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[Vger]

Gen III price is pretty important. If they market supercharger network and price around $50k, it is a mistake. I think tesla mention price of $35k for Gen III & with supercharger, network spread out pretty similar to existing gas station $35k price is not bad. Again if they can bring the cost down for Gen III anywhere close to $25k (take out few features and keep it as a basic model) it will be huge success, and everybody feels comfortable in buying.

Yes and no. You are not looking at the comparables that Elon has already stated: BMW 3-series and Audi A4. These are NOT $25k cars, and do not need to be. Elon is not going to compromise high quality for price. Tesla is not Chevy or Nissan.

In the shareholder's meeting, Elon made it pretty clear that Gen III will NOT sacrifice range for price, and said that 200 miles is his range spec floor. I think it is more likely they will delay the car a year (closer to the end of the 3-4 year window) than to short-change the range. They are working VERY closely with Panasonic, and I believe between JB and this pals in Japan, they know more about the cost/performance curve of Li tech than some shadowy analysts quoted by Barrons.

I have always believed and experienced that those who are deeply invested in the status quo will never see innovation coming, nor understand the speed or scale of its effects on the economy.

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Think of Gen 3 as a BMW 3 series killer for the same price. That is Tesla's mid-term goal. This is not going to be a cheap commuter car for the masses, but rather a luxury compact/mid-size sedan affordable to 50 million people in the US.

Ya beat me to it! :wink:

 

[gameon]

Gen 3's goal is to compete with BMW 3 series and sell around 200,000 units a year. A car starting at $25k may come later down the road to compete with Camry's/Civics of the world and sell in millions. But that is Gen 4 or possibly even later if Tesla builds a Truck. Tesla does not have the capacity to do this just yet; think 7 - 10 years down the road for that.

I was looking at a BMW 328, and a basic stripped down model with only some of the basice upgrades, such as leather, upgraded stereo, etc. and you are looking at $40-45k. A basic Tesla starting at $35k will give you a comparable car, only faster, better torque, more power, roomier inside the cabin and far more storage, better technology, quieter, and much, much cheaper TCO.

Think of Gen 3 as a BMW 3 series killer for the same price. That is Tesla's mid-term goal. This is not going to be a cheap commuter car for the masses, but rather a luxury compact/mid-size sedan affordable to 50 million people in the US.

In that situation buying 40 to 50k BMW 3 series don't make any sense even today if you can take model s starting at $62k.

If 25k is a cheap car for masses and tesla is not making in that situation, I will not be interested (many like me) in tesla. Again, I am taking this in wrong way and no where tesla mentioned exact price and range for gen 3.

If tesla sell cars above $35 (add taxes, etc make it above $40k) is not for masses, and other companies see the opening to capture market just like google android did to apple. Android made in roads by producing cheaper tablets and phones and now market cap is above or close to apple IOS. Again, people will buy cell phones every year but a car is not consumer gadget's people buy or trade that often.

 

[callmesam]

Gen 3's goal is to compete with BMW 3 series and sell around 200,000 units a year. A car starting at $25k may come later down the road to compete with Camry's/Civics of the world and sell in millions. But that is Gen 4 or possibly even later if Tesla builds a Truck. Tesla does not have the capacity to do this just yet; think 7 - 10 years down the road for that.

I was looking at a BMW 328, and a basic stripped down model with only some of the basice upgrades, such as leather, upgraded stereo, etc. and you are looking at $40-45k. A basic Tesla starting at $35k will give you a comparable car, only faster, better torque, more power, roomier inside the cabin and far more storage, better technology, quieter, and much, much cheaper TCO.

Think of Gen 3 as a BMW 3 series killer for the same price. That is Tesla's mid-term goal. This is not going to be a cheap commuter car for the masses, but rather a luxury compact/mid-size sedan affordable to 50 million people in the US.

Gen 3 price-point at $35,000 has a TCO of far less than a Camry or Civic.

$35,000 price

Financed @ 3% for 60 months costs $625/month

Subtract $250/month fuel

$375/month is affordable by 80% of car buyers, since the cost certainty makes this car much more affordable. They don't need a "cheaper" version of their car although I support an electric motorbike like the CL1.

 

[gameon]

The mass-market segment will be crowded by the time Tesla plans to deliver Gen III. Chevy just introduced GM's first all-electric car, the Spark EV, at $20,000 (after the $7,500 tax credit). Consumers seem cool to paying more for an electric vehicle with a driving range that's a fraction of an internal-combustion model's. Disappointing demand drove price cuts last month on Honda's Fit EV and Nissan's Leaf. The category-leading Leaf sold fewer than 10,000 units last year.
We're sure Musk could have told us why potential buyers of affordable electrics still see internal-combustion-powered cars as a cheaper, more convenient choice.

I think above assessment from Barron's article make some sense unless someone has better explanation if it is not true.

 

[Krugerrand]

I think above assessment from Barron's article make some sense unless someone has better explanation if it is not true.

Actually, that seemed even more like a reason to hang up on the guy.

 

[Citizen-T]

I think above assessment from Barron's article make some sense unless someone has better explanation if it is not true.

The author boils the cars down to nothing but range and price, then draws the conclusion that the cars sold poorly because of their expensive price and lack of range. This is a flawed analysis because the cars could have very well sold poorly because they WERE BAD CARS. Furthermore, none of these cars would be in a Tesla Gen III's market segment so he's comparing apples and oranges.

He's made the same mistake that people made with Model S. They assumed that the only people that would buy a Model S are the ones that might buy a Chevy Volt or Nissan Leaf. This was a dumb assumption then, and continues to be when looking forward to Gen III.

 

[Darko]

I think above assessment from Barron's article make some sense unless someone has better explanation if it is not true.

Sounded rather snarky on the part of the reporter, but I imagine Elon would have responded that people don't want all of those other EVs because they are complete compromises, not because they are too expensive.

One admitted headwind Tesla will be facing when Gen III comes out is that if Models S and X sell as well as some are hypothesizing, Tesla will be close to completing the 200,000 unit limit for the $7500 consumer tax credit, whereas many other manufacturers may still have a good amount left. Not that I think Tesla's strategy of working down the value chain could have been done better, but it is an irony that the $7500 is going now to buyers for whom the impact will be less than those buying a $35000 car.

Update: CitizenT you beat me to it...

 

[CapitalistOppressor]

http://www.reuters.com/article/2013...feedType=RSS&feedName=financialsSector&rpc=43

one more link to same article. I am not very sure about Barron's work, but one thing struck me that model 3 will have a short range to achieve lower price tag. I mean anything below 100 is not great idea in 3-5 years time but who knows what other companies will bring to that market.

There is no need for a shorter range. Despite what Barron's think's Tesla will be able to build the Gen III car they have described, which will start with over 200 miles of range just like the 60kWh Model S.

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Did the author ever opine about the actual cost to Tesla of the battery pack? I looked through the article but couldn't find it.

Seems pretty fundamental.

Yes, they claimed it cost $400/kWh. It almost certainly costs less than half that.

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He's made the same mistake that people made with Model S. They assumed that the only people that would buy a Model S are the ones that might buy a Chevy Volt or Nissan Leaf. This was a dumb assumption then, and continues to be when looking forward to Gen III.

If anything, its a dumber assumption now. I only need to be punched in the teeth once before I learn my lesson.

 

[sleepyhead]

Articles like this one are actually good for Tesla's stock. They weed out all of the flaky investors, encourage more people to short the stock, and gives inestors (who actually understand Tesla) a chance to pick up some more shares. This strengthens the shareholder base, which will allow the stock to continue its rise. Once some good news comes in, nobody is left to sell their shares (because they are in it for the long haul) and it intensifies the short squeeze. 30% short interest is still a ridiculously high number.

 

[EVNow]

Gen III price is pretty important. If they market supercharger network and price around $50k, it is a mistake. I think tesla mention price of $35k for Gen III & with supercharger, network spread out pretty similar to existing gas station $35k price is not bad. Again if they can bring the cost down for Gen III anywhere close to $25k (take out few features and keep it as a basic model) it will be huge success, and everybody feels comfortable in buying.

Musk $35k. The big question is - is that pre-tax credit or post tax credit.

If $35k is pre-tax credit, we are looking at $27k post tax credit. $35k is essentially the price of Leaf SL now.

BTW, the supercharger network in 4 years will be nowhere close to existing gas station network. In 2008 there were 115k gas stations in the US.

 

[deonb]

Musk $35k. The big question is - is that pre-tax credit or post tax credit.

If $35k is pre-tax credit, we are looking at $27k post tax credit. $35k is essentially the price of Leaf SL now.

It's pre-tax credit. At the shareholder meeting Elon mentioned it's a mid-20s car after the tax credit.

BTW, the supercharger network in 4 years will be nowhere close to existing gas station network. In 2008 there were 115k gas stations in the US.

There are 76 million garages in the U.S. where you can charge your car. Agreed - it's nowhere close.

 

[gameon]

Musk $35k. The big question is - is that pre-tax credit or post tax credit.

If $35k is pre-tax credit, we are looking at $27k post tax credit. $35k is essentially the price of Leaf SL now.

BTW, the supercharger network in 4 years will be nowhere close to existing gas station network. In 2008 there were 115k gas stations in the US.

Nissan slashed price of leaf by $6400 but again spark is $27000 (if you take out 7500 it is $19000)9000) but again, without gen 3 price it is useless to discuss IMHO.

I think leaf has some chance of improving because of existing user base.

Another factor is the change in California law. By 2025, 15 percent of all new car sales must be zero-emissions vehicles.

 

[DaveT]

It's pre-tax credit. At the shareholder meeting Elon mentioned it's a mid-20s car after the tax credit.

I don't remember Elon saying it's pre-tax $35k. Was this at the last shareholder's meeting?

Elon has always said prices as post-tax credit (ie., $50k Model S which was post-tax credit).

 

[Darko]

I don't remember Elon saying it's pre-tax $35k. Was this at the last shareholder's meeting?

Elon has always said prices as post-tax credit (ie., $50k Model S which was post-tax credit).

A point I made upstream, but if I understand the EV tax credit program correctly, those credits will be phasing out for Tesla buyers right around when the Gen III debuts (@200,000 units per manufacturer). If so, the pre or post-tax credit pricing is moot because there will be no post-EV credit price for Tesla buyers then - the price will be the price.


Update: of course I mean the $7500 federal credit.

 

[deonb]

I don't remember Elon saying it's pre-tax $35k. Was this at the last shareholder's meeting?

Elon has always said prices as post-tax credit (ie., $50k Model S which was post-tax credit).

Mmm. It was definitely in one of the last 3 I listened to, either in the AllThingsD interview, SuperCharger announcement, or StockHolder meeting. He broke down the pre- and post- tax for the Gen III.

I remember I was surprised because it's the first time I heard a "20s" number.

I'll go re-watch them...

 

[EVNow]

There are 76 million garages in the U.S. where you can charge your car. Agreed - it's nowhere close.

The question is about the supercharger network.

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A point I made upstream, but if I understand the EV tax credit program correctly, those credits will be phasing out for Tesla buyers right around when the Gen III debuts (@200,000 units per manufacturer). If so, the pre or post-tax credit pricing is moot because there will be no post-EV credit price for Tesla buyers then - the price will be the price.

If Gen 3 comes in 4 years, we are looking at 4 years of S & X sales. I'd guess 125k in sales.

Ofcourse, assuming there are no changes in the tax credits.

 

[Darko]

If Gen 3 comes in 4 years, we are looking at 4 years of S & X sales. I'd guess 125k in sales.

Ofcourse, assuming there are no changes in the tax credits.

Yes, I realize I was also assuming international sales which shouldn't count. Nevertheless, whatever is left of Tesla's credits at that point will go quickly, within the first half of the year (although this won't be all bad as it will boost help boost sales at the debut with everyone trying to make it in the door).

 

[deonb]

The question is about the supercharger network.

I consider home charging an essential part of the supercharger network strategy. If you take away home charging, the only people who can use the SuperCharger network are the ones living in Folsom, Gilroy, Harris etc.

Nobody who lives in a city would even be able to get to a supercharger in the first place. (Except if you live in Seattle for some reason...).

 

[kenliles]

I consider home charging an essential part of the supercharger network strategy. If you take away home charging, the only people who can use the SuperCharger network are the ones living in Folsom, Gilroy, Harris etc.

Nobody who lives in a city would even be able to get to a supercharger in the first place. (Except if you live in Seattle for some reason...).

where do you see something in seattle? That map dot looks south of Tacoma to me

 

[qwk]

In that situation buying 40 to 50k BMW 3 series don't make any sense even today if you can take model s starting at $62k.

If 25k is a cheap car for masses and tesla is not making in that situation, I will not be interested (many like me) in tesla. Again, I am taking this in wrong way and no where tesla mentioned exact price and range for gen 3.

If tesla sell cars above $35 (add taxes, etc make it above $40k) is not for masses, and other companies see the opening to capture market just like google android did to apple. Android made in roads by producing cheaper tablets and phones and now market cap is above or close to apple IOS. Again, people will buy cell phones every year but a car is not consumer gadget's people buy or trade that often.

If people think that they will be able to buy a Tesla for cheaper than about $40k, they are going to be very dissapointed. The cheapest Model S is almost $70k, that and the discontinuation of the 40kwh Model S are two clues that Tesla gave at this point in time. Tesla is never going to compete with cheap econobox cars on price.