AP2 Pricing

[JeffK]

Not sure where you come to that conclusion because there is nothing there that makes that clear to me. The article was published 9 months ago, which would put at least in late January. The "updates" state no date to reference when the updates were made. The newest comment on the article is dated February 12th. All points to be pre-reveal unless I'm missing something. Doesn't really matter to me though as I'm checking all boxes unless it gets stupid expensive, but will still be high spec regardless.

Ah you're right, now I remember, Elon officially said the highly optioned Model 3's were going to come first during that Q4 earnings call.

I'm going to check all the boxes too .

transcript is here http://seekingalpha.com/article/388...musk-q4-2015-results-earnings-call-transcript
if anyone is interested

 

[Darryl]

First you have to realize Tesla is in business to make money. There is very little profit on a base Model 3. On the other hand there will be considerable profit margin on a highly optioned Model 3. It only makes financial sense to order delivery of the Model 3's by which cars will bring you most profit. Even with the Model S and Model X they manufactured the highly optioned cars first. There are people who placed a reservation for a Model X over four years ago but just recently got theirs because it was only a $85k version not the $160k fully optioned car. It is not like Tesla has hid that this was their plan as Elon meantioned it during the reveal and again during a quarterly call.

With regards to the AP2 pricing. The cost to Tesla for hardware for AP2 is minimal. Probably a few hundred dollars. This is why it is easier for Tesla to install it during manufacturing and then offer it to those who want it as an over the air upgrade. It is much cheaper to install the parts by robot on the assembly line. It would be prohibitively expensive to go back and retrofit them with this functionality after the fact. The $8k is the cost of hardware, software along with the cost of R&D. Ultimately you may find the offset in insurance costs may help pay for this option over the lifetime of the vehicle.

I keep seeing where people say they hope the cost comes in below $35k. I think the chances are the price will be higher than $35k than they are prices will be under $35k. Elon has committed to $35k and it is highly likely this is what the base model will cost. I think there will be very few people who will buy a Model 3 with just the base options.

Paul Carter who has been contributing to the TMC forum since inception has put together a good spreadsheet which goes over his estimate to the cost of the various options for the Model 3. I find his estimates to be very concervative and if anything the costs will probably be slightly higher. Also don't forget when you look at the total cost to add $1,200 as this is what Tesla charges as the destination and docs charge on for all cars no matter the cost along with whatever your state charges for sales tax on new cars. My state charges 6% or $2,400 on a $40k car, $4,800 on a $80k car.

Here is a link to Paul's pricing thread: Model 3 Average Selling Price Predictions

Finally if you have not already created an account on http://Model3Tracker.info and input what options you plan to purchase please do so. Also, if you haven't been out there lately some of the options have changed so please update your information. Finally, City and State are now required fields.

 

[Nuclear Fusion]

I'm pretty shocked at the pricing. Especially since they want the money upfront, but, you won't be able to use it for quite a while. Maybe years. But they want and additional TWO THOUSAND dollars to turn it on later? Not sure I will want to spend another 2K on my car once it is a few years old. I'm still processing the whole thing.

It probably wouldn't comply with Australian law.
The Australian Competition & Consumer Commission would be very interested in this - I don't think you can buy a product & it does nothing (which is the case for full autonomous in the short to medium term). I doubt it would comply because it simply states that it will do what it suggests 'at some unknown time in the future'

 

[Booga]

It probably wouldn't comply with Australian law.
The Australian Competition & Consumer Commission would be very interested in this - I don't think you can buy a product & it does nothing (which is the case for full autonomous in the short to medium term). I doubt it would comply because it simply states that it will do what it suggests 'at some unknown time in the future'

It does enable the additional 4 cameras, so I wonder if "Enhanced Autopilot" is improved with the additional vision and overlapping coverage. If so, it would help right away.

 

[Booga]

Ultimately you may find the offset in insurance costs may help pay for this option over the lifetime of the vehicle.

As someone who works in the insurance industry, I would say that this may be totally right for the ultra long term view, but in the next 5-10 years, I wouldn't expect this.

The advanced capabilities of these cars are modifying what insurers are doing - parking lot accidents, which before would remain under the deductible, are now often triggering claims, because of the advanced sensors that have to be replaced/calibrated/etc. and are often OEM specific without too many alternatives so far. So you get more accidents, though relatively minor, you get many more coming in, and that increases insurance costs/pricing. In addition, it's a more expensive car in general compared to the others on the road, and so severity is on average higher as well. The early Volvo's with automatic braking showed that it makes a dramatic impact on bodily injury, and that's very helpful, but there are still plenty of areas accidents which experience more expensive claims and keep insurance costs from being too low.

I'm hopeful insurance pricing will improve, but as of now, I'm fully expecting the Model 3 to be fairly expensive (by my own standards) to insure and likely more expensive than similarly priced cars given that fewer places can repair them. (Sensors, aluminum work, etc.)

 

[JeffK]

It does enable the additional 4 cameras, so I wonder if "Enhanced Autopilot" is improved with the additional vision and overlapping coverage. If so, it would help right away.

That's exactly what it does.

 

[Garlan Garner]

I don't think any car I've ever seen is worth $45000 of my money.

Many people feel that way. You are not alone.

I just am not in the income class that can sacrifice that much money, when at the end of the day it is just a car. Certainly a very nice car, but just a car nonetheless.

Climbing into my flame retardent jump suit now....

Many folks are in your same income class as well.

I hope Tesla remembers both of these things as they continue to develop the M3.

 

[Garlan Garner]

Won't the hardware be standard either way? So you just have to pay to activate it?

You would just have to pay to use it.

As it was stated by Elon, the hardware will be reporting data back to Tesla even for those who haven't paid for it / use it.

 

[Garlan Garner]

I have a question:

There are 2 versions of AP 2 correct?

Doesn't one version have more cameras than the other one?

 

[JeffK]

I have a question:

There are 2 versions of AP 2 correct?
Doesn't one version have more cameras than the other one?

One version of the hardware... two different software options.

 

[Garlan Garner]

One version of the hardware... two different software options.

So we get 8 cameras a super computer and other stuff - no matter what?

 

[brianman]

It kinda sucks too that they gouge you to add software features later.

You lost me here. Granted I'm biased - I respect that software development costs.

 

[JeffK]

So we get 8 cameras a super computer and other stuff - no matter what?

Yup, and they will all run shadow mode and collect data for the next year as they train the neural net behind the scenes preparing for regulatory approval.

This is how we know that the cost of the hardware is baked into the base price of the car... everyone gets all the hardware.

 

[JeffK]

You lost me here. Granted I'm biased - I respect that software development costs.

It's more of a price by value... They are first to market and can therefore charge whatever they want. Keep in mind this influx of cash helps the Model 3 ramp up.

 

[brianman]

It's more of a price by value... They are first to market and can therefore charge whatever they want. Keep in mind this influx of cash helps the Model 3 ramp up.

In your opinion.

 

[JeffK]

In your opinion.

If you say so

Although hardware is cheap and if everyone purchased self driving at $8,000 that's $640 million in the first year for a neural net which besides the corner cases trains itself using a GPU cluster which isn't terribly expensive.

If half the Model 3s produced in 2018 purchased at $8000 a pop then that's $2 billion dollars. That's some expensive software if you don't think that money is going into the ramp up.

If "my opinion" is correct though, we will see lower prices for self driving on Model 3. The hardware isn't going to get any cheaper and the software doesn't magically become cheaper with the Model 3.

Many industries use "value-based pricing" nowadays.

 

[brianman]

the cost of this hardware is going to be sunk into every Model 3 whether people choose the option or not and, at $8000, it's probably not cheap for Tesla or its customers.

Your phrasing makes it sound like the hardware costs Tesla $8,000. This is definitely incorrect.

 

[brianman]

It is literally just an OTA update, akin to going from ios9 to ios10 on your phone. They shouldn't charge anything for this

All entertainment content should be free too. #entitled

 

[JeffK]

Besides the Drive PX 2 which we don't have a price for, the cameras are all around $100 and the radar is a few hundred. So hardware cost likely well under $1200 not counting the PX 2. Here's an older article:

Turns Out the Hardware in Self-Driving Cars Is Pretty Cheap

 

[brianman]

There is some mythical post/tweet/blog/interview out there where he says that they changed their minds and won't do it that way.

I suspect what some people are remembering / referring to is the discussion around no Signature Series for the Model 3.

They might also be recalling some comments related to the pulling forward of production because of the volume of reservations. The tone of that was "we don't want people waiting forever for their cars" and in such discussions inevitably the topic gets intermingled with the two "I want my car early and I'm willing to pay for it and/or I deserve it because..." and "the delivery order should be 'fair' " camps arguing.