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Any thoughts of the price of the model 3 going up if the steel/aluminum tariff goes thru?

ℬête Noire

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Jan 30, 2018
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ℬête Noire

Active Member
Jan 30, 2018
3,105
2,703
TX
The increase on the raw stock should be relatively muted by overall costs. The thing about EVs is their batteries are such a large portion of the cost that stuff like this will get diluted a lot. Maybe a percentage point? It'll matter of course, it's tax that's going to end up propagating impact fairly broad so it's bump inflation some but nothing like 10%.
 
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It really depends on Tesla's sourcing. If Tesla is sourcing their Al and Steel via US sources, then this tariff doesn't really impact them. If they are using international sources, then it could. I really don't know what Tesla will do. Make no mistake about it, this tariff is an opportunity for ALL companies to make a margin grab and blame it on Trump even if they are not actually impacted.
 

ℬête Noire

Active Member
Jan 30, 2018
3,105
2,703
TX
It really depends on Tesla's sourcing. If Tesla is sourcing their Al and Steel via US sources, then this tariff doesn't really impact them. If they are using international sources, then it could. I really don't know what Tesla will do. Make no mistake about it, this tariff is an opportunity for ALL companies to make a margin grab and blame it on Trump even if they are not actually impacted.
One man's "make a margin grab" is another man's "relief from market pressures so we can turn a profit". ;) It's a pretty natural thing that happens when you have taxes that selectively hit, it always brings up prices across the board by some fraction. Econ 101. *shrug* "Blame" wouldn't be wrong.

As for Al source of Tesla, IIRC nearly all Al used in the US is imported (it's something like 10% produced local to the US, because smelting is so dependent on cheap electricity).
 
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One man's "make a margin grab" is another man's "relief from market pressures so we can turn a profit". ;) It's a pretty natural thing that happens when you have taxes that selectively hit, it always brings up prices across the board by some fraction. Econ 101. *shrug* "Blame" wouldn't be wrong.

As for Al source of Tesla, IIRC nearly all Al used in the US is imported (it's something like 10% produced local to the US, because smelting is so dependent on cheap electricity).

"not actually impacted" with price increases would = "Margin Grab".... IMO
 
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T34ME

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Mar 31, 2016
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Inland Empire
Increase cost of aluminum/steel will have almost no or little impact on COG for Tesla. What is more important is that the instability of the stock market and US economic policy will affect the value and exchange rate of the US dollar versus other currencies.

Like gun control policies, his tariff policy is subject to change at any moment. And that further impacts confidence in the stability of the US.
 
Since Trump (without thinking) talks first and is influenced by others later, I think it is unlikely that the tariffs will actually go into effect. Just look at the one day flip flop on gun control after a talk with the NRA.

Even if it does happen the steel and aluminum is a small cost overall, so unless Tesla is trying to make a political statement I imagine Tesla will absorb the cost, at least for a while.
 

ℬête Noire

Active Member
Jan 30, 2018
3,105
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TX
I guess we all can now sleep better because the CEO of Century Aluminum says that the worst case would increase the price of your car by $37 (He claimed historically it never got that bad)!

Surely we can trust the word of this individual with no self-interest in play!


EDIT: I believe also he's talking only about the aluminum, too, not including the steel portion of it. I do wonder which particular vehicle/hypothetical vehicle he chose as the basis for those numbers on.
 
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Whether it greatly affects the cost or not, this would be a good and convenient excuse for Tesla to increase the planned Model 3 Standard Range MSRP of $35,000 to something higher when it comes out next year.

Perhaps they can grandfather a certain number of reservation holders to keep everyone happy. In the case of Model S, those who reserved a Model S 40 by December 31, 2012, were promised the originally advertised $57,400 MSRP, even though the cars themselves were not delivered until March 2013.

Tesla had a reasonable and generally well-regarded explanation for the Model S price increase (by citing the CPI): 2013 Model S Price Increase

The target price of $35,000 was first announced back in 2014, which is $36,400 in today's dollars. By next year, when Model 3 Standard Range is released, it'll be closer to $37,000.
 
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ℬête Noire

Active Member
Jan 30, 2018
3,105
2,703
TX
Whether it greatly affects the cost or not, this would be a good and convenient excuse for Tesla to increase the planned Model 3 Standard Range MSRP of $35,000 to something higher when it comes out next year.

Perhaps they can grandfather a certain number of reservation holders to keep everyone happy. In the cse of Model S, those who reserved a Model S 40 by December 31, 2012, were promised the originally advertised $57,400 MSRP, even though the cars themselves were not delivered until March 2013.

Tesla had a reasonable and generally well-regarded explanation for the Model S price increase (by citing the CPI): 2013 Model S Price Increase

The target price of $35,000 was first announced back in 2014, which is $36,400 in today's dollars. By next year, when Model 3 Standard Range is released, it'll be closer to $37,000.

1) If they don't "Grandfather", AKA sell at the price they agreed upon and promised to every person that has put down a $1K deposit, there'd be copious righteous outrage.
2) . Your wording "convenient excuse" suggests Tesla is looking for one to raise prices, but that runs counter to Musk's ultimate goal, changing the world's vehicle fleet over to EVs.
 
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1) If they don't "Grandfather", AKA sell at the price they agreed upon and promised to every person that has put down a $1K deposit, there'd be copious righteous outrage.
2) . Your wording "convenient excuse" suggests Tesla is looking for one to raise prices, but that runs counter to Musk's ultimate goal, changing the world's vehicle fleet over to EVs.
Tesla can't do that if they're losing money. As the prices of materials go up, it only makes business sense to charge more -- if they can without reducing demand.
 
The target price of $35,000 was first announced back in 2014, which is $36,400 in today's dollars. By next year, when Model 3 Standard Range is released, it'll be closer to $37,000.

I don't deal with business at this scale, but even with 8 figure deals, inflation and risks of that like are always wedged in to any profit analysis, and margins are defined to hedge risks. Even if there's a troublesome increase in cost (of *any* kind), they'll cost-shift it forward to future buyers. There may not be a 30-year plan, but there's a lot more planning to financing at this level than there is to our mortgages...
 

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