Air Suspension Price Increase

[J in MN]

Just noticed that the air suspension price has gone up from $1500 to $2250.

So, this is the third item with a 2013Q3 increase: 21" wheels from $3500 to $4500, air suspension from $1500 to $2250 and extended service agreement/warranty from $2500 to $4000.

 

[gg_got_a_tesla]

Ouch! Is this an all-out effort to get to those 25% gross margins?!

 

[jerry33]

Ouch! Is this an all-out effort to get to those 25% gross margins?!

Sounds like it.

 

[AustinPowers]

So wait, they are making a car that is already quite expensive (especially here in the non-subsidized parts of Europe) even more expensive?
I thought that they would be having a hard time selling the car here already. If these price increases are carried over to here (and I am sure they will be), then the sales numbers are guaranteed to be even lower than what they would be in the first place.

I mean, extended warranty price is up 60%, air suspension up 50% - are they serious? Ever heard about inflation-adjusted rise? When I think of the German carmakers, I am sure the annual price increases are less than 5%.

Even Apple, whose products are ridiculously overpriced compared to the competition, doesn't make the new iPhone 50% more expensive than the last. Or do they?

 

[rolosrevenge]

It's been over a year now, inflation is say 2% so on a $70,000 car expect to pay an extra $1000-$2000 every year for it.

 

[Kaivball]

So wait, they are making a car that is already quite expensive (especially here in the non-subsidized parts of Europe) even more expensive?
I thought that they would be having a hard time selling the car here already. If these price increases are carried over to here (and I am sure they will be), then the sales numbers are guaranteed to be even lower than what they would be in the first place.

I mean, extended warranty price is up 60%, air suspension up 50% - are they serious? Ever heard about inflation-adjusted rise? When I think of the German carmakers, I am sure the annual price increases are less than 5%.

Even Apple, whose products are ridiculously overpriced compared to the competition, doesn't make the new iPhone 50% more expensive than the last. Or do they?

It's not the whole phone, but the cost of the USB cable in comparison.

 

[alexkiritz]

People have been saying on here that air suspensions are very prone to breaking. It could have more to do with the cost of warrantying it.

 

[ckessel]

Ouch! Is this an all-out effort to get to those 25% gross margins?!

That's certainly my take. For the wheels and air suspension, they're sucking a bit more money out of the high end crowd that aren't (in general) as price sensitive. Makes perfect sense as a way to grow margins.

 

[Citizen-T]

The timing makes sense, they just completed a full quarter operating at full capacity. I suspect they've looked at that data and concluded that they were not making their margins on these items. Besides, they were selling way too many of these things as it was. I remember them saying at the end of 2012 that the performance package was way more popular than they expected. This was obvious from the number of missing carbon fiber spoilers.

You know what they say in business: If your restaurant is always packed, your food is too cheap.

 

[deonb]

You know what they say in business: If your restaurant is always packed, your food is too cheap.

Please don't tell that to Thomas Keller...

 

[evmile]

I took the factory tour Friday and the vast majority of the suspension parts waiting to be installed were the air suspension (10:1).

 

[Bipo]

You know what they say in business: If your restaurant is always packed, your food is too cheap.

That's it... If Tesla can rise the prices and still sold out the production, that is precisely what they should do. It's a pity for us, (future) customers, but shareholders will be happier.

 

[mrbry]

Please don't tell that to Thomas Keller...

LOL! :scared:

 

[Right_Said_Fred]

So wait, they are making a car that is already quite expensive (especially here in the non-subsidized parts of Europe) even more expensive?
I thought that they would be having a hard time selling the car here already. If these price increases are carried over to here (and I am sure they will be), then the sales numbers are guaranteed to be even lower than what they would be in the first place.

I mean, extended warranty price is up 60%, air suspension up 50% - are they serious? Ever heard about inflation-adjusted rise? When I think of the German carmakers, I am sure the annual price increases are less than 5%.

Even Apple, whose products are ridiculously overpriced compared to the competition, doesn't make the new iPhone 50% more expensive than the last. Or do they?

You mean the German carmakers that were already charging €4000 for leather interior, €4000 for 18 inch wheels, €5000 for an entertainment system, €1500 for xenon, €1200 for parking sensors, etc, etc.? (I bought an Audi A6 Allroad 6 years ago, so I know what I am talking about. I even had to pay €150 to have two cup plastic holders in the back). Audi, BMW and Mercedes are world champions in charging outrageous prices for options.

 

[brianstorms]

I reckon in Q3 or Q4 Tesla will introduce parking sensors and adaptive cruise control in the US market. ANd when they do it'll either be an additional package, or they'll up the Tech package to $5k or so. Just watch.

 

[HHHH]

I just hope it can be retrofitted!

 

[Laumb]

I reckon in Q3 or Q4 Tesla will introduce parking sensors and adaptive cruise control in the US market. ANd when they do it'll either be an additional package, or they'll up the Tech package to $5k or so. Just watch.

Well, parking sensors is already an extra package In Europe - so go figure. I think they'll Keep like that. Being optional and not bundled.

 

[phat78boy]

I can't remember my exact number anymore, but it looks the active air suspension did not increase if buying a P or P+ model. Can anyone confirm?

 

[ohh]

The price increase on the air suspension and 21" wheels also makes sense to do now, as it will allow Tesla to rise the prise for the coming Model X. I bet Model X will have air suspension as stantard feature, and maybe also 21" wheels.

 

[AustinPowers]

You mean the German carmakers that were already charging €4000 for leather interior, €4000 for 18 inch wheels, €5000 for an entertainment system, €1500 for xenon, €1200 for parking sensors, etc, etc.? (I bought an Audi A6 Allroad 6 years ago, so I know what I am talking about. I even had to pay €150 to have two cup plastic holders in the back). Audi, BMW and Mercedes are world champions in charging outrageous prices for options.

Must be the Dutch market premium on some of these items. The current German A6 allroad quattro brochure lists leather interior at EUR 2,255 (the expensive Valcona) or EUR 1,930 (the cheaper Milano), 18 inch wheels from EUR 900 to EUR 2,100 (depending on the design), entertainment systems from EUR 690 (the basic) to EUR 950 (the BOSE) or EUR 6,000 (the ultra high-end B&O). You are right about the xenon and the parking sensors (but only if you want a camera too, the basic parking assistant is EUR 780).
It's not that I want to dismiss the fact that German carmakers charge quite a bit for some options, but Tesla does the same. EUR 1,500 for heated windshield, rear seats and wiper fluid nozzles (which are mandatory here anyway), EUR 300 for a parcel shelf (which is standard on any other car), EUR 3,900 for a tech package with hardly any special tech in it.
Anyway, I didn't want to argue about the price of the options per se, just the immense and sudden price increase. Of course, if sales of these options don't drop because of the increases, good for TSLA, and I will applaud them for that. But sad for us potential future customers (I say future because the way this is developing, the Model S for me is slipping ever further out of reach. Still, can hope for Gen III - I do actually).