FSD cost increase likely reason

[TMThree]

Was thinking about it and this is what I came up with:

Tesla urges tariff exemption for Chinese-made car computer 'brain' - Reuters

Trump: Elon Musk’s tweets on tariffs ‘very interesting’

https://techcrunch.com/2019/05/03/trumps-tariffs-could-knock-teslas-autopilot-off-course/

China had a 25% import tax from the US, while the US had a 2.5% import tax from China. To make things even, Trump is now making it 25% from China.

Tesla applied for exemptions, but just had their HW2.5 and HW3.0 exemptions denied. So Tesla's costs for them are going up. The model 3 center screen exception hasn't yet been decided.


If you look under the covers, the actions Tesla makes are logical, but their public reasoning are often masked.

For example, Tesla is now battery constrained, so they fixed this issue by making higher margins on the cars they can produce by requiring all vehicles come with AP, and the LR vehicles now require AWD.


Meanwhile with the hardware costs going up, the cost of FSD is being passed to consumers under the guise of the vehicle becoming appreciating assets.


I'm pretty sure SR, and LR RWD will be back on the menu when the battery shortage is over.

Likewise, AP will likely become optional again (maybe, hard to say since they have been backed into a corner by saying its standard because it makes the cars safer).

I like looking at the Model Y ... LR RWD is available, and AP is still a $3,000 option. FSD is $5,000. Could be that they just aren't bothering to update the Y since it's so far out, but that seems like a lazy excuse.

 

[afadeev]

China had a 25% import tax from the US, while the US had a 2.5% import tax from China. To make things even, Trump is now making it 25% from China.

Tesla applied for exemptions, but just had their HW2.5 and HW3.0 exemptions denied. So Tesla's costs for them are going up. The model 3 center screen exception hasn't yet been decided.

All fair guesses.
Alas, there are FAR more computers in the cars (dozens!), including Tesla, then the ones you are focusing on in this analysis.
That 25% import tax, if retained, will produce a sizable inflation spike on all cars and many consumer goods.

For example, Tesla is now battery constrained, so they fixed this issue by making higher margins on the cars they can produce by requiring all vehicles come with AP, and the LR vehicles now require AWD.
[...] I'm pretty sure SR, and LR RWD will be back on the menu when the battery shortage is over.

I wish that was true.
Tesla is now demand constrained, especially on high-margin Model S & X, and that's a serious problem for the company's cash flows:
New Updates: Monthly Plug-In EV Sales Scorecard: April 2019

Meanwhile with the hardware costs going up, the cost of FSD is being passed to consumers under the guise of the vehicle becoming appreciating assets.

The fault with that logic is that HW3 now goes into cars whether or not customer buys FSD.
FSD surcharge is a form of voluntary subsidy for ongoing autonomous driving software developing R&D.

As to vehicles becoming an appreciating efforts - good luck with that one, unless we are talking about classic cars !


a

 

[TMThree]

If it's demand constrained, then there would not be any sense in raising the average sale price and decreasing options

 

[afadeev]

If it's demand constrained, then there would not be any sense in raising the average sale price and decreasing options

It's not an "if demand constrained".
Sadly, it's the fact of life, as witnessed by the monthly sales #s.
Feel free to explore the stats at the link in my previous post at your leisure.

As to Tesla's pricing logic - good luck finding some!

a

 

[TT97]

In another article I read, the article stated that the tariff will cost Tesla about $40 per vehicle.

While every penny counts and would be about $20mm per year if they hit 500,000 deliveries, it is still less than 0.1% of the sale price - hardly a reason to raise FSD prices.

Trump’s tariffs could knock Tesla’s Autopilot off course – TechCrunch

 

[newtonfb]

Makes no sense to raise the price when the feature is already not highly purchased. The hardware and software is already in the cars...every dime they get from someone purchasing FSD is more than they had. Raising the price will indeed have even less adoption...doesnt take a genius to know that.

 

[TMThree]

In another article I read, the article stated that the tariff will cost Tesla about $40 per vehicle.

While every penny counts and would be about $20mm per year if they hit 500,000 deliveries, it is still less than 0.1% of the sale price - hardly a reason to raise FSD prices.

Trump’s tariffs could knock Tesla’s Autopilot off course – TechCrunch

Where are you getting the $40 figure from? The article clearly states Tesla thinks this change will harm its profit margins, and will force them to change where hardware is being built. That's a lot of complaining over $40, especially given that they regularly change consumer pricing for things like paint by $500 at a time.

Also note that the HW3/HW2.5 are not the only components being built in china.