Attempting to price out options for Model 3

[22522]

No, it will not.

As of today every Model S and X comes with the AP-HW standard, but you have to pay for the AP-package to use anything but the security functions (auto-brake++). And Elon clearly stated in the unveiling that the same will be true for Model 3. And "summon" is not a security function

Elon needs to change his mind on this. A main purpose of the Model 3 is to make a market for behavioral advances that reduce emissions. Robot car parking, and specifically charging, garages make the number of people who can/will use a BEV much larger. The capability needs to be ubiquitous.

A high capability standard feature set delivers 10 times more value to society than a stratified pricing/option approach. Tesla will net a significant fraction of that value.

It would be amazingly short sighted to kill the goose by balkanizing capability.

 

[ummgood]

When has a new iteration of an Iphone come out at a lower price point with the same features? Iphone 5c had a cheap case, slow processor, etc. Iphone 6 had a smaller screen, worse camera than the 6 plus.

You aren't getting something for free. Will battery costs continue to come down for Tesla....sure. They also have a multi billion dollar factory to pay for expansion of, 4 announced vehicles they need R&D for, never-ending updates on AP to invest in, hundreds of thousands of employees to pay and acquisition of a solar company. All of this helps them stay atop competitors in technology and value, but isn't intended to make you get an Audi quality car at Honda Fit prices. It is intended for you to get better than Audi quality car at Audi prices.

This isn't a valid comparison. Going from the iPhone 6 to the iPhone 7 the numbers of production are in the same order of magnitude. Millions for iPhone 6 and Millions for iPhone 7. The cost stays the same because they add new hardware each time. The hardware on the 6 is much cheaper the next year due to negotiations and they rename it and charge 1/2 as much. Example the 5c is actually the hardware from the iPhone 5 in a plastic case. They charged the same for the iPhone 5 as the iPhone 6 just one year earlier so the prices did come down.

Tesla is going from negotiating parts for 50-60k cars/year to 500k cars/year. Some of those parts that were used in the S will drop in price just because of a volume increase. Then if they work a multiyear deal for 2.5M parts that will bring the cost down more.

I work in Automotive for a semiconductor business and you get a lot more attention from my company when you buy millions of parts vs 100k parts. The latter gets no support whatsoever while the former gets you a dedicated engineer to support you while you bring up your product. Plus the former gets the parts at a negotiated price while the latter pays our book price for their parts. There are minor exceptions to this like McLaren or Ferrari (and possibly Tesla) where you get attention because it is good for marketing but it doesn't usually affect the price just how much support you get if you need help because of a design problem.

 

[ummgood]

Elon needs to change his mind on this. A main purpose of the Model 3 is to make a market for behavioral advances that reduce emissions. Robot car parking, and specifically charging, garages make the number of people who can/will use a BEV much larger. The capability needs to be ubiquitous.

A high capability standard feature set delivers 10 times more value to society than a stratified pricing/option approach. Tesla will net a significant fraction of that value.

It would be amazingly short sighted to kill the goose by balkanizing capability.

Yeah the entire option thing is getting phased out. You can see it even in luxury "build it" sites. Audi's system is much simpler than it was even 2 years ago. (BMW still is crazy complex). It is much more efficient to have a car with say 4 packages than it is to have 15-20 options that people have to chose from. This allows the company to plan better and manufacture easier.

But you never know with Tesla. Perhaps since they are in this "Design the machine that builds the machine" mode they might be trying to prove that you can let people have their choice and it not affect the manufacturing process. Now delivery logistics who knows...

 

[melindav]

They also have a multi billion dollar factory to pay for expansion of, 4 announced vehicles they need R&D for, never-ending updates on AP to invest in, hundreds of thousands of employees to pay and acquisition of a solar company.

what hundreds of thousands of employees are they paying? I (or google) could have out of date information, but have Tesla listed at 14,000 and SolarCity at 13,000 employees (if you want to toss in SpaceX, they are at 5,000).

 

[22522]

But you never know with Tesla. Perhaps since they are in this "Design the machine that builds the machine" mode they might be trying to prove that you can let people have their choice and it not affect the manufacturing process.

Yeah, there is a danger there. "If they were smart" should maybe be replaced with, "If they were not distracted."

If they were not distracted, they would recognize that identification improves with image clarity. Blurry hinders identification. Sharp helps identification.

People need to know what a Model 3 delivers. They will know that better if there is not all sorts of jitter on the signal. And if there is no example of someone who "went wrong" by buying an under optioned Model 3. It needs to be "impossible to go wrong by buying a Model 3."

That means a high level of capability as standard.

 

[ccutrer]

Yeah the entire option thing is getting phased out. You can see it even in luxury "build it" sites. Audi's system is much simpler than it was even 2 years ago. (BMW still is crazy complex). It is much more efficient to have a car with say 4 packages than it is to have 15-20 options that people have to chose from. This allows the company to plan better and manufacture easier.

But you never know with Tesla. Perhaps since they are in this "Design the machine that builds the machine" mode they might be trying to prove that you can let people have their choice and it not affect the manufacturing process. Now delivery logistics who knows...

Drivetrain (battery, AWD, performance)
Paint
Seats
Interior trim
Wheels
Roof
AP
Winter weather
Premium package
UHFS
High amperage charger
Towing
SAS (which is increasingly less of an option)

(This is theoretical for Model 3, looking at what applies to it from the S/X).

13 categories where you have/get to choose. And some people don't even count the first 6 as "options". Two of those are software only.

Honestly, I've always felt that a Tesla is simple to configure, and there aren't currently any "oddball" options (I always thought the yacht floor and paint armor were odd options for the S). I've been playing with the design studio for years, and known how I would configure the current set of options.

 

[ummgood]

Yeah, there is a danger there. "If they were smart" should maybe be replaced with, "If they were not distracted."

If they were not distracted, they would recognize that identification improves with image clarity. Blurry hinders identification. Sharp helps identification.

People need to know what a Model 3 delivers. They will know that better if there is not all sorts of jitter on the signal. And if there is no example of someone who "went wrong" by buying an under optioned Model 3. It needs to be "impossible to go wrong by buying a Model 3."

That means a high level of capability as standard.

Yeah you are right. It also hurts resale value. Because people only pay for "70D", "P85D". If you see one car for slightly more you might not go look at it in the used market. I actually buy cars used quite a bit and while it is quicker to sell a car with more options most likely you'll be giving away a lot of the upgrades for free. Plus I love buying used Hondas because when I see a EX-L or a Touring Elite I know exactly what options I am getting in the used market.

 

[ccutrer]

People need to know what a Model 3 delivers. They will know that better if there is not all sorts of jitter on the signal. And if there is no example of someone who "went wrong" by buying an under optioned Model 3. It needs to be "impossible to go wrong by buying a Model 3."

That means a high level of capability as standard.

I don't think they can go wrong. The only option that I feel makes a Tesla a Tesla is Auto Pilot, and if you screwed that up it's an easy call to the service center to get it enabled - the hardware is already there. (Actually, a careful reading of the battery upgrades at shop.tesla.com implies you can just visit your MyTesla and do the whole thing on line).

 

[ummgood]

Drivetrain (battery, AWD, performance)
Paint
Seats
Interior trim
Wheels
Roof
AP
Winter weather
Premium package
UHFS
High amperage charger
Towing
SAS (which is increasingly less of an option)

(This is theoretical for Model 3, looking at what applies to it from the S/X).

13 categories where you have/get to choose. And some people don't even count the first 6 as "options". Two of those are software only.

Honestly, I've always felt that a Tesla is simple to configure, and there aren't currently any "oddball" options (I always thought the yacht floor and paint armor were odd options for the S). I've been playing with the design studio for years, and known how I would configure the current set of options.

Comparing against BMW it isn't bad...

Comparing to Honda or the new Nissan strategy it is complex. Not that it is a bad thing but it is something to think about. Imagine if the P was like a sport model that had bigger wheels etc...

With the Honda/Nissan/New Audi model you could see something like this and still keep the software options and maybe 1 or 2 special paint colors. All other paint colors are standard like Silver, Blue, Red, Grey etc...:
Base - $35k (cloth, lowest battery option, etc...)
AWD - $42k adds leather or vegan, slightly nicer wheels, more range...
Premium AWD - $50k adds to AWD, premium interior and sound, sunroof, nicer wheels, etc...
Sport AWD (P??D) - $60k adds to Premium AWD, sport suspension, sport seats, bigger rear motor...
Ludi AWD - $75k adds fancier wheels, ludicrous performance, a certificate for your living room wall, and Elon Musk bobble head.

This is really how mass market cars are done now. There are still some outliers but even the companies that were crazy with options like Nissan and Audi are starting to do this. I didn't get all the options here but you get the picture.

 

[dsvick]

A lot of people, apparently, since it's impossible to just make used cars to sell.

But they do it with those jeans they sell ....

 

[flamingoezz]

Many of the options that'll be available are not technology-based. What exactly are you missing out on with getting the S seats now vs 2 years ago? Do they kill the cow more humanely now? Did new thread technology come out that will last 10x longer? Why would you expect to pay considerably less for an option like that unless the quality was worse on the M3? same for panoramic roof, wheels, etc. Costs on items like this have little reason to come down. AP is constantly updated --cost of this will not likely come down as it is a constant investment.

Could retail battery costs become cheaper?...sure. but what is the benefit to Tesla? Their top electric competitor already costs more and is frumpy as all hell and tesla's factory is maxed out on manufacturing capacity. They are entirely more likely to wait for luxury cars to make competitive cars in the electric market and when the desirability of another electric car matches tesla, they will offer more battery or technology for the dollar.

To think that a company will just give you a discount because they decide they are profiting enough when people are purchasing their product hand over fist is naive. The only way I could see option pricing lower on most things is if they want to push people towards certain packages which will make manufacturing cheaper for them.

This isn't a valid comparison. Going from the iPhone 6 to the iPhone 7 the numbers of production are in the same order of magnitude. Millions for iPhone 6 and Millions for iPhone 7. The cost stays the same because they add new hardware each time. The hardware on the 6 is much cheaper the next year due to negotiations and they rename it and charge 1/2 as much. Example the 5c is actually the hardware from the iPhone 5 in a plastic case. They charged the same for the iPhone 5 as the iPhone 6 just one year earlier so the prices did come down.

Tesla is going from negotiating parts for 50-60k cars/year to 500k cars/year. Some of those parts that were used in the S will drop in price just because of a volume increase. Then if they work a multiyear deal for 2.5M parts that will bring the cost down more.

I work in Automotive for a semiconductor business and you get a lot more attention from my company when you buy millions of parts vs 100k parts. The latter gets no support whatsoever while the former gets you a dedicated engineer to support you while you bring up your product. Plus the former gets the parts at a negotiated price while the latter pays our book price for their parts. There are minor exceptions to this like McLaren or Ferrari (and possibly Tesla) where you get attention because it is good for marketing but it doesn't usually affect the price just how much support you get if you need help because of a design problem.

 

[22522]

I don't the they can go wrong. The only option that I feel makes a Tesla a Tesla is Auto Pilot, and if you screwed that up it's an easy call to the service center to get it enabled - the hardware is already there. (Actually, a careful reading of the battery upgrades at shop.tesla.com implies you can just visit your MyTesla and do the whole thing on line).

Yeah. that is true. It is really a question of "fraction of owners who are house poor." Capability will be less expensive (lower cost to society) if it is there, and turned on, on every one. So a high level of standard capability will result in less people that are "house poor."

So if you stand away, and look at all the people who bought Model 3s, you will see a place you want to be, where everyone is included in beneficial capabilities and a seating surface that lasts as long as the power train. (that is another loss to society thing. loss is less if you use leather. Tesla wins on that, too.)

 

[ccutrer]

Yeah you are right. It also hurts resale value. Because people only pay for "70D", "P85D". If you see one car for slightly more you might not go look at it in the used market. I actually buy cars used quite a bit and while it is quicker to sell a car with more options most likely you'll be giving away a lot of the upgrades for free. Plus I love buying used Hondas because when I see a EX-L or a Touring Elite I know exactly what options I am getting in the used market.

One could argue that due to not caring about the options you improve resaleability (especially for lower optioned cars) at the cost of resale value of higher optioned cars. Which is a pro to one person, and a con to the other, depending on which side of the transaction you're on .

 

[melindav]

It is much more efficient to have a car with say 4 packages than it is to have 15-20 options that people have to chose from. This allows the company to plan better and manufacture easier.

the last new car I bought that I went to a dealer (ford) and picked the specific options I wanted, had packages that were something like "Convenience" (extra illumination, heated mirrors, upgraded mats, leather shift boot and steering wheel, etc), "Sport" (upgraded wheels, upgraded seats, bright sill trim, different suspension/steering, etc), "Sun & Fun" (sunroof - apparently it's fun enough on it's own) then individual options like leather, ABS, etc and a particular car could have any combination of packages.
Personally, I think I'd rather be able to pick the specific parts and pieces I really am interested in and skip the others that may be adding cost that I'm not interested in, but if packages bring down prices as a while, I am all for them if they combine things as most people would (IE an interior package with decor/leather/tech)

 

[dsvick]

Just also had a thought, we are assuming a la carte pricing. Its possible Tesla offers packages like most cheaper cars to make manufacturing easier...

I've thought this as well...only makes sense to lessen the variables by offering predefined packages.

How about a mid-battery / the D / paint/ wheels and seats package?
No more, no less and I'll pay no more than $48k thank you very much. I hope.

I'd love a package with a larger battery, dual motors, and SC baked in.

 

[Skione65]

I'd love a package with a larger battery, dual motors, and SC baked in.

^^^This would be a GREAT start!!! Then I'd add Options as necessary.


Ski

 

[ccutrer]

the last new car I bought that I went to a dealer (ford) and picked the specific options I wanted, had packages that were something like "Convenience" (extra illumination, heated mirrors, upgraded mats, leather shift boot and steering wheel, etc), "Sport" (upgraded wheels, upgraded seats, bright sill trim, different suspension/steering, etc), "Sun & Fun" (sunroof - apparently it's fun enough on it's own) then individual options like leather, ABS, etc and a particular car could have any combination of packages.
Personally, I think I'd rather be able to pick the specific parts and pieces I really am interested in and skip the others that may be adding cost that I'm not interested in, but if packages bring down prices as a while, I am all for them if they combine things as most people would (IE an interior package with decor/leather/tech)

This is why other automakers do packages. Sure it may make manufacturing a bit easier, but they simply don't know what the actual customer wants, and it would be impossible to stock every variation. I feel that packages just complicate the process of custom ordering. For evidence, go through the history of the X forum at the outcry from "so much" being bundled into the premium package, or how many things require SAS. Or the S forum right now because you can only get Ultra White seats with a P model.

 

[ccutrer]

I'd love a package with a larger battery, dual motors, and SC baked in.

This would fit historical configurations for the Model S, where larger battery includes SC, or no non-D with larger battery.

In my mind this is simplification. Sure they are base options, but once you "level up" to a larger battery, it's assumed you want the other two options, so they're no longer options, they're just included.

 

[dsvick]

People....wake up! There is absolutely no reason for the options to be "cheaper" on the model 3.

Sure there is. Elon already said dual motors will be cheaper.
The cost of the batteries should be cheaper since they're going to be produced at the gigafactory, and the cost per kwh will also be lower, so battery upgrades may be lower.
I would expect the premium sound system to be less expensive since it is not a premium car they may not spend as much on the audio.
Some of the technology based options may also be lower since the MS and MX are supposed to be the technology test beds for what will end up in the M3.
They'll be building multiple times as many M3's as they are MS and MX so many of the options may cost less simply because they are buying more, things like tires, radio speakers, some of the premium features.
Yes, those are all guesses, in reality no one will know until they tell. I expect it will end being a combination of the two, some will be cheaper, some won't.

Good luck getting a decent Model 3 for under 60K. I am just saying, be prepared, so you won't be disappointed.

Your definition of decent sounds pretty different from mine. What part of the base car do you think wont be decent?

 

[SageBrush]

When you can get a loaded Accord for low 30's it is hard to pay 20k more for the same options on an electric.

Except that many (most?) of the options for the TM3 are not available in the ICE, including the biggest option of them all: EV