadster before it, are necessary planks in the TM business model to get the GenIII to market...right now, any speculation that the GenIII pricing will change is just speculation...
�
Nov 21, 2012
brianman While GeorgeB's quote sometimes applies, I don't think it does here.
From what I've seen, nobody is upset that Tesla is communicating this "bad news". In fact, it seems consistent that people are glad Tesla is being open and firm about this.
What (some) people are upset about is that there is a price increase period, not the communication about it. In other words, the concern is about the content about the message not the format of the message or the messenger.�
Nov 21, 2012
Krugerrand Indeed, it's ironic and hilarious.�
Nov 21, 2012
Rodolfo Paiz +1. Additionally, Tesla may -- and should -- be adapting to the differences between real-world demand and whatever they projected. They need to charge what the market will reasonably bear in order to maximize profit and growth opportunities from the Model S. If they have a 20,000-unit backlog in sales, then a 5% increase in price is a great idea. That 5% goes straight to the bottom line, and a startup like Tesla can use all the oomph it can get!
Finally, let's not forget that the Model S was never meant to "mainstream the electric car". Tesla does intend to do that! But Rome was not built in a day, nor can you develop new technologies in weeks. The Model S is a huge step in the right direction: no EV before it provided anywhere near its capabilities, period. Regardless of cost, by the way. Now, with technology improving and Tesla making money from the S and X, their next car is planned to have a base price in the thirties after the tax credit: that's a 30% lower starting price than Model S, and will make the Gen-3 car affordable to a much larger market segment. But even that may not be totally "mainstream" yet... as technology improves and costs come down, it may be the Gen-4 car that starts at $20K.
We are not there yet, sure. But it's absurd to think that one car model and one development generation was going to be enough to reach that objective. Great results are achieved by the combination of both pressure, and time.�
Nov 21, 2012
richkae I don't know how you can make statements like this without facts.
You know what won't make EVs mainstream? Tesla selling a few cars and making no profit.
What will make them mainstream is other manufacturers making compelling EVs. They will do that if Tesla sells cars AND makes a profit.
Tesla making a profit - and in fact more profit than the old car manufacturers - is good for EVs, not bad.�
Nov 21, 2012
JakeP I also wouldn't doubt that based on comments from the last earnings call where they were surprised by the high demand for the Performance model, that we see an increase in the "Perf upgrade" gap...perhaps sweetened by additional performance options.�
Nov 21, 2012
Norbert In so far as this is driven mainly by supply/demand (and less by necessity, for example due to suppliers raising Alu prices), I hope the price increase doesn't exclude (but rather support) adding production facilities to increase volume beyond the current maximum production rate of the line. Although perhaps such investments would delay those necessary for Gen III.�
Nov 21, 2012
Robert.Boston I agree that we'll see the biggest price increase on the Performance model. On a head-to-head price/performance comparison, the MSP is cheap compared to the Panamera Turbo, M5, etc. Also, the MSP requires a lot of hand-built attention to the electronics, and we've gathered that the CF has been a real headache.
I disagree with JakeP and others that we'll see any new options. The bulletin board post didn't talk about new options, only different groupings of existing options. I could see, e.g., the Tech Package getting broken out into a couple of smaller of packages.
I strongly agree with comments supporting the bundling of service into the base car.�
Nov 21, 2012
Zextraterrestrial @ R.B. what about the performance suspension set up that they have been testing supposedly?�
Nov 21, 2012
Robert.Boston Anything's possible, but I think this price reset is independent of any new/improved options.�
Nov 21, 2012
rogbmw All the whys and how much, etc is purely speculation at this point. Realistically though - if anyone of us were producing a complex product which involved as many sub-systems as a vehicle does, how many of us could truthfully say that we could guarantee a price 2 - 3 years from now based on what our costs are now?
If I understand correctly, Tesla has said that they will be honoring those who have reserved a car at the price quoted.
Try walking into a Chevy store and saying that you wanted to order a 2015 Corvette at a guaranteed price of what their MSRP is today.......just imagine what would be said.�
Nov 21, 2012
Majerus I wonder if I reserve on Monday if I will be stuck with the new price of if i can get current.. This kinda sucks I was planning on not buying until I could order it and have it within one month..�
Nov 21, 2012
strider Yes, anyone who reserves before the actual increase goes into effect will get the current pricing.�
Nov 21, 2012
Rodolfo Paiz George said reservation holders would not be affected by the price increase as long as they finalized within a "fair, predetermined time frame" after they got the email requesting that they do so. My speculative and uninformed guess would be that "reservation holders" includes anyone who reserves his or her car before they formally announce the price increase. So, if you reserve soon you ought to be OK.
Remember, your reservation is refundable. If you can spare the $5K for now, I'd suggest reserving ASAP and then revisiting whether or not you want to keep that reservation after the price increase is announced. That way you can get the best of both worlds, and an earlier delivery. If you don't reserve, you could end up really regretting it. If you do reserve, you'll either be happy you did or you can cancel your reservation... and in that case, your only cost is the time value of that $5K for a month or so: call it 12% annually, so about $50 in a month.�
Nov 21, 2012
49er Yes, I'm speculating when it comes to GenIII pricing. But let's not ignore the fact that we have now seen the only two Tesla models brought to market -- Roadster and Model S -- announced at a price that was subsequently raised. So Tesla is batting 1.000 in pricing higher than we thought (some might even claim "higher than Tesla said" but I don't have solid facts to support that assertion). Whether or not they should raise prices is another matter. I'm just saying that their pricing history affects my (speculative) predictions about their Gen III pricing.
I thought I had the facts! We already know the price increase, don't we?
This is an excellent point that you made. But at what price do they have to sell EVs to be profitable? If that price proves to be high, then how will that convince other manufacturers that making and selling EVs is anything more than a niche business, suitable for the likes of Tesla?�
Nov 21, 2012
DaveVa While I understand the angst with any price increase, we need to take into account that Tesla is putting in place a price increase that will not take effect for 8-10 months (with the delivery of new reservations).. Counting early deliveries that is over one year after introduction. Ford, GM, BMW, Toyota, and nearly every manufacturer announce revised pricing and options with nearly every model year on every vehicle.
It seems "early" because Tesla has such a large backlog, but if they waited they could be tied to current pricing for 24+ months. I think they are trying to do the right thing in an awkward situation.�
Nov 21, 2012
Majerus The only issue with this is the Roadster price adjustment was fairly dramatic.. Something in that ballpark could cause individuals on the cusp decline to purchase. I do understand inflation and other cost but i hope it is not more then 4k per model..�
Nov 21, 2012
Jules I assumed that when they produced and sold more vehicles they would be able to lower prices. (Due to the initial cost of development.)�
Nov 21, 2012
jcstp This will never happen, unless Tesla is in big trouble!
Tesla builds to order!
To stay healthy they should keep a healthy backlog of 3 months, and even that will be risky!
Getting your car 3 months after ordering it will probably not happen the next 2 to 3 years!
More so after the number of reservations they get now!
They get reserved a day in greater numbers then the speed they can build them a day!�
Nov 21, 2012
Jules Also, does anyone know a rough 'cost to build' estimate of the model S?
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Actually, it's more like going into a Chevy store and wanting to order a 2012 Corvette at current MSRP. This is a car already in production and already on the road. The 2015 Model S is a different story, however.�
Nov 21, 2012
Rodolfo Paiz It's not exactly like either one, but is a little closer to the first analogy. You're ordering a product with at least a year-long waiting list at this point. What Tesla is saying is that there will soon be a price increase for new reservations but that people who have already reserved will get the current pricing. They are honoring their promises. Those who reserve a car after the price increase is announced are going to be actually buying and receiving a car at the end of 2013, or later, so Tesla is essentially maintaining the initial pricing for nearly 18 months after the first sales of the Model S. Anybody who disapproves of that is welcome to their opinion... I see it as fine, upstanding conduct by Tesla.
If they don't announce a price increase now, and they keep getting as many new reservations as they're getting right now, then they'd be stuck with current pricing until sometime in 2014. That'd be very harmful to Tesla: aluminum prices go up, other component prices go up, labor costs go up, and inflation makes the dollar weaker. Some things go down, like battery costs... but if there's a ton of demand for the car, then Tesla would be foolish not to strengthen themselves and protect themselves from potential cost variances. The price increase makes perfect sense to me.�
Nov 21, 2012
Raffy.Roma I agree with you. Then it should also be considered that Model S is car of the year 2013. The recognized quality has to be valued. Model S won versus BMW, Porsche, Audi and so on. It's right that value of Model S increases when compared to other premium cars.�
Nov 21, 2012
derekt75 At the last SEC filing, they were estimating that they could build Model S with 25% gross margin once they got their volumes up in 2013.�
Nov 21, 2012
AndyM Exactly. Prices go up, folks. Remember the early Roadster owners who were told the price went up AFTER they reserved... and count yourselves lucky.�
Nov 21, 2012
Trnsl8r Why wait until Monday? The website is always open... Like other said, if you can spare $5k right now, there is no harm in covering your bet until the new prices are announced.�
Nov 21, 2012
vfx
And other manufacturers looking at Tesla making cars so in-demand they raise prices. Do they jump on board and make their own EV that people want just as much? Or do they throw up their hands and give up?
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Well they actually made things that were previously included with the car paid "accessories"�
Nov 21, 2012
Jules While it's not a bad thing that they're making profit, I don't see how they can justify raising the price because of increased demand when they should really be raising the supply to meet the demand. Raising prices will only turn people who are 'on the fence' off from purchasing.
The only way I can see this making any kind of sense is if the new reserve holders will actually be purchasing a new and updated 2014 version of the model S. Not the same exact thing. Is Tesla going the rout of a new 'version' per year?�
Nov 21, 2012
hcsharp I'm not sure I agree with GeorgeB on this. I haven't seen much complaining about getting the news. People have mostly complained about the content. In fact most people have only complained about NOT getting the news when it was bad. The over-priced service required to keep your warranty that wasn't announced until after many of us had locked in is a good example. Many of us would not have complained as much if we had been given the bad news early on before we had any choice but pay it. On the other hand, the price increase is a good example of bad news that is resulting in praise for communication even if nobody likes to see a price increase.�
Nov 21, 2012
cinergi Most of the comments I hear in the store are of shock at how relatively cheap the Model S is after seeing it.�
Nov 21, 2012
Norbert In that case, it is at least a "niche" business. In the other case, it is not a business at all.�
Nov 21, 2012
richkae Woah. Hold on. We have no idea why the price is changing, nor how much.
And no Tesla is not doing a new version every year. They have said they will make improvements whenever they are ready and won't make them wait for a model year changeover. Some of those future changes will likely require pricing and package changes.�
Nov 21, 2012
Norbert It makes sense in a demand/supply driven situation for example if they expect to be able to max out production capacity even with higher prices, and if expanding production would delay Gen III, which has much higher potential for both volume and profit.
In any case, the sales volume of Model S is likely to pale in comparison to Gen III, so the goal should be to maximize total profits so that investments in Gen III can be made sooner.�
Nov 21, 2012
Jules (sorry, I'm new here) I'm assuming Gen III is to come after the model X? Or is the model X gen III?�
Nov 21, 2012
felixtb welcome. gen III is after the model X and is a BMW 3 equivalent car.�
Nov 21, 2012
Jules Ah I was confused and thought that it was their third generation car, thank you. I guess I'm just upset that my dream car is now going to be that much more out of reach! Someday.�
Nov 21, 2012
Norbert Model X is a variant of Model S, built on the same (almost) "skateboard" platform, and both are considered 2nd generation.
Model X will be built more or less on the same production line, however it will require some additional investment for additional manufacturing equipment. But far less than Model S required, since they share a lot.�
Nov 21, 2012
mklcolvin Hasn't Tesla booked more than a year's worth of Model S? If so, wouldn't this be like announcing that next year's Model S will cost more? Other car manufacturers do this all the time. Am I missing something?�
Nov 21, 2012
Jason S At a targeted manufacturing rate of 20k / yr, they have roughly 6 months in backorders if there is a lower percentage of dropouts.�
Nov 22, 2012
gregincal Actually, the current estimated net total of reservations is over 15,000, according to michiganmodels tally. Therefore, the first car likely to be sold at the higher price will probably be sometime in August or September. That seems like a reasonable time to raise prices to me. They are announcing the price increase now, but the prices don't go up until people have to pay them, and that will be more than a year after they started shipping cars.�
Nov 22, 2012
ChrisgG I don't really know, many potential buyers here are like me. My current car does cost half of what a Model S costs. We are all hyped about this car, it being electric, elon is tony stark yadayadayada...
But in the end we want to buy a car wich is very expensive for us already. Making it more expensive will make a lot of people draw back their reservations, just because it really got over the point where we can justify it, hype or no. And I think the genious of this car was that it brought so many new people to this car-price segment...
All this talk about the supercharger cost for the 60KW battery, the high service costs and now the more expensive car are not really good news for my 'wealth-segment'.�
Nov 22, 2012
Jaff Whilst I completely understand your disappointment in the forthcoming Model S price increase, and agree that some "reservationists" may have to scale back their desires for the Model S due to their financials, we still have to remember that at the end of the day, the Model S and Model X are not typical mass market vehicles nor were they ever meant to be (according to TM's business model)...(the same as BMW 5's / Audi A6's / Porsche Cayenne's / etc / ...)
It might be a nice goodwill marketing move by TM to establish their GenIII reservation list "a little early" by allowing those who must drop off of the Model S list to be first on the list for GenIII...
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Nov 22, 2012
Trnsl8r (Emphasis mine.)
While I don't like to nitpick, I think it's important to emphasize that current reservation holders won't be affected by the price increase, as long as they don't defer.�
Nov 22, 2012
Jaff Good point Sir!
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Nov 22, 2012
Rifleman I am in that exact boat, I had to drop the Model S due to finances, but I am going to put down a reservation on a GenIII the second that I am able to.�
Nov 22, 2012
tdelta1000 It looks like the price hike will change the game for many people going forward. I would rather TM tell us that the price hike is due to the cost of the Aluminum, the cost securing parts from the third party vendors and the cost of hiring more employees instead of a price hike for options. Some of the options that are missing on the S are considered cheap options. I understand it's about the bottom line.�
Nov 22, 2012
aviators99 I think there's nothing wrong with raising the prices because of demand. If I was a shareholder, that's what I'd want them to do. I've also had a feeling all along that the 40kWh model is priced at or under cost, and I would be shocked if the price for that doesn't go up substantially. If the tax credit doesn't continue into 2013, the increase will hurt a lot of people who are planning to reserve and get a 40kWh. I would be even less shocked if the 40kWh goes away completely. I think it doesn't fit in with Tesla's model of super practical EVs. By the time you're done with the EPA rated (more realistic) mileage, load a wife and 2 kids into it, add some A/C and 70mph, you may be talking around 100 miles range.�
Nov 23, 2012
Robert.Boston I agree, though I'd note that world aluminum prices are moderating from their summer highs [graph]--probably the result of slackening global demand (not a good thing).�
Nov 23, 2012
jcstp in summer many people buy alluminium soda- and beer-cans�
Nov 23, 2012
ckessel Does any company divulge that level of detail in their pricing? Can they even legally give out that sort of inside information?�
Nov 23, 2012
richkae A major component of the cost of aluminum is the energy to make it ( I think a third ) . Most of that energy is electricity. So aluminum prices will be heavily influenced by electricity prices - no idea how long or short term their electricity costs are.�
Nov 23, 2012
jerry33 Not that I've ever heard of.
No reason why it would be illegal--hiding things or not giving them to some but not all is more typically illegal--but they'd be foolish to do so because that would tell the competition exactly what they needed to do to undercut prices.�
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