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AP2 Pricing

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It kinda sucks too that they gouge you to add software features later. I mean, I could see $100-200 bucks additional to turn a feature on after purchase, but the hardware is already there. A $2000 premium over the retail cost for an over the air upgrade is nuts. I know tesla has done this for some time now, but with making an 'affordable' car, they really should keep their new market in mind with these updates.

I assure you they are charging not a penny more than the hardware and development costs for AP 2.0. If they charged $200, they would be losing $7k per vehicle. That would bankrupt them immediately and prevent them from growing. Are you joking? And who said this new tech was supposed to be cheap? It's still affordable for a large portion of their market, and they're already going to have 100,000's of backorders once M3 goes into production.
 
I assure you they are charging not a penny more than the hardware and development costs for AP 2.0. If they charged $200, they would be losing $7k per vehicle. That would bankrupt them immediately and prevent them from growing. Are you joking? And who said this new tech was supposed to be cheap? It's still affordable for a large portion of their market, and they're already going to have 100,000's of backorders once M3 goes into production.

Oh! You must work for Tesla since you know so much about the financial situation/ profit margin of the Model 3. Please tell me, when is reveal Part 3 going to be?

I mean... you must know, with access to sensitive inside information of Tesla.
 
If they charged $200, they would be losing $7k per vehicle. That would bankrupt them immediately and prevent them from growing. Are you joking?

You either didn't read or understand what i was saying. If you buy AP2 at the time you buy your car, it costs 8K. If you buy it a day later it costs 10K. It is literally just an OTA update, akin to going from ios9 to ios10 on your phone. They shouldn't charge anything for this -- I could see them charging a couple hundred dollars to help pursuade people to update at time of purchase, but $2K!?
 
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You either didn't read or understand what i was saying. If you buy AP2 at the time you buy your car, it costs 8K. If you buy it a day later it costs 10K. It is literally just an OTA update, akin to going from ios9 to ios10 on your phone. They shouldn't charge anything for this -- I could see them charging a couple hundred dollars to help pursuade people to update at time of purchase, but $2K!?

Cost of money.
 
Oh! You must work for Tesla since you know so much about the financial situation/ profit margin of the Model 3. Please tell me, when is reveal Part 3 going to be?

I mean... you must know, with access to sensitive inside information of Tesla.

If they go from charging $8k for a feature to charging $200, they lose $7.8k per customer. It's simple math. Where is this money supposed come from? Multiply that $7.8k by 500,000 or whatever the final number of M3's are, and you're left with a bankrupt company. Doesn't take insider information to understand basic economics and business principles. Tesla is a young growing "startup" that has heavy R&D and market integration costs. Elon has always made it clear that their financial plan has evolved from the low volume/high profit margin Roadster, to the medium volume/medium profit margin Model S, and finally to the high volume/low profit margin priced M3.

And reveal Part 3 is Soon™.
 
You either didn't read or understand what i was saying. If you buy AP2 at the time you buy your car, it costs 8K. If you buy it a day later it costs 10K. It is literally just an OTA update, akin to going from ios9 to ios10 on your phone. They shouldn't charge anything for this -- I could see them charging a couple hundred dollars to help pursuade people to update at time of purchase, but $2K!?

$8k now is worth more than $10k later. Read about the rule of 72 in investing. Literally I could drop $8k in a high tech mutual fund and it will be worth about $8.8k 12 months later. So $200 would be way too cheap and Tesla would lose much needed R&D money. Also if you have any experience in business or consumer market behavior you will know that a customer saying "I might get that later" has a severely diminished chance of actually doing so vs them getting it right then and there. Try this for fun: walk into a used car dealership, let the salesman pitch a car to you, and say "Sounds great! I want it but I need to think about it and wait until next week to be sure". He will do anything in his power to keep you from leaving because he knows he just lost the sale 99% of the time you leave empty handed.
 
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If they go from charging $8k for a feature to charging $200, they lose $7.8k per customer. It's simple math. Where is this money supposed come from? Multiply that $7.8k by 500,000 or whatever the final number of M3's are, and you're left with a bankrupt company. Doesn't take insider information to understand basic economics and business principles. Tesla is a young growing "startup" that has heavy R&D and market integration costs. Elon has always made it clear that their financial plan has evolved from the low volume/high profit margin Roadster, to the medium volume/medium profit margin Model S, and finally to the high volume/low profit margin priced M3.

And reveal Part 3 is Soon™.
One thing you didn't factor in is that at $8k fewer people will buy AP but at $200 almost everyone would. So overall they wouldn't lose $7.8k per customer. The hardware will be included on all M≡'s so that cost doesn't change. Now I never expected AP to be only $200 but $8k sounds pricey. I have a feeling it won't cost that much in an M≡. Mainly because of economies of scale not because it's the baby brother of the MS and MX. They might charge less than $8k in a MS/MX by that time as well.
 
They shouldn't charge anything for this -- I could see them charging a couple hundred dollars to help pursuade people to update at time of purchase, but $2K!?

It makes you really want to buy it now huh? ;)

Most people will take out loans to purchase the car, it's far easier to wrap up the cost in the loan vs coming up with the cash later which, for some, might never happen even if they want the feature. It dissuades people from wanting to get the feature after purchase because they'd have to pay an arm and a leg. It leads to impulse purchases as well. You might purchase a feature you won't actually use but once or twice a year.

It's not like the people purchasing high end Model S/X are hard up for cash but sometimes people stretch themselves thin on the purchase.

They really need this extra cash for the Model 3 ramp up and to pay off any Solar City debts. How do you think they don't need to ask investors for money for the next couple quarters? No worries, I doubt the penalties will be this high for Model 3.
 
If they go from charging $8k for a feature to charging $200, they lose $7.8k per customer. It's simple math. Where is this money supposed come from? Multiply that $7.8k by 500,000 or whatever the final number of M3's are, and you're left with a bankrupt company.
People weren't taking exception to your math they were taking exception to you stating that they aren't charging more than it cost them. Actually, since I'm sure they assumed not everyone would enable the options they have, in fact, priced it out at more than whatever its estimated per unit cost would be.

A low selling price will not bankrupt them either. The cost of the hardware will be built into the car so that's a wash and the majority of the money for the software development has already been spent. They priced it like they did knowing that not everyone would take it, so those that do have to also cover, to some extent, the R&D costs for everyone that didn't take it.
 
I don't really mind pay $8k, but the $2k premium for activating it later is killing me, 25% increase is nuts.

On a side note, if I choose to purchase Enhanced AP for $5k, but later I want to upgrade to Autonomous, I will pay $5k ($3k for Autonomous software plus $2k upgrade fee), not $10k right?
 
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I don't really mind pay $8k, but the $2k premium for activating it later is killing me, 25% increase is nuts.

On a side note, if I choose to purchase Enhanced AP for $5k, but later I want to upgrade to Autonomous, I will pay $5k ($3k for Autonomous software plus $2k upgrade fee), not $10k right?

Nope, if you start with Enhanced AP for $5k, and later add Full Autonomy it will be an additional $4k. ($3k for the option plus the $1,000 upgrade/after delivery change fee.)

So your total cost would be $9k.
 
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I assure you they are charging not a penny more than the hardware and development costs for AP 2.0. If they charged $200, they would be losing $7k per vehicle.
That's not the way I read the original post. I read it to mean that it cost $8k extra when you configure and purchase your new Model 3. IF you weren't able to pay for an $8k option when you bought the car, paying $200 (extra to activate, so $8,200) $2k above the $8k original price, so $10k feels like price gouging.

If the way I read it is what he meant in his post, I completely agree.

My other thought is similar to the small fear I had in the back of my mind when I reserved. That is, by the time the car reaches actual customers, the high end cars are built first and then the <$45k cars are no longer offer "due to a lack of substantial interest." At the risk of being considered heretic, I don't think any car I've ever seen is worth $45000 of my money. 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....
 
My other thought is similar to the small fear I had in the back of my mind when I reserved. That is, by the time the car reaches actual customers, the high end cars are built first and then the <$45k cars are no longer offer "due to a lack of substantial interest." At the risk of being considered heretic, I don't think any car I've ever seen is worth $45000 of my money. 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....
It was stated by Elon that with the amount of reservations, they couldn't afford to build just the high spec cars first like the S and X were done. It would be a PR nightmare and outrage with lots of people since the 3 is supposed to be affordable to the masses, so they can't cater to the "rich" people first.
 
It was stated by Elon that with the amount of reservations, they couldn't afford to build just the high spec cars first like the S and X were done. It would be a PR nightmare and outrage with lots of people since the 3 is supposed to be affordable to the masses, so they can't cater to the "rich" people first.
Unless there's a source I have to call BS on this. High spec cars have the biggest margins and cash is needed for the ramp up. It's in everyone's best interest if high spec'd cars are produced first.