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Falling Canadian Dollar

Discussion in 'Canada' started by Han Chen, Dec 15, 2014.

  1. Han Chen

    Han Chen Member

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    With the falling Loonie, how long do you think it will be before Tesla adjusts their Canadian prices?
     
  2. Lloyd

    Lloyd Active Member

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    Maybe not for awhile looking at the big picture........ 1y-cad-Large.gif 10y-cad-Large.gif
     
  3. 3s-a-charm

    3s-a-charm Active Member

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    I thought I read somewhere that automobile manufacturers who import to other countries have a currency freeze for importation purposes for a fixed period (5 years?). That ensures they aren't having to adjust pricing every month to compensate for the fluctuating dollar.
     
  4. Canuck

    Canuck Active Member

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    Also, they pay their Canadian employees, leases, suppliers, supercharger contractors, utility rates, etc. in Canadian dollars. If they keep their Canadian payments in Canadian dollars, and use it for Canadian expenses, then there is no loss on the exchange rates. In the past, they had to fund these expenses with American dollars but with increased sales in Canada there's no need to exchange funds. They can also hold the profits in Canadian funds and when our dollar goes back up, as it inevitably will, they can cash out then.
     
  5. Hugh Mannity

    Hugh Mannity Mediocre Member

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    Sounds good canuck, am hoping i dont get burned when its time to pay for the x a year from now! i guess once the vehicle is built in the design studio the price is pretty much locked in at that point :)
     
  6. wayner

    wayner Active Member

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    They may pay Canadian expenses in CAD but the bulk of the cost that goes into buying a Tesla has to be in USD. I don't see how they won't be raising prices soon - unless they enjoy selling vehicles at a loss, and/or opening a huge arb opportunity for Americans to come and by their Teslas in Canada. Has anyone calculated the implied exchange rate between Canada and the US by looking at pricing of an equivalent vehicle in both countries? I know that some (most/all?) car makers make this difficult by changing option packages slightly between Canada and the US.
     
  7. Han Chen

    Han Chen Member

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    So once you build your car in the design studio the price is locked in? What if I build the car using design studio now but don't want to take possession of the car until April? Will they hold the price for that long?
     
  8. Canuck

    Canuck Active Member

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    Not really. The bulk of the price that goes into a Tesla is based mainly on commodity prices - not the price of the US dollar. If commodity prices rise, it costs more to make a vehicle regardless of the rise of the US dollar. Here's one of main commodities that goes into a Tesla:

    GraphEngine.jpg


    There won't be any loss with commodity prices at these prices -- and the Canadian dollar is strongly tied to the price of commodities and energy - two of the three most significant costs of vehicle manufacturing (the other being labour). Also, I remember well the 65 cent dollar and vehicle prices in Canada were not increased by that amount and there was no flood of Americans buying cars in Canada. After accounting for duty and hassles of registration and warranty issues, it just doesn't happen. When our dollar was over par (only 2 years ago) we could buy cars in the US and save about $10k to $20k on a vehicle. Despite this fact, very few people did that.
     
  9. wayner

    wayner Active Member

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    But over the years vehicle prices in Canada have been adjusted when the CAD moves. I could be wrong but I do not believe that Tesla prices have been adjusted this year despite the fact that the Canadian dollar has gone from 1.06 to 1.16 (or 0.94 to 0.86 depending on which way you look at it). I am guessing that they will do so which is the reason the OP started this thread. FYI - by my quick calculation the current implied FX rate is 1.10 as the P60 is posted at $71.1k in the US and $77.8k in Canada. The P85D is $104.5 vs $114.7.
     
  10. Canuck

    Canuck Active Member

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    I looked at the OP post to question if that adjustment will be happening soon. I don't see that happening. Of course, if the dollar keeps falling it will happen at some point in the future. However, if it stays at around 85 cents I predict no price increase.

    If Tesla announces a Canadian price increase within the next year I'll stand corrected. I just don't see it happening with the offset by growing Canadian expenses, and the fall in commodity and energy prices. But I've been wrong many times in the past (except I won't admit that to my wife) and I could be wrong again here. Only time will tell.
     
  11. Hugh Mannity

    Hugh Mannity Mediocre Member

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    I am not sure how that works, my assumption is purely speculation on my part
     
  12. mrElbe

    mrElbe Member

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    Once you confirm you will receive a Vehicle Purchase Agreement with the list and prices you ordered. Now if that is a binding document remains to be seen.
     
  13. PoweredByRain

    PoweredByRain Member

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    On the topic of Tesla's prices in Canada: hopefully in a couple of years with the "Gigafactory" coming on line, the Model S will no longer be considered a foreign car and thus subject to 6% duty (if I understand that correctly - I can't find the reference online right away). That should drop the price significantly.

    (Currently the battery cells are made in Japan.)
     
  14. mibaro2

    mibaro2 Member

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    That is correct. It will have the required % of U.S. made parts to fall under NAFTA and be excluded from 6% duty.
    The only reason it doesn't fall under that now is the battery is 40% of the cost and is made in Japan (as you pointed out).
     
  15. Doug_G

    Doug_G Lead Moderator

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    I understand that the Model S is only a couple of percent short of the 60% NAFTA content required to avoid the 6% duty. The Gigafactory will definitely make the car duty-free.
     
  16. Jaff

    Jaff Active Member

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    Was it 60% for NAFTA Doug?...I seem to recall is was a goofy oddball number...something like 63%...
     
  17. Doug_G

    Doug_G Lead Moderator

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    Found this:

     
  18. Jaff

    Jaff Active Member

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    What %tage were the original P85's...I can't recall, but I think the P85D's are coming in around 50%...
     
  19. Ktowntslafan

    Ktowntslafan Member

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    #19 Ktowntslafan, Dec 17, 2014
    Last edited: Dec 17, 2014
    So should taking advantage of Canada's exchange rate. Tesla's next GIGA should BE in CANADA...
     
  20. Jaff

    Jaff Active Member

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    Good idea!...maybe we can get the Feds to abolish the Senate, raze the building, and put the factory in the same spot...(at least a gigafactory would be a good use of the land)...sounds like a "win-win" to me...:wink::biggrin:


     

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