35,000 for how long?

[alloverx]

Just wondering how long the Model 3 base price will be at $35K in the US for the promise to be kept. i.e. when will the base price go up?
I am not exactly clear when the 35K was first promised (I doubt they had a handle on the eventual costs at that point) but at some point inflation will come in to play unless they can bring the cost down over time. Or you remove things but not sure what they could remove from the base model.

My guess is late 2018 for a base price increase, so they have time to deliver some base models.
Presumably they will add some features to justify the increase at that time.

 

[cwerdna]

For those sorta new, Tesla has increased prices at least once before, besides the many times they've mucked around with what the minimum model is.

2013 Model S Price Increase

Also, notice the price of the 40 kWh Model S? Originally the Model S was just under $50K after $7,500 tax credit. Look where it is now after the 40 kWh car got canceled.

 

[HabitualUser]

My guess is late 2018 for a base price increase, so they have time to deliver some base models.
Presumably they will add some features to justify the increase at that time.

Not a bad guess, but i'd bet 2019 or beyond. One of the major goals of the Model 3 is the $35K base price, so i'd imagine there is motivation within Tesla to keep it there for as long as possible

 

[yak-55]

Just wondering how long the Model 3 base price will be at $35K in the US for the promise to be kept. i.e. when will the base price go up?
I am not exactly clear when the 35K was first promised (I doubt they had a handle on the eventual costs at that point) but at some point inflation will come in to play unless they can bring the cost down over time. Or you remove things but not sure what they could remove from the base model.

My guess is late 2018 for a base price increase, so they have time to deliver some base models.
Presumably they will add some features to justify the increase at that time.

Forever. But you'll never buy one. The base model will be "discontinued due to lack of demand" long before any are delivered. It's the Tesla upsell.

 

[KarenRei]

S prices have slowly drifted up, but not nearly at the same rate that the stats have increased. This is a reasonable move as they're trying to draw a clear distinction between the S and 3. It's hard to say where Tesla will want 3 prices to drift. If they eventually want to release a "economy" sedan then they'll probably drift up. If the 3 is to become the economy sedan, they'll probably drift down. While neither is going on, it's anyone's guess.

 

[deonb]

2 people seems to be in denial about the existence of inflation:

Wonder if they think the Model 3 will still be $35000 in the year 2067...

 

[KarenRei]

2 people seems to be in denial about the existence of inflation:
View attachment 238695

Wonder if they think the Model 3 will still be $35000 in the year 2067...

No, they simply realize that there are more factors to pricing than inflation. As a general rule, technology prices drop over time, rather than rising. You have to argue that the rate of advancement (for example, battery price reduction) will be slower than the rate of inflation, which is a pretty silly argument to make.

The question is what balance Tesla will choose between A) price reductions, and B) improving vehicle capabilities. And that, in turn, depends on how they want to market their vehicles, which in turn depends on what sort of future model offerings Tesla plans.

 

[Troy]

I wouldn't be surprised if Tesla clears out the waiting list, discontinues the 220 miles version and releases a 240 miles version at a higher price. There is too much gap between the 220 and 310 miles range numbers. Maybe that's intentional because they know they will replace the 220 miles version with 240 miles.

This theory is more likely if it turns out they went over the 75 kWh maximum battery size Elon tweeted about. Especially if the numbers are 55/80 or 55/85, then I will make a prediction for the discontinuation date of the 220 miles version. However, if the numbers are 60/85 kWh then it's less clear.

 

[deonb]

No, they simply realize that there are more factors to pricing than inflation. As a general rule, technology prices drop over time, rather than rising. You have to argue that the rate of advancement (for example, battery price reduction) will be slower than the rate of inflation, which is a pretty silly argument to make.

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.

 

[neroden]

Prices are based on demand and the inability to meet it, not supply costs.

The price will be raised as soon as it can be done respectably, maybe in late 2018... *unless* there is a shortfall in demand. If demand is still through the roof, they will want to charge what the market will bear.

Unless, of course, the second factory is already under construction by then and due to open soon. In that case they won't want to raise prices in case the second factory gluts demand. This is a possibility, given the mission of Tesla (to *accelerate* the adoption of electric cars).

 

[ItsNotAboutTheMoney]

I wouldn't be surprised if Tesla clears out the waiting list, discontinues the 220 miles version and releases a 240 miles version at a higher price. There is too much gap between the 220 and 310 miles range numbers. Maybe that's intentional because they know they will replace the 220 miles version with 240 miles.

This theory is more likely if it turns out they went over the 75 kWh maximum battery size Elon tweeted about. Especially if the numbers are 55/80 or 55/85, then I will make a prediction for the discontinuation date of the 220 miles version. However, if the numbers are 60/85 kWh then it's less clear.

My view is that the ranges are determined by module sizing and cell density. It appears that the base model has 2/3 of the modules in the larger battery version. Whether they could create an intermediate car would depend on configuration of the batteries.

They could add an intermediate at some point, but the only reason to ditch the base model would be due to competition reducing significantly base model demand. Otherwise ditching it would lose a large number of vehicle upsells, and, worse, lose sales to competition.. At the current pricing of the 310 it'd be extra $5k net for an intermediate.

 

[KarenRei]

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? Tesla's goal is to go from $190/kWh to $100/kWh in just a few years (they've been doing similarly in the past). Inflation rates are typically low (current US inflation rate = 1,6%). Do the math.

And, for the record, batteries are not the only piece of technology advancing on Tesla. Just the fact that they're growing their scale of production alone reduces costs.

 

[cpa]

I would guess that for the foreseeable future, if battery costs drop with the scale of production AND the gross profit percentage is within the parameters established by executive management, base prices will not increase. I believe that Tesla wants to flood the marketplace with Model 3, so they will want to keep prices "affordable," whatever that means to the masses and investors.

For the three years that we have owned our S, Tesla has changed options, option pricing (we paid $250 for the parcel shelf!) seemingly two-three times per year.

It is possible that Tesla will do the same with the Model 3. Tesla will keep the base price at 35K but tweak the options and the option packages to increase sales price. Many on here have suggested that Tesla makes a very high return on their sales prices for their options and option packages.

 

[shrspeedblade]

I don't see them raising the price until a while after the tax credit expires to avoid the "double whammy" of the tax credit going away and a price increase.

Even then, they might give a slight range bump or a few better options, and then raise the price modestly even further down the road. You don't want to heat the water the frog is in too quickly!

 

[Atlantis]

I wouldn't be surprised if Tesla clears out the waiting list, discontinues the 220 miles version and releases a 240 miles version at a higher price. There is too much gap between the 220 and 310 miles range numbers. Maybe that's intentional because they know they will replace the 220 miles version with 240 miles.

This theory is more likely if it turns out they went over the 75 kWh maximum battery size Elon tweeted about. Especially if the numbers are 55/80 or 55/85, then I will make a prediction for the discontinuation date of the 220 miles version. However, if the numbers are 60/85 kWh then it's less clear.

Do you remember this article from Randy Carlson in Seeking Alpha, in 2015, Will Tesla's Model 3 Compete? - Tesla Motors (NASDAQ:TSLA) | Seeking Alpha I kept it (printed it) and this weekend I took time to read it again, and his assumptions about standard and long range Model 3 were correct at 220 miles with a 44 kWh (RWD) and 310 miles with 66 kWh (RWD), and predicted a 320 milesAWD model 3 too, but with a a weight of only 3.251 lbs for standard Model 3, instead of actually 3.549 lbs.
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 (we can see some 40% improvement in range between both, so the difference should be some what similar in battery packs (taking in account that there is always a little lost in efficiency because of the bigger weight)).
My two cents guess is that this huge gap between the two cars is intentional and will be filled once final ramp up is attained and they will be able to add options and configurations. If all goes ok, I think Tesla should be able to offer a 260 miles Model 3 at $39k in spring of 2019.
Latter, at the beginning of 2020 they could even discontinued the 220 miles version, then the 260 (60kWh) would became the standard 3 and LR would have some 330 miles with an improved 80 kWh battery (in 2020?). As I said, it's a wild guess, but at the same time, or even sooner, in late 2019, Tesla should release a new S with a 100 kWh standard battery from a new technology/ new chemistry with some 375 miles and a long range new S with some 400+ miles to compete with all long range EV cars from German Premium brands and new brands (Air Lucid) all meet to arrive in the market in the 2019-2020 time frame...

 

[WierdMobile]

I'm not sure how you expect a different chemistry to allow the Model S to travel that much father on a battery that still only has 100kWh of energy. Sure a better chemistry might weight a bit less, but I doubt you could get anywhere near a 12% boost in range from a lighter battery chemistry alone.

 

[cizUK]

In the long term, the model 3 price should go down.

Model S 60 price in 2012 was $67,400.
Compare that to the S 75 today which is $69,500.
That is a $2,100 difference, but you now get 15 kWh more, EAP & FSD hardware, SAS, electric & heated front seats, 19" wheels, faster 0-60, better interior, and many more that I can't think of.

I take that as the price going down, and that is what I expect the 3 to do as well.
They have also just reduced prices for the Model X too.

 

[shrspeedblade]

Keep in mind that being a "premium product" is reflected in the price, and I think Tesla wants to retain that image. I think it is far more likely that they will keep the $35k base price and add more features long before they would drop the price. If they want to make a profit in that lower market segment they can probably just be one of the best priced battery suppliers to manufacturers who do compete in that segment without taking on all the headaches. Low priced cars aren't exactly a big money maker.
They could lower the price on the S/X by $10,000 or more and it would still remain a premium product with a only a minority able to afford it. The more profitable they are the more successful they are, and the more successful they are the more pressure they put on other manufacturers to make the transition to EVs.
Make money and help the planet, sounds like something I read somewhere.

 

[johnnyS]

When I originally put down our deposit on a model S in 2011, part of the allure was the $50,000 price. Of course I ended up spending nearly double that. If the original price had been $95,000 I probably would not have made the initial deposit.

We have a deposit on a model 3. We do not need another car with a 2016 model S. If we order a model 3, it probably will be the base model with one option-color.

 

[WileyTheMan]

I'd guess the 35k price will stay in place for a while, meaning 3-5 years. As manufacturing and tech gets cheaper for Tesla, they steadily improve the model 3's profitability, so there's no reason to mess with a price people have come to expect. And that means no reason to reduce the price either, unless the product isn't selling.

Eventually inflation will force a change in pricing structure. Employees want to keep feeding their families and get pay raises, and the company will want to grow and invest in new technology. It's just a matter of time.