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EAP Purchase Strategy

Discussion in 'Model 3: Ordering, Production, Delivery' started by Carotene, Mar 26, 2018.

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  1. Carotene

    Carotene Member

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    Since the TM3 purchase includes the EAP hardware, Tesla's margin on vehicles sold without EAP is much lower. Given the TM3 is a cheaper car for the masses, I suspect that once the lower cost trims are available the percentage of TM3 sold with EAP will be lower. 5k/35k adds quite a bit of cost on a percentage basis.

    Regardless, I think there is a huge incentive on Tesla's part to lure TM3 owners to add EAP in the future to recapture margin on the EAP hardware. I could easily envision heavily discounted EAP offers for TM3 owners in the months/years to come, along with free trials and so on. I see the value in EAP, but man, $5k is a chunk of change. If they offered just TACC, i'd probably skip full EAP altogether. My strategy right now is to hold off on EAP and see how things progress. Yes, I may have months or even years of ownership w/o EAP, but my gut tells me i'll be able to jump on a good offer in due time.

    What is the assessment from the peanut gallery? :)
     
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  2. PoitNarf

    PoitNarf My dog's breath smells like dog food

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    Sure for some the $5000 price for EAP is a bit hard to swallow for some given the limited feature set. Once they are able to achieve all of the promised features for EAP I think it will be well worth the money and you'll see a pretty high number of Tesla's with it enabled. That's why I ordered my Model 3 with EAP, because I know it will continue to get better and more features will be added eventually.

    For now it seems that a majority of people configuring now are pulling the trigger on EAP as well.
     
  3. Skidmark

    Skidmark Member

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    EAP is most of the reason for me buying a Tesla, so holding off on adding it was out of the question. AP1 only cost $2k though - that was a bargain!
     
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  4. Shygar

    Shygar Member

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    Yea but don't completely discount the value of Tesla including that hardware on all cars. They are getting valuable data about their surroundings running everything in shadow mode. Obviously purchasing EAP on top of that is really what Tesla wants, but it's not like there's zero value to Tesla for those who may never purchase it.
     
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  5. PoitNarf

    PoitNarf My dog's breath smells like dog food

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    This. I believe that is also why Tesla hasn't started charging for the cellular data connection in any of their cars yet. The AP active and shadow mode data they're getting back from their fleet is far too valuable for them at the moment.
     
  6. Carotene

    Carotene Member

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    Good point on the value of data, though I would challenge that they extract $5k of value per car. I don't disagree Tesla have much to gain from their fleet of TM3 data streams. But at some point when EAP is pretty refined, would there not be an incentive by their bean counters to rope in the EAP hold-outs with a good deal? This is all prognostication, but IMO it wouldn't be at all surprising for them to float a $2k or $3k deal sometime in the future to get a nice bump in revenue at almost 100% margin.
     
  7. MP3Mike

    MP3Mike Well-Known Member

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    I doubt they will ever discount it for after-purchase additions. (Unless they discount it for new purchases as well.) There is a reason it is a package and not à la carte, they know people would purchase TACC only. But what if TACC was $4k, and EAP with all the extras was $5k? Would you still get just TACC?

    On the other hand, I do see them providing a free demo. (They did that with AP1 at least once.)
     
  8. Shygar

    Shygar Member

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    Rather than offering a discount, I think they will make it more valuable. When the car can fully drive itself and you want to turn it into a revenue generating machine while you are at work, then people will pay that $8k-$10k in a heartbeat.
     
  9. agastya

    agastya Member

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    Don't think they will ever discount the price for EAP on M3.

    At present, the vast majority of current M3 owners have probably used EAP at some point in time on their previous Teslas and know what is on the table. I would like to believe that the EAP option would have a big conversion percentage in these orders. As the deliveries grow for non-owners, there will be bigger bucket of people who haven't tried it, have a car with the capabilities, but are being held back due to what seems a big chunk of change. If the number crunchers believe this to be a significant subset, a free trial is one of the most solid ways to let this community test waters. Totally hoping that they will have a free trial at some point in time.

    If Tesla really wanted to improve it as a revenue stream, they have to look at it as a service. Build the EAP/AD program into a trusted program ( no incidents etc ) and then charge for it on mileage basis. And once over a certain fee charged for the service... enabled permanently.
     
  10. d21mike

    d21mike Active Member

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    Like someone else said I would not have considered a Tesla without AP. If you are serious about the features of AP I would get it at purchase. Remember after purchase it is $6K (today). Lets say they do discount to $4K (30% discount) at some point in the future that would only be $1K less then the current $5K at purchase. And if you finance the car over say 5 years how much more is the $5K per month. I can see you not getting FSD especially if on a lease. However, I also got FSD at the end of Sept. 2017 but I plan to keep the car at least 5 years.

    Since my purchase I have seen steady improvements. However, the biggest improvement for me just happened with 2018.10.4. Assuming the New Nav/Maps are starting to roll out this weekend I believe over the next 3 months we will see quicker improvements rolling out.
     
  11. Shygar

    Shygar Member

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    Yea it's $1k more but do you pay sales tax on that $6k after the fact? I never was sure on that question. Because bundling it with the car you are paying sales tax on that $5k.
     
  12. d21mike

    d21mike Active Member

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    Good point. But I do not know the answer.
     
  13. d21mike

    d21mike Active Member

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    5k + 462.50 = $5,462.50 at time of purchase. Using 9.25% sales tax in Fremont CA.

    Not sure about sales tax on 6k after purchase.
     
  14. Carotene

    Carotene Member

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    This is creative. As a software product, they have a lot of ways to monetize it. I could see activating EAP for a long road trip for a fee. Very cool idea.
     
  15. Carotene

    Carotene Member

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    IMO current improvements to EAP aren't adding value, they are simply moving a product from beta into stable release so that it delivers on promised functionality.

    FSD is another ball of wax and remains to be seen if they can pull it off. That option is not even a consideration for me at the moment.
     
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  16. GDNTX

    GDNTX Member

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    Those cameras and component prices are a very very small cost to Tesla. Selling EAP is all cash to them. The wiring harness would be the same in every car whether they installed the cameras or not. This is done on most every car built. It's cheaper to put the same part in vs having multiple parts and overhead building different harnesses. The cameras are likely a few bucks a piece when purchased in volumes they purchase in.
     
  17. animorph

    animorph Active Member

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    I could see a deal for $2k or $3k EAP if the car is 8 years old or so. Keep waiting.
     
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  18. kgclark

    kgclark Member

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    I could see them discounting the after-sale upgrade price at some point in the future, especially at the end of a quarter - It's a quick way to grab a wad of cash and increase profit. They discounted the software upgrade from the Model S 60D to 75D a few months ago. I forget what the actual numbers were, but it was a significant savings over the stated upgrade price.
     
  19. GDNTX

    GDNTX Member

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    Kind of makes sense, but I doubt they would discount, but maybe they would waive the $1000 extra after purchase, maybe just let people buy at the original price with no $1K penalty.
     
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  20. insaneoctane

    insaneoctane Active Member

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    I don't see a discount. It sets an undesirable precedent and lowers the future value.
     

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