Attempting to price out options for Model 3

[jbcarioca]

In a weird way I actually like this debate. Regardless of the precise price range of given "competitive" vehicles it is clear that different people have vastly different expectations of options, pricing ranges and equipment options. It's equally clear that among us we have vastly different views of what we would pay for and how. Just as in much of current political views in much of the world, those of us with oen view often view those of us with a different view as "wrong" or even "insane".

I'll happily wager that Tesla will accommodate most of those alternate views in their Model 3 pricing and options, just as they now do with Model S and X. It's no accident that they reintroduced the 60's, nor that they seem to be being very well received. It is quite natural that the P100D comes at about the same time with added opportunities to buy "Bioweapon Defense Mode".

...

$80k for the M3 ( in my opinion ) would be insane..l.

So, I have no problem with your view. You'll have Model 3 for a price you agree with. Those who "want it all" will have the chance to buy a Model 3 that probably exceeds your 'insane' limit. Nobody will be forced to buy it!

 

[djdimsum]

80K for a fully loaded M3 thats retarded, its not practical to spend that much on a daily driver IMHO. this isnt for the mass market if your getting all the bells and whistles. TBH if you wanna talk practical the base M3 for 35K should be good enough.

 

[SureValla]

this isnt for the mass market if your getting all the bells and whistles.

I disagree with Tesla that this is a mass market car even without any options. 35K while only 2k higher than the avg selling price of new cars is probably quite a lot higher than the average (or even better median) price of all cars bought (this would include used car sales).

To me mass market car is a car that the majority of people can afford. Median houshold income is ~50k. A rule of thumb is to not spend more than 20% of your income on a car. This means a mass market car should cost $10,000...Even if we bump that rule of thumb up to 50% of your income its still 10k less than starting M3.

Remember also the above is household family of 4. Usually households need 2 cars. So per car affordability would be $5,000-$12,500.

Put another way if your family of 4 can afford 2 $35,000 cars and spend 50% of your income on them you are in the top 13%.

 

[jbcarioca]

80K for a fully loaded M3 thats retarded, its not practical to spend that much on a daily driver IMHO. this isnt for the mass market if your getting all the bells and whistles. TBH if you wanna talk practical the base M3 for 35K should be good enough.

You are correct except for the "retarded" part. The people who will spend $150,000 for a daily driver (see P100D either S or X) rarely are retarded, although they clearly have a different view of value than do those who set their vehicle price ceiling at $35,000. If it is 'practical' you're after maybe Tesla is not yet in the market. There is always the off-lease Nissan Leaf for <$15,000. Now, That is practical!

I cannot see any problem with having all those choices. I have recommended used Leaf to numerous people and P100D to others, based on their own needs and preferences. Would it not be boring if everyone wanted the same thing?

 

[JeffK]

I disagree with Tesla that this is a mass market car even without any options. 35K while only 2k higher than the avg selling price of new cars is probably quite a lot higher than the average (or even better median) price of all cars bought (this would include used car sales).

To me mass market car is a car that the majority of people can afford. Median houshold income is ~50k. A rule of thumb is to not spend more than 20% of your income on a car. This means a mass market car should cost $10,000...Even if we bump that rule of thumb up to 50% of your income its still 10k less than starting M3.

Remember also the above is household family of 4. Usually households need 2 cars. So per car affordability would be $5,000-$12,500.

Put another way if your family of 4 can afford 2 $35,000 cars and spend 50% of your income on them you are in the top 13%.

The rule of thumb is not to let the monthly payments and expenses be more than 10% of your monthly gross income.

Therefore a $50,000 income and 10% over a 5 year loan term allows for $25,000
Go to 20% and you're up to $50,000

 

[Model 3]

To me mass market car is a car that the majority of people can afford.

Then, by your definition, there is no mass market car anywhere. The majority of people (in the world) can't afford to get a car.

... or you have to limit what part of the world you want to find the majority among. Like ex: "... the majority of people that does buy new cars in marked X can afford" where X may be US, NA, EU ....
And when you then notice that it was not "easily afford", and you add in incentives like your tax credit in the US and other in other countries, and lower running cost over the lifetime, then I think we may actually reasonably close.
But anyway, I think Elons, Teslas and most manufactures definition of "mass marked" is somewhat different then yours.

 

[djdimsum]

I disagree with Tesla that this is a mass market car even without any options. 35K while only 2k higher than the avg selling price of new cars is probably quite a lot higher than the average (or even better median) price of all cars bought (this would include used car sales).

To me mass market car is a car that the majority of people can afford. Median houshold income is ~50k. A rule of thumb is to not spend more than 20% of your income on a car. This means a mass market car should cost $10,000...Even if we bump that rule of thumb up to 50% of your income its still 10k less than starting M3.

Remember also the above is household family of 4. Usually households need 2 cars. So per car affordability would be $5,000-$12,500.

Put another way if your family of 4 can afford 2 $35,000 cars and spend 50% of your income on them you are in the top 13%.

i did the math buying a camry and gas costs for 100K miles is around 36K usd. so if you include oil change it will probably cost more. so yeah 35K is a really good deal for a model 3. im not saying i wont pay for upgrades, but lets see how the pricing will be after part 2 of the reveal. hopefully its lower than the OP estimate.

 

[SageBrush]

The rule of thumb is not to let the monthly payments and expenses be more than 10% of your monthly gross income.

Therefore a $50,000 income and 10% over a 5 year loan term allows for $25,000
Go to 20% and you're up to $50,000

50k a year, ~ 4k a month gross income
So $400 a month total to spend on the car(s)
Insurance ?
Fuel ?
Repair ?
Maintenance ?
One or Two cars ?

 

[JeffK]

50k a year, ~ 4k a month gross income
So $400 a month total
Insurance ?
Fuel ?
Repair ?
Maintenance ?
One or Two cars ?

That's what they say at least... point was that it's not a percentage of your yearly income... it's over the term of your loan.

I'm not going to stick to it.

How much should you spend on a car? | Interest.com

Having a used prius though my currently my monthly expenditures are about $300 including insurance, loan payments, gas, maintenance, etc. (my insurance is rather high).

I'm going to go ahead and pay the car off next month though so I can save more for the Tesla

 

[SureValla]

Then, by your definition, there is no mass market car anywhere. The majority of people (in the world) can't afford to get a car.

Yes you are correct, there are approximately 1 billion cars in the world and 7 billion people...

The rule of thumb is not to let the monthly payments and expenses be more than 10% of your monthly gross income.

Therefore a $50,000 income and 10% over a 5 year loan term allows for $25,000
Go to 20% and you're up to $50,000

I really don't think you guys know how poor some people are. When I bought my prius I could barely afford to make the payments and I was making more than double its cost at the time...There is 0 chance I would have been able to buy a car equal to my salary.

 

[JeffK]

Yes you are correct, there are approximately 1 billion cars in the world and 7 billion people...
I really don't think you guys know how poor some people are. When I bought my prius I could barely afford to make the payments and I was making more than double its cost at the time...There is 0 chance I would have been able to buy a car equal to my salary.

Not everyone needs to or should buy a brand new car. I've never owned a brand new car in my life. The Model 3 will be a first for me.

Used Model 3s will hit the market in a few years, don't worry.

When I bought my prius I could barely afford to make the payments and I was making more than double its cost at the time...There is 0 chance I would have been able to buy a car equal to my salary.

I would probably venture to bet that the rent/mortgage percentage you were paying at the time may have been too high and/or you didn't put down a 20% down payment.... or the dealer swindled you, they're evil.

 

[SageBrush]

That's what they say at least... point was that it's not a percentage of your yearly income... it's over the term of your loan.

Here is the FULL advice:

The 20/4/10 rule
It all starts with what we call the 20/4/10 rule, which says you should:

• Make a down payment of at least 20%.
• Finance a car for no more than four years.
• And not let your total monthly vehicle expense, including principal, interest and insurance, exceed 10% of your gross income.

Using 4% apr this works out to a $17,500 car of which 20% is a down payment and $320 a month payment coupon.
This of course presumes only one car in the household.

Only thing for sure is that calling the M3 a "a mass market model" cannot mean affordable to households with median income. Maybe double median income if a one car family. And even using double is underestimating the actual income required because single car households usually implies one adult households whose median income is way below $50,000.

 

[jbcarioca]

The rule of thumb is not to let the monthly payments and expenses be more than 10% of your monthly gross income.

Therefore a $50,000 income and 10% over a 5 year loan term allows for $25,000
Go to 20% and you're up to $50,000

Just to add a little flavor to the question:
The median US household income in 2014 was $53,657
Real Median Household Income in the United States
The average US new selling price in December 2015 was $34,428
Record New-Car Transaction Prices Reported In December 2015, According To Kelley Blue Book

Such data tends to confirm only that ~$35,000 is a reasonable place to begin pricing for a mass market vehicle. It is not accidental that US versions of a great many "aspirational" vehicles start about there.

Thinking more specifically the "entry level luxury car" category that includes the BMW 3 series had an average selling price of $39,841 (same Kelley Source) while the BMW 3 series itself allegedly had an average US selling price during 2015 on $45,600. (this last is 'allegedly' because my source would not allow attribution.

All this really means that the sales volume shifts heavily towards the base models with few options. However, the profit margins increase greatly as the equipment levels rise, thus yielding huge profits in comparison. (This sentence is also not attributable directly but readers of Automotive News with probably not argue with the statement. At least a few manufacturers make >100% of the profit on a given line from the more fully equipped but lower volume models.

 

[Model 3]

I've never owned a brand new car in my life. The Model 3 will be a first for me.

Same here, and I think it will be the first and only. The reason to at all buy this new is that - well, there is no reasonable priced used Model 3 on the marked yet
I have waited so long for a car like this, so this "train" is one that I will get on as soon as I can. My next car will probably be a CPO TM3 or TMY

 

[SageBrush]

Just to add a little flavor to the question:
The median US household income in 2014 was $53,657
Real Median Household Income in the United States
The average US new selling price in December 2015 was $34,428
Record New-Car Transaction Prices Reported In December 2015, According To Kelley Blue Book

These two numbers cannot be rationally combined because it presumes that the median family is buying that median new car. One should really not ignore the used car market.

 

[SureValla]

I would probably venture to bet that the rent/mortgage percentage you were paying at the time may have been too high and/or you didn't put down a 20% down payment.... or the dealer swindled you, they're evil.

I did not put 20% down because I did not have 20% (~$5000) in my bank account (not unlike most of America which has only a few thousand in savings). Dealer did not swindle me as prii were selling like hotcakes as gas had just hit $3/gallon for the first time and I paid just under MSRP. My rent was through the roof as I was living in a city with the third highest rent rates in the country and I had student loans to pay off (also not unlike most of America which is on average has 15k in credit card debt). This was also before the great recession so even great credit only got you a 6.5% interest rate!

Things have significantly improved since then which is the only reason I can afford a M3

 

[SureValla]

Just to add a little flavor to the question:
The median US household income in 2014 was $53,657
Real Median Household Income in the United States
The average US new selling price in December 2015 was $34,428
Record New-Car Transaction Prices Reported In December 2015, According To Kelley Blue Book

Such data tends to confirm only that ~$35,000 is a reasonable place to begin pricing for a mass market vehicle. It is not accidental that US versions of a great many "aspirational" vehicles start about there.

Thinking more specifically the "entry level luxury car" category that includes the BMW 3 series had an average selling price of $39,841 (same Kelley Source) while the BMW 3 series itself allegedly had an average US selling price during 2015 on $45,600. (this last is 'allegedly' because my source would not allow attribution.

All this really means that the sales volume shifts heavily towards the base models with few options. However, the profit margins increase greatly as the equipment levels rise, thus yielding huge profits in comparison. (This sentence is also not attributable directly but readers of Automotive News with probably not argue with the statement. At least a few manufacturers make >100% of the profit on a given line from the more fully equipped but lower volume models.

These two numbers cannot be rationally combined because it presumes that the median family is buying that median new car. One should really not ignore the used car market.

Even further it assumes the median family is buying the average new car. Median families buy median used cars.

The fact remains if you are buying a M3 you are in the top 15% of american households in terms of income.

 

[SageBrush]

This is my version of affordable as a monthly payment (not from savings): discretionary money left over after saving 20% of paycheck.

So where does that place the still very large and predominant household of 2 parents and 1.5 kids starting from a gross salary of $4,400 a month ?

• $1000 to mortgage
• $250 to utilities
• $400 to Health Insurance
• $660 to taxes
• $700 to food
• $750 to Savings
• $80 to Car Insurance

That is already $3850 and does not include rather common items like clothing, car fuel, co-insurances, cleaning, school, hobbies, entertainment, presents or socializing.

 

[SageBrush]

Even further it assumes the median family is buying the average new car. Median families buy median used cars.

Exactly, although a nitpicker like me might say "median income families buy cars that on average are about the median used car price."

;-)

 

[SageBrush]

Here is another take on that above average family income of $65k for two adults and two children:

Summary: they can pay for transport if they do not save a dime.