Gen III Range & Pricing Speculation

[CarlK]

$30K with 200mile range would definitely a game changer. Don't forget it supposed to target BMW 3 series in size and performance too.

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$30K with 200mile range would definitely a game changer. Don't forget it supposed to target BMW 3 series in size and performance too.

However the more I think about it the more I believe this CANNOT be done.

 

[JRP3]

It can't, today. 3-4 years from now, quite possibly. 45kWh pack and 200 wh/mi driving efficiency gives you 200 miles with a buffer, at a pack cost of $200/kWh that's $9K for the pack, say $18K for the rest of the car, equals $27K to build the entire car. Add on a conservative 15% profit margin for the base model and you're at $31K. Obviously all these figures are just guesses but not impossible. Right now Tesla is pricing the 25kWh difference between the 60 and 85 at $400/kWh at retail pricing so their cost is certainly already below that. If the silicon and sulfur electrodes pan out that should provide cheaper cells with much better energy density. If they are also safer and less thermally sensitive that could eliminate much of the extraneous pack materials which would also lower costs and improve pack energy density.

 

[Norbert]

However the more I think about it the more I believe this CANNOT be done.

Not the first time Tesla does something that was thought cannot be done.

Three examples:
- Produce a commercial electric car with the range of the Roadster (and make profit on a per-car basis).
- Build an electric car with all the significant features of the Model S, in 2012.
- Produce (and sell) Model S by the thousands.

 

[anticitizen13.7]

Not the first time Tesla does something that was thought cannot be done.

Three examples:
- Produce a commercial electric car with the range of the Roadster (and make profit on a per-car basis).
- Build an electric car with all the significant features of the Model S, in 2012.
- Produce (and sell) Model S by the thousands.

I confess that I initially thought Tesla's vision of automobiles couldn't be done. When I first started following news about Tesla Motors around 2007, the Tesla Roadster was an obscure novelty, and management drama was rocking the company. Since then, the company has proven itself, and I don't doubt that they will find a way to achieve their goals.

Technological progress is often an uneven, rocky road. I expect bumps along the path to G3/BlueStar, but I think it is more likely than not that Tesla will meet its targets for range and cost. There are few times that I can remember where I have encountered a game changing product. Macintosh, BlackBerry, and iPhone are the three that come to mind. Perhaps Internet qualifies as well, but it's more of a general digital landscape than a specific product.

The Tesla team also inspires confidence. Elon, George B., Joost, Von Holzhausen, Gilbert Passin, and other members of the leadership seem to have both vision, drive, and consistency. I didn't get that from Apple in the early years. Jobs was a visionary and extremely driven, but his erratic behavior as a young man left Apple in a continual state of anarchy and crisis. It wasn't until Jobs had mellowed a bit in the late 90's that the company got back on track. Tesla does not seem to have this problem.

 

[KD5MDK]

Add on a conservative 15% profit margin for the base model and you're at $31K.

I thought the target margin was 25%. Holding the line on margin is important.
That said, those numbers works if you assumed 3% inflation over the next 4 years.

 

[stopcrazypp]

I thought the target margin was 25%. Holding the line on margin is important.
That said, those numbers works if you assumed 3% inflation over the next 4 years.

That's the target margin for the Model S. It'll be amazing (and difficult) to keep a 25% in a high volume 3 series-like vehicle. BMW/Benz/Audi overall only make a 20% gross margin (which means 3 series is likely below that since the more expensive vehicles tend to have higher margins than the average).

 

[anticitizen13.7]

With the 40 kWh Model S cancelled due to 4% reservation rate, leaving 60 kWh as the base model, I think what I suspected was more or less correct: over 200 miles EPA range is what the vast majority of buyers will be comfortable with. Starting the day with around 200 miles leaves enough margin of error that most people don't need to worry about charging until they get home at night.

 

[KD5MDK]

That's the target margin for the Model S. It'll be amazing (and difficult) to keep a 25% in a high volume 3 series-like vehicle. BMW/Benz/Audi overall only make a 20% gross margin (which means 3 series is likely below that since the more expensive vehicles tend to have higher margins than the average).

That's fair, but margin is what allows you to do things like SuperChargers, fancy stores in extremely high value real estate, etc. If you don't make sufficient margin on every sale, you're out at the Motor Mile being compared to Kias and Dodges. Also, once you give up margin you never get it back (except by internal cost cutting which is painful and difficult). The next model year will not have higher margin than the current one. I can see them going down to 23% etc if it hits a significant number for MSRP, but I don't see them going all the way down to 15%. They need that revenue, and I don't think the BlueStar is going to be any less capacity constrained than the Model S. Their ramp up can only go so fast, and the pool of buyers for each step down in price is much bigger than the previous pool.

 

[gjunky]

I guess I was right about them giving up on the 40kwh pack. There were too many limitations on it. Slower, less range (of course), no supercharging. I am sure the GEN3 will only have two sizes with an additional performance model like the Model S with the smaller one being above 200 and hopefully the large one being around 350 miles. Is a performance model with awd too much to ask :smile: ?

 

[vfx]

Not the first time Tesla does something that was thought cannot be done.

Three examples:
- Produce a commercial electric car with the range of the Roadster (and make profit on a per-car basis).
- Build an electric car with all the significant features of the Model S, in 2012.
- Produce (and sell) Model S by the thousands.

This could be another "100" things list.

Starting with building a car (the first one) with range.... and speed... and in quantity...

 

[vfx]

So my theory on BlueGenlll pricing (shared with a few others) is the the low end price $39K car would be the stripped down low range version. Today's announcement killed the low range S so what will become of the entry level BG3? Is Elon's "30 thousand dollar car" even doable?

 

[KD5MDK]

I think the answer to that is too far in the future to know.

 

[Grendal]

So my theory on BlueGenlll pricing (shared with a few others) is the the low end price $39K car would be the stripped down low range version. Today's announcement killed the low range S so what will become of the entry level BG3? Is Elon's "30 thousand dollar car" even doable?

Well we know that Elon wants to do the car and have it come out at $30K with a 200-ish mile range. In the future he could still make a $47,400 car (assuming there is still a $7500 tax credit) that retails for $39,900 and still get away with a "$30K" car. I'm certain that he wants a $37,500 car that he can sell for $30K.

The question I have is how many range choices will the Gen III have? Yesterday I would have said three, today I'm thinking they will just do two like the Model S, just to simplify things.

 

[ElSupreme]

I think there will still be three pack sizes for the Gen III. I think Tesla will make a "$30k" version but much like the 40kWh S it won't sell much. But having a low entry point for something like a Gen III, or car for everybody, you need that entry point.

When people come into a store, look around, figure out how much operating costs will drop. They can be shown that they can afford $10k or more than an ICE base price. Get moved up to the second tier battery and be much happier. I think Tesla is seeing plenty of demand, without a low price point entry point with the Model S. So they axed the 40kWh pack.

And remember the average new car purchase price is well into the $30k range right now. Considering fuel savings you can easily tack on $10k to the purchase price. I don't think Tesla will have any problems selling $40k and $50k Gen III vehicles to normal middle class Americans. They will just have to get them into the door, and educate them about TCO.

I also think that Gen III will benefit from a much better residual value estimate, with the LEAF and Model S being sold so much. And I also expect a battery reuse ecosystem to be starting around that time, giving more demand for a used battery, raising the residual value even more. All of this makes a higher purchase price easier and easier to swallow. Not to mention makes leasing the cars out at very low rates possible.

 

[JRP3]

Is Elon's "30 thousand dollar car" even doable?

Sure, the question is does Tesla want to do it? If they cut out a lot of the gee wiz stuff and build a a highly efficient platform I think they could almost do it with today's cells. If they can't do it with cells available 3-4 years from now then the EV industry has a major problem.

 

[vfx]

New info to add.
Watch the Bloomberg interview of Elon. His reason for cancelling the 40kWh was low sales but he talks a lot about not enough range.
So where does that leave the bottom end of the Bluegenlll? If it's not in the same class as the S then maybe it can go less than 200 miles but hearing Elon maybe no car should force a owner to buy another vehicle This also hints that the BG3 will also be able to use the SC network.

 

[AnOutsider]

I can't imagine gen 3 WOULDN'T be SC capable. Why build out a network if you didn't plan to use it on future vehicles.

 

[vfx]

I can't imagine gen 3 WOULDN'T be SC capable. Why build out a network if you didn't plan to use it on future vehicles.

Cause the car that has less range can't make it? The 40kWh was not SC compatible.
Cause the car that sells 100,000 per year will clog the system made for the luxury cars?

 

[brianman]

Cause the car that has less range can't make it?

I suspect 2-3 years from now we won't be talking about 120-200 mi. between SCs but something more like 80 mi.

Cause the car that sells 100,000 per year will clog the system made for the luxury cars?

This is definitely a risk/concern though.

 

[Norbert]

This is definitely a risk/concern though.

Yes, it could be, in theory. However, actually I think the Gen III's use of Superchargers will mean a significantly larger network, beneficial also to Model S owners.