EAP Purchase Strategy

[jjrandorin]

I agree with @socal_suburbanit (great post btw). I think they will eventually have sales or other enticements to get the uptake on the EAP up on cars delivered without them. At the very least, I believe at "some point" it will be offered after sale at the same price someone could get it on pickup (like a black friday price next year or something).

Its a much harder sell to someone buying a 35k "basic" model 3 whenever those are available... which I suspect will be somewhere around summer to this time next year. Its around 15% of the cost of a 35k car. Its 7.5% on a 65k model 3 performance. It also depends on what people see the car as IMO.

Some see it as a cooler version of a bolt / leaf, Some see it as a techie version of a BMW / Merc / Audi with a downgraded interior compared to those. For me personally, the EAP is a core feature of the tech package for a tesla, so I would not even consider buying one without it. I hate that I dont get free supercharging. Hoping there is some way to earn that later, through referrals or something.

Anwyay back on topic, I got surveys from BMW for market research, asking how I would feel if BMW added all the sensors for their drivers suite (basically their EAP but its not nearly as complete) to every vehicle for "free" but charged for it on a per mile basis.

I said "Not only no but @#$Q@$ no" to that... but I suspect that this is a generational thing. I would much rather pay for it and have it forever than pay to turn it on and off. Im 51. I think people in their 20s may want to pay as you go because it may be cheaper if they dont use it. I would rather pay 60-70 for a video game (yep i still play games) than any sort of "free to play" game where the charges are "in app / in game purchases". I cant stand that, but people are being conditioned that this is the best way.. software as a service.

At some point I see tesla offering a subscription to EAP for people who dont have it yet. Either monthly, or yearly, especially since they (tesla) can turn it off and on fairly easily from what I read. How many might take autopilot under a "free for first 3 months you own the car, only 49.99 a month after that, cancel any time!" type situation?

 

[Shygar]

I feel like Tesla will eventually split up the autopilot into more of a pick and choose your features. Like the new Nav on Autopilot, it is only going to be getting better. So maybe they will add regular TACC for $1k, regular autopilot for another $3k and nav on autopilot for another $3k.

I did at first wish I got free supercharging, but out of the 6-8 roadtrips we've taken so far, each "fill up" costs me about $7 to $13, so it really is minor to me in the long run anyways. I fill up fully before leaving home too which reduces it.

 

[Carotene]

This thread is kinda a zombie, resurrected from last Spring but it is a top google result so I stumbled onto it while thinking about my own configuration. My 2 cents:

First, agree with those that Tesla gets loads of value from the hardware in each car regardless of whether the customer pays for the use of them or not. They shadow collect all that data including how you are driving in response and include that in their algorithms. They also get to keep manufacturing consistent-basically if i order a car today i simply chose colors, battery size and single or dual motor. There is some debate whether the P series is a software only upgrade and from what I've read it appears that at least some customers are getting P simply as software.

To say that the cameras/sensors only cost a little bit so 5k is too much is also a false economy. It is like saying that since Microsoft Office fits on a DVD they should sell it for $10. Tesla has invested tens of millions of dollars into self driving tech and need to recoup that cost somehow.

Which does open the door. There are lots of ways to get money for EAP including subscriptions, short term rental (for road trips) or having short term sales. I promise that they have discussed these and other ways to sell EAP and just this year they have started 14 day trials which include a short term sale price of $5500.

I disagree with those that say that it will never be discounted below 5k. That is a premium price for a feature in a <50k vehicle. I imagine that their Model 3 team wants to reduce that price while their Model S and Model X teams want to keep that margin where it has always been. As the Model 3 plows through their early adopters (us) the pickup rate on EAP will drop and Tesla will not want to leave cash on the table so will find ways to get cheaper EAP switched on in the cars. Personally I don't think they will sell features a la carte as that will create too much confusion for end users for car they already have a hard time describing accurately.

Cheers.

Pretty much agree with all of this. Tesla have clearly demonstrated a willingness to play with pricing. I'd wager that if a customer doesn't purchase EAP with the vehicle, the probability of them paying later is much, much lower. Tacking $5k on a $60k financed purchase is a lot easier to swallow than laying out $5k in isolation as a stand-alone purchase. And you're right, they've already had countless discussions internally about all of this. The only thing I know for sure at this point is that i'm bound to be surprised at least once a quarter by a new pricing change or option or discontinued feature. They do keep us on our toes!

 

[Carotene]

I thought i'd revive this thread
Question now is: wait a bit longer? How low can it go?

 

[lencap]

Well, in economic theory the selling price could fall to the marginal cost of production, which I expect is pretty low since it's a software upgrade. But I wouldn't bet on fire sale pricing just yet. In fact the latest move seems like an attempt to raise the price. Tesla has dropped the gauntlet to EV buyers. The M3 is a steal at $35K - you get the full moon roof and all the major features of the car plus access to the Supercharger network. I don't know any other EV that has a similar value proposition. If Tesla sales don't pick up, and if they do have fire sale pricing for the EAP/FSD options, that would scare me into being concerned that their cash flow is in big trouble. Don't forget their new Chief Financial Officer resigned after two months on the job, and the Tesla acquisition of SolarCity is a BIG money pit with no end in sight. All I want is for Tesla to remains solvent - if it survives the next two years we should be fine. If not, someone will buy the bankrupt company, but it will be a mess.