Yah, my point about the X was to hint that projections are not final by definition.
As far as the particular issue (dropping 40 kWh), I think they learned some things (and are still paying in PR) about 40 kWh with S and made (IMO) a less-painful-longterm choice for X based on that. Of note is that the "similar to the Model S" part is essentially retained (same 60kWh and 85kWh battery options, with a reportedly slight decay in expected range),
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Feb 13, 2012
AnOutsider
Personally, I think this option is best. Though it's easier to be a luxury maker and sell downmarket than it is to be a low-end maker and sell up-market (VW -> Phaeton, Hyundai -> Equus), I still think they should rebrand for specific applications like commercial/utility vehicles. I can't see them going much lower than bluestar in the market though, so they shouldn't have an issue there (BMW sits down in the 30k range as well with no problem).
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Feb 13, 2012
ElSupreme
I really don't see this as possible. I imagine a 60kWh pack is costing Tesla $10,000 minimum, I bet it is closer to $15,000. And that is their main warranty part, so they have to build in replacement cost in their sell cost. I see batteries droping in cost, and increasing in usability in the future. But going below $40,000 (pre rebate) is going to be tough, since it seems (espically in the Model X no 40kWh battery light) that Tesla wants all their offerings to be 100+ usable miles.
I think Nissan is selling Leafs very close to cost, because they are getting valuable R+D and driving data out of the program. And their scale is pretty large, and they already have supplier and sales systems in place. If you want to give 50% more range, and make a real profit you are going to be above $40,000 for quite some time.
What Tesla needs to do, as well as Nissan is market the car as 'prepaying' (or rolled into your monthly bill) gasoline costs. My estimated cost to fuel my GTI is ~$3,500 a year. My costs for my tesla are about $350 a year. I will save over $15,000 over my 5 year payments. Once this gets accepted, or promoted, people can pay $40,000 for a car rather than $22,000 if they plan on having it for more than 100,000 miles. It is more an education and perception problem than anything else. After 100,000 miles you need a new battery, which you can think of 'prepaying' for another 100,000 miles worth of fuel.
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Feb 13, 2012
EVNow
Let us say current price is $500 / kWh. BlueStar is only 3 years away - so, at best we get to $300/kWh. That puts 60kWh at nearly $20k. It would be very difficult to sell a car for $40k given that cost. A 40 kWh battery at $12k is a better proposition.
You are not assigning any time value to money. It doesn't work that way. In the US people don't like paying a lot upfront (see the cell phone market).
Renault is trying that in a different way - buy the car, lease the battery + electricity. I'm not sure the idea will work well in the US - where people have set ideas about "owning" a car.
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Feb 13, 2012
ElSupreme
I completely agree with this. And I think those numbers are pretty optimistic. I was responding about 60kWh car costing $30k. I don't think Tesla will go below the same 160 miles number they have for the Model S.
I agree with this statement dead on also. There is a difference. I don't think many people pay cash for their cars. Especially new cars. I am financing my Model S, so other than perception (and insurance cost) what is the difference between $350 a month on my AmEx for fuel vs $300 extra on my car payment, and $30 on my power bill?
Your typical cash buyers will be off put, but then again they tend to have a handle on their finances (or are loaded and cost isn't an exclusion) and can take the information and figuer out if it is worth financing their fuel costs.
The only thing this doesn't take into consideration is insurance costs, and a banks perception of extra purchasing power someone with an EV has over an ICE due to maintenance/fuel costs.
EDIT: Well I guess I lose out on ~500 AmEx points a month.
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Feb 13, 2012
Robert.Boston
That Company Overview cited earlier also makes clear that the target market for Gen III is against premium sedans from BMW, Audi, etc.; they don't name models, but presumably they are setting out to compete with the BMW 3, Audi A4, MB C-class, Lexus IS and ES, and Infiniti G. This band gives them some head-room on price above $30k.
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Feb 13, 2012
EVNow
At $4/galon & 30 mpg - we need to put in 2,600 miles a month (i.e. 31,000 a year) to spend $350 a month on gas.
A typical car would be driven for about 1,000 miles a month or about $150 a month of fuel. So, we are looking at about $120 more for fuel in an ICE. Including insurance we are looking at $100 extra in monthly payment to break-even with an ICE. That is a difference of 5,000 in the price of the car at 5% interest rate.
So, a nice compact car can be about $25k after tax credit to break-even with a $20k ICE. Incidentally Leaf's was priced at $25k last year after tax credit.
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Feb 13, 2012
dsm363
To get to the sub $30,000 price point people want along with a 40 kWh pack or bigger, Tesla would have to greatly cheapen the interior with extensive use of plastics, cloth interior...etc to even try and make a decent profit on each car. I don't think they're willing to do that at this point.
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Feb 13, 2012
EVNow
But how do you get to half a million cars ? BMW sells a total of about 200k cars/SUVs a year in the US.
I think BlueStar will be priced about the same as BMW 3 series like you say - but that 200k per year volume is unrealistic.
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Feb 13, 2012
Norbert
The Leaf isn't a very good measurement since a) it is not what Bluestar will compete with, it competes with BMW 3-series., and b) the Leaf, as far as we know, doesn't make profit.
Saved cost of $120 per month is about $1400 per year or $14,000 over 10 years. I don't quite see how an "interest rate" would reduce that to $5k, given that most of us expect the price of gas to go up over time.
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Feb 13, 2012
Lloyd
Sell cars to China!
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Feb 13, 2012
Norbert
Tesla's stated goal is 200,000 per year but that doesn't mean they have to start with 200,000. They can start with less and get to 200k as battery prices come down. They only need to engineer it so that they can reach that price point eventually.
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Feb 13, 2012
ElSupreme
Right I always forget I drive a whole lot. My whole family does so it doesn't ever stick out in my head. I have driven 1,600 miles in the last 30 days (no abnormal drives). And spent $270 in fuel. Looking back on 2011, I spent just shy of $300 a month in fuel ($3,500 last year) so my $350 number in my head is high. But given 1,600 miles in a month I will almost get to 100,000 in 5 years. So all my numbers I was equating 5 years with 100,000 miles, which is not good. I will be able to discount $15,000 off the purchase price.
When you buy the EV you prepay for ~100,000 miles of fuel. I would guess this is a good number for battery life in the 25-50kWh size. Bigger batteries will last longer but really are more a convenience item. For me that 100,000 miles is almost fully taken care of in my 5 year payment system so is a non issue. For someone who takes 8-9 years to get there it is really a different story. But these people will be needing Leaf type range, and I really think Tesla won't make a car with less range than the 40kWh Model S, and while I don't think there will be equivalent pricing between a $25k ICE and $25k EV until the EV production volume jumps 2-3 orders of magnitude, and it still may never make it.
The auto industry is so good at lowering cost. Because of this ICE and transmission are stupidly cheap and reliable. It will take the same to get induction motor production cost down, and inverter cost down. Purely material wise the induction motor and inverter are going to cost more. After a few generations, and hundreds of thousands of units produced, reliability will get so good where the industry can cut their margins and not have to worry about huge warranty replacement costs. I don't think people realize this 'insurance' cost on things. The only thing that can lower that cost is units produced and ever decreasing defective units.
Given the increased volume, etc and Tesla's focus on driving down the cost of their battery packs, I would think that by the time of production they will reach this target. So at $225/kWh that is $13500. At $37500 before the tax credit, that leaves Tesla $24000 to build a decent car. I must confess I am not sure if this is a reasonable amount or not, but judging by the ICE cars on the road (in a similar category) that retail for $24000 new I would suggest it is. Remember Tesla is still a startup, that knows how to stretch a dollar and still get a phenomenal result.
If Tesla launches with a 160 mile range vehicle in a few years (with Nissan and everyone else being in the same ball park) they won't get anything like the reception they want, or need to sell the volume and increase brand awareness. I think they will be willing to sell these VERY close to break even early on for a number of reasons. First, they will need to knock this out of the park to sell 200k vehicles, a car that is merely $10,000 cheaper then the base Model S won't sell anything like those numbers. Second, it will cement them as the leader in the electric revolution in the minds of the public and put them at the forefront of the new automotive industry. Thirdly the massive increased exposure they will receive if they do knock this out of the park (think of all the press, buzz, etc) will have a massive knock on effect to the Model S, and Model X vehicles in terms of sales.
This will be the vehicle that can either make Tesla a massive player (a "real" car maker) in the new automotive industry if they knock it out of the park, or merely a player dwarfed by the current car giants EV programs. Tesla has done a lot of things that are not easy, and that people thought impossible. Given all that is on the line for them, and the volumes they are talking about, I think they will deliver once again. And mostly, I think what I suggested will prove feasible.
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Feb 13, 2012
ElSupreme
I really hope that is possible. But that means in 5 years today a current pack costing $10,000 would cost $2,373 in 5 years. I just don't buy it. I think we will probably be in the $6,000-$7,000 range at best (~8% drop for 5 years straight). It isn't like Li-Ions are new. A lot of production cost is already removed. Volume reductions at this point will be minimal. I actually think, not sure, that most of battery improvements right now are cell architecture (getting more complex for material efficiency, not simpler easier to manufacture) and cell chemistry.
I hope I am wrong.
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Feb 13, 2012
meepz11
As with the original thread that bought this up, I should caution that the percentages (25% per year) he mentions actually look like a typo or poor choice of language. The important point is the price per kWh target which people believed to be plausible/accurate.
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Feb 13, 2012
ElSupreme
Using your numbers from earlier I think it is close.
$15k for Car body, interior, suspension, chassis. $6.5 k for motor, inverter. $12.5k for battery (~40kWh for ~200 ideal miles) $2k for warranty 'insurance'
That equals $36k before profit. I don't think Tesla can get into the high volume low margin market before they are selling 30-40k cars a year. They won't be producing enough to properly scale up. There will be labor problems, supplier problems, customer service problems, maintenance problems, loan problems.
I home they can make it $40k or less before any tax breaks. If the Federal $7,500 break is still in place I will put money on the base price being either $42,400 or $47,400 before tax break!
If they go lower they will lose their margins, and start competing with Nissan, maybe Ford, probably Toyota.
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Feb 13, 2012
dsm363
I think a $50,000 well equiped car with a 200 mile ideal range would be a reasonable target. Future model years can always come down in price as Tesla ramps up and is able to decrease their cost while protecting their profit. Of course when the $7,500 federal tax credit is close to ending, they'll have to figure out what to do with their pricing.
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Feb 13, 2012
WhiteKnight
2012 BMW 328i starts at $34,900 - just sayin!
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Feb 13, 2012
Norbert
IIRC Tesla mentioned 550,000 per year as the nominal capacity of the Fremont factory itself.
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Feb 14, 2012
Grendal
I agree with those who've said that the Bluestar needs to be an inexpensive luxury sedan. Let the big boys fight over the low end market. Tesla should not go up against the Leaf, IMiev, Focus EV, Spark, and 500 EV. They should be the company that sells a better product, besides that's an incredibly competitive market for a new automaker to fight against.
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Feb 14, 2012
TEG
They have a motto 'Premium electric vehicles'...
Although years back it was suggested that the goal was eventual large scale (mass) production. But if other manufacturers have already filled that gap...
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Feb 14, 2012
vfx
Why can't they do both? Tesla clearly has the advantage in battery and motor technology. That can be applied as savings to the consumer making a luxury car at low cost.
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Feb 14, 2012
brianman
It's an issue of margins and spreading themselves too thin. Let's take for example a "budget-equivalent" of a $15k ICE car. At a low price we expect higher volume. At higher volume, I expect more overhead from frivolous issues reported by buyers. More frivolity means more overhead and distraction.
I'd prefer to see them sell key componentry to other suppliers of the chassis+ rather than get distracted with details like 28 flavors of cloth interior of high volume models.
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Feb 14, 2012
TEG
Also, keep in mind that they would have to grow sales and support offices to match the expected volume of customers.
What if RAV4EV is just the start with Toyota? Imagine having Toyota sell and support Tesla powered Scions for instance...
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Feb 14, 2012
Robert.Boston
Brand image and margins. Far better, IMO, to provide drivetrains to established lower-end brands, and keep the halo effect around its premium offerings.
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Feb 14, 2012
vfx
You are assuming Tesla's brand is luxury. Their brand is desirable leading edge fully electric vehicles and powertrains. They will do a van (including utility) and a mass market car in the 30K range- even lower eventually. They have said this. They bought a factory to do it. Sit back and watch!
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Feb 14, 2012
Sig698
Mercedes offers both of those things as well, just something to mull over. It can definitely be done and keep the luxury image.
so looks like bluestar got pushed up, R3 pushed back (if this is accurate)
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Feb 14, 2012
Grendal
Elon has said it more than once. And it makes sense financially. If you are a growing company then each step needs to be a progressive growth step. Pausing to build the new Roadster, which will have a much smaller market base, will slow the growth.
Besides it gives Tesla the opportunity to really test the possibilities of the Gen 3 platform before they commit it to what I expect to be a show stopping supercar.
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Feb 14, 2012
Doug_G
I've always been skeptical of the next generation Roadster being a priority. It was a great place to start the company, but it's not going to provide the kind of growth they need.
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Feb 14, 2012
AnOutsider
You have a point, but on the point of "pausing" for the roadster and "testing gen3", I'd think the opposite would be true.
Doing the Roadster first, would mean they could recoup more expenditures and quickly than they could by selling low-margin, but high-volume cars. Also, if they go low-volume first, that makes it easier to solidify the platform with a smaller group of clientele (that are usually more understanding and forgiving of flaws). Going headfirst into the mass-market with a problematic platform could be disastrous.
Plus, it would match Tesla's "start high, work down low" thing.
I think there is still a lot of room for improvement with current chemistries, let alone newer ones.
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Feb 14, 2012
vfx
But have they saturated the Electric Sports car market?
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Feb 14, 2012
AnOutsider
Mayhap, but I'd wager there are some who never considered the Roadster because, while exotic, it wasn't really luxurious. Roadster 2.5 performance (or better), with a more luxurious fit and finish could see some of the Lamborghini, Ferrari etc folks coming over as well.
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Feb 14, 2012
vfx
I suppose they could pick up a lot of Porsche owner who like the lux of that brand. Though I still think there are a lot of Early adopter, I want electric, Roadster owners that would just keep that car.
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Feb 14, 2012
Mycroft
That's exactly what I'm waiting on!
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Feb 14, 2012
AnOutsider
Admittedly, me too
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Feb 14, 2012
vfx
3.0...
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Feb 14, 2012
AnOutsider
vfx, your post gives me a poll idea (I know, I know.. ANOTHER one?!)... How many Roadster owners will be upgrading to 3.0? Though I guess there's just so much in the air... will 2.5s and older get new packs? What are the costs? 2+2? Yadda yadda.. off-topic for here though.
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Feb 14, 2012
Doug_G
Let's wait until they roll it out, shall we?
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Feb 14, 2012
neroden
Because after a certain point, 0..60 is really kind of a stupid number? In normal driving, nobody uses it except on highway on-ramps, and then you're usually dealing with curves and lane changes and whatnot.
If the Bluestar does 0..60 in 8 seconds, while having the center of gravity of model S and the AWD traction of model X, and a coefficient of drag better than model S (this I bet they can do by being daring about styling), with the all-electric flat torque curve, I think it will be plenty attractive enough as a "fun to drive" car without needing to advertise 0..60 times.
Tesla can make a car which handles better than the competition and accelerates well enough that nobody ever thinks "this is too slow" except on the track.
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Feb 15, 2012
PeterW
I would like to know what cars are made in 100,000 units or more a year. Use that as your basis of comparison. Elon has said the 3rd gen car would be around the $30k mark and they would make 200,000 units a year.
Without an ICE motor and drive-chain, why "$15k for Car body, interior, suspension, chassis."
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Feb 15, 2012
JRP3
I agree with all of that, except the idea that the affordable Bluestar will have AWD. No need for it and no way it can be cost effective to have dual motors and inverters in a 30-40K vehicle. If they push the envelope with good aerodynamics that still look good they can get good range with a smaller pack, and the smaller pack will be lighter so that will help with stop and go range. 8 sec 0-60 and 150 mile range under $40K will probably even steal some sales from the LEAF, unless that improves a lot in the next few years, which it might.
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Feb 15, 2012
ElSupreme
I guess they could get into the $10k range if they cheaped out the interior. I imagine ICE cost is about $1.5-$2k. Transmission is probably another $1k. Various intake/exhaust/engine monitoring components add another $1k. So taking a Base Chevy Cruze (assume $2k profit, which is probably generous) at $17k Subtract $2k engine, $1k transmission, $1k misc, $1k profit, you end up with $11k for the body, chassis, suspension, interior. I bet GM with their volume, has economies of scale where they can build the same car (save for drive train) for $2k less than Tesla can, but I think assembly of an electric car is a little bit cheaper. But that puts Tesla's cost at $13k. Plus I don't think Cruze is really the quality marker that Tesla wants to hit, but honestly a Cruze is just a Cobalt in my mind, even though in real life I know this isn't quite the case.
Body, chassis, suspension, interior have a lot of material and labor costs involved with them. Interiors are way labor intensive, and quality control headache. Suspensions are pretty cheap to produce but require testing after the car is basically fully assembled, and rework is very expensive. Chassis and Body require a good amount of material cost. If Tesla is going Aluminium then you can count on these costs to be double what a steel car costs. And paint isn't cheap. And is a quality control headache.
You could probably drop all my numbers 10-15% and get a workable car. I see going under $40k really a dream for their next model, because Bluestar is going to have to bankroll their scale up. And going 20k-30k units a year to 225,000 (200k + Model S + Model X) units is really not a good idea. The really need to be about 75k-100k units before they try to add on another 200k units. Especially because of all the labor they would need to scale up. Not to mention all the sales and maintenance staff they would have to hire, and the stores they would need to open. I work in manufacturing where it takes 7-12 people to run a line. So adding 2 lines only takes hiring 20-30 people. And generally that can double production. Going from 20k-30k units to 225,000 units a year will require probably 300+ people or more just to manufacture them.
I think Tesla's Bluestar will become a 200,000 unit car that may sell for $30-$35k when it goes to 2.0. I think manufacturing, labor, and sales scaling up will keep Bluestar 1.0 in the $42-$47k range. That and Tesla is going to have to slowly bring down their margins, it will be scary for them to go from 25% to <10% in a single jump.And remember a $45k car is 21% cheaper than a Model S.
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Feb 15, 2012
NigelM
On earnings call today Elon confirms directly that Gen III is the next project after Model X and it will be "in the $30,000 range".
(This may be posted elsewhere)
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Feb 15, 2012
JRP3
I assume he means with the rebate, but did he state it specifically?
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Feb 15, 2012
NigelM
He stated specifically "...in the $30,000 range."
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Feb 15, 2012
grisnjam
He did not say but they have included the rebate in the past (see the website).
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Feb 15, 2012
JRod0802
I don't know if this has already been posted elsewhere, but he also mentioned that R&D will be shifting from Model X to Gen III in early 2013.
He also said that while they're always making incremental improvements in their battery technology, he expects that new battery chemistry about every three years. So Model S in 2012 with one chemistry might point to Gen III in 2015 with a new chemistry.
Its always exciting to hear more about the Gen III, since that's what I plan on buying.
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Feb 15, 2012
AnOutsider
I hope that means ramping up on r&d in early 2013. If they just start on it then, it would likely be 2015 at the earliest when it debuts, leaving tesla with no new launches in 2014.
They were working on Model X at least as early as June 2011. With a November 2013 delivery date (at the earliest), that's 2 years and 5 months
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Feb 15, 2012
vfx
I was listening to an old Martin speech where he talked about the ice testing of the Roadster. He said out on the frozen lake when a car maker is designing tracking control they would up with a gear that will work and the go back the Stutgart (or wherever) and make changes and come back check and again and it takes months. With the Electric Roadster they just open up a laptop, tap out the changes and had the car dialed in in a week.
These are the kind of things that ICE builders will have to contend with. Bluestar will be sooner than later.
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Feb 16, 2012
Norbert
Elon appeared committed in the conference call.
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Feb 16, 2012
dpeilow
$39,995 after rebate.
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Feb 16, 2012
Hells
I think 37,499 before rebate..
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Feb 16, 2012
JRP3
I think David is probably closer to being right but I hope Hells is.
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Feb 16, 2012
grisnjam
I think this is the sweet spot they want to hit as well. Would be truly compelling to a lot of city drivers.
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Feb 16, 2012
JRP3
I doubt it will happen because that price would put it under $30K with the rebate, which means Elon would have said "in the 20 range". Elon tends to quote pricing with the rebate included. I'd be surprised if they can be profitable with the type of car I think they want to build at $37,499, unless something major happens with batteries in the next few years, which they can't count on.
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Feb 16, 2012
dpeilow
I should add that I'd happy pay �39,995 for a genuine 328i competitor (with rapid charging).
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Feb 16, 2012
NigelM
This is where the U.S. tax system is kinda silly. If the Federal rebate stays at $7,500 then it makes marketing sense to price at $37,499; if the rebate goes to $10,000 then Bluestar can be priced at $39,900. It actually makes no difference to the end consumer.
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Feb 16, 2012
WhiteKnight
It's not silly for the lobbyists and big corporations that wrote it :smile:.
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Feb 16, 2012
EVNow
That is the price of Leaf SL. If you want something closer to BMW 3 series, it would cost more to build.
I think BlueStar will be priced to compete with couple of direct competitors who would be already on the market - Infiniti EV - BMW i3
Both these are likely priced to be around $45k pre tax credit. That is likely the price of base BlueStar as well.
Ofcourse, that is not a price that gets anyone to 200k volume. For that matter neither is $30k after tax credit. EVs have to hit $25k after credit and about 200 miles of range - with a well developed fast charging network to hit that kind of volumes.
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Feb 16, 2012
TEG
But so much of the LEAF price is based on battery costs. By the time GENIII/BlueStar is ready, I would assume pack prices will have come down some.
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Feb 16, 2012
EVNow
True - but there is also the expectation that the BlueStar range will be much better than Leaf's.
Just to reiterate, 200k volume is "blockbuster" volume. Lots of things have to go right to get to that volume. I can only assume talk of 200k or half a million by 2016 is just bluster from Elon - not a serious business plan.
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Feb 16, 2012
JRod0802
I agree. I'm assuming that the smallest battery Tesla will make for the Gen III is a 35-40 kWh battery. Tesla making a 35-40 kWh battery in 2015 will certainly be cheaper than Nissan making a 24 kWh battery in 2010.
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Feb 16, 2012
Robert.Boston
3 words: Strait of Hormuz.
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Feb 16, 2012
JRP3
Looks as if Iran has blinked. At least for the moment. I expect fuel prices to rise anyway.
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Feb 16, 2012
vfx
Originally the statement was third " $30,00 car". That makes it more hopeful that "$30,000 range" is lower rather than higher. The leaf shocked everyone with it's pricing. The Mitsubishi I had to match. More units will also bring the price down and the batteries will get cheaper. $32,995.
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Feb 16, 2012
Norbert
I don't think it is supposed to necessarily make a difference for the consumer. It's meant to offset battery cost.
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Feb 17, 2012
Hells
Yes, the quote may have included the rebate, but he has previously said he wanted bluetar to be a car for the masses and pricing between "$20k-30k. I really doubt he will be able to sell the volume required if it's above 30k
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Feb 17, 2012
Tempus
i still think it's about educating the masses about what that 30k really means. Heck, just do the exercise of taking a 30k car with monthly payments over 5 years, and ZERO gas bill, and compare it to a 20k car with 2k a year of gas... seems pretty straightforward to me. And you could do that at any price point.
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Feb 17, 2012
NigelM
Then cut out all the bureaucracy and give the money straight to the company that makes the EV....
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Feb 17, 2012
Norbert
Sounds much more practical to me... I don't know why the Bush administration made it a tax credit for the buyer. But the amount is more or less proportional to battery size, it just has a ceiling at $7.5k for 16 kWh. If they increase it to $10k, I'd say that should be for batteries > 16 kWh only.
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Feb 17, 2012
Norbert
Don't forget that the Leaf doesn't make profit (yet)(as far as we know).
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Feb 17, 2012
Doug_G
Probably because politicians usually want new taxes to be invisible and new tax credits to be very visible...
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Feb 17, 2012
Norbert
Maybe currently they want both to be invisible. :crying:
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Feb 21, 2012
Grendal
I'd agree with this. 200K, while possible, is overextending a lot for a new car company. I'd feel a lot more comfortable if the target number for the Bluestar was 80-120K. Which is quadrupling the scale/sales for the Model S.
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