35,000 for how long?

[John E.]

Is the $35K even relevant beyond being the initial starting point? Most folks will add adaptive cruise, self driving capabilities, premium colors, etc., so you are looking at a typical car in the 50's and even $60's.

 

[David_Cary]

On the price timeline - autonomy will become a greater part of the value equation.

Say 2020, a Model 3 is Level 5 capable. The base could still be $35k but they can sell 1 million a year with a $10k FSD package. Once true Level 5 is reached, they won't be able to produce enough cars - even at a much higher price point.

I haven't done the math but I am pretty sure the true value of Level 5 is well over $10k per car so who knows what the market will bear. I drive a lot for work and make good money. I remember quickly estimating the value of level 5 for me personally at $2000 a month lease (20 hours a month, $100 an hour)- so $100k roughly. Note - that is the additional value above the car. Now they do need to make the steering wheel retract of course and give me a laptop shelf. And I'm not counting the $150 a month I spend in Uber.

 

[Aieukl378]

The tech part of the car, is, what, maybe 33% of its price? So for the price of the car to remain just stable, the price of tech has to drop at 3 times the price of inflation. That's what, 9% per year? Very ambitious, and not supported by recent history.

And thereafter the problem is that the tech portion of the car becomes smaller. Let's say after 8 years, tech prices halved, and now tech is 15% of the value of the car. Then the tech prices has to further drop by 18% per year to keep up with inflation of the rest of the car. Not going to happen.

Sooner or later your tech value is insignificant and the price of the car is purely based on raw materials and manufacturing cost. And the price will go up.

We've been in a stable price/low inflation environment for so long people think this is the "new normal" and may not have considered the cyclical nature of interest rates/inflation. And your right, tech only makes up a small portion of a car. This isn't a laptop with $20 worth of materials and a $2 a day worker assembling it.

If for some reason there's a spike in steel or aluminum prices or Tesla employees unionize etc. prices will need to be adjusted. I think this is the cheapest we'll ever see the Model 3.

 

[kwest2]

This difference and the right predicted range make me think that there is a 50 kWh battery in the standard 3 and a 75 kWh in the LR 3

Well done!