Gen III Range & Pricing Speculation

[Grendal]

Elon said aluminum is so expensive for his rockets mused owning his own factory.

Both his companies use massive amounts of aluminum. It's certainly worth doing a simple check to see if bringing an aluminum company into the mix would be worth it.

 

[alexkiritz]

Elon said aluminum is so expensive for his rockets mused owning his own factory.

Not really. That was a joke.

Another time, Musk had an issue with a vendor that makes the big aluminum domes that top off the fuel tanks. The issue was that they were going Russian on him. "We got a big increase from the vendor after the first units were delivered," says Mark Juncosa, SpaceX's lead structural engineer. "It was like a painter who paints half your house for one price, then wants three times that for the rest. That didn't make Elon too enthusiastic. He was like, 'All right, we're not going to get screwed by these guys....'"

SpaceX now makes its own domes — as Juncosa puts it, "We have our own dome-manufacturing facility in the back of the factory." This is a big deal: Elon Musk is not just assembling rockets in Hawthorne, California; he's manufacturing 70 percent of them, piece by piece. It doesn't mean that vendors have stopped trying to screw him, though, and on the evening that Musk sits eating his medieval turkey leg at his desk, Juncosa walks in to tell him that Alcoa is going Russian on him. The problem is that the domes are made of aluminum, and Alcoa has a special machine for making the aluminum SpaceX needs. They're the only ones who have it, they spent a lot of money on it, and now they want to make SpaceX pay for it....

...

And yet he can't help himself: He wants to build the next one. He has big ideas. He sells SpaceX with the reality of expendability and himself with the dream of reusability. He sells SpaceX with its launch manifest — its order book — and himself with Mars. His PR person describes him as "an unconventional man with conventional customers," not to mention vendors who act like Russians. So now as he finishes his turkey leg, he listens to Juncosa tell him that he's found a way to go around Alcoa, involving smaller pieces of aluminum. "Maybe," Musk says. "But they seem to be operating on the principle of 'What is the degree to which we can screw the customer, and that is the actual limit on the price.' They're giving the shaft to Tesla as well, and it really pisses me off."

The real problem, Musk tells Juncosa, is that "they make a shitload of aluminum."

"They're definitely not easy to push around," Juncosa says.

Musk smiles. He has a funny smile, boyish and playful but also private and a little rueful — he tends to laugh at the world's absurdity, and smile at his own.

"It makes me want to start an aluminum company," Musk says. "There has to be some serious gravy in that."

 

[vfx]

Not really. That was a joke.

Musing.

 

[art]

what is the weight of a model s 85 kwh ? and what will the weight be on a model s 60 kwh? then take a 20% smaller gen 111 and what do you think that model will weigh?

 

[constraint]

Assumptions
1. Current battery prices are $400 per kwh and will be $300 per kwh for Gen 3
2. Although not a cost factor for the car, I am assuming the tax credit will be repealed with the budget negations over the next several years.
3. Assuming 145 mile EPA range on the 40 kwh Model S (higher effeciency due to lighter pack(160 [tesla 55mph estimate] *0.92)
4. Assuming 15% increase in range

Speculation
1. Base price will be 37k and if tax credit still exists will bring that down to 30k.
2. Best case scenario will be the 40 KWH pack with EPA range of 165 miles.
3. Pack Cost: 12k, PEM, Inverter, Motor cost: 6k

So assuming 40 kwh pack and the cost of the other drive train components Tesla would need to make a BMW 3-series capable car for 19k. Seems like to tall an order without battery pack costs below $250 The more i look over the numbers i think its too optimistic for a 40 kwh pack for 37k. Thinking more like 30 kwh with 125 mile EPA range for 37k price.

 

[Kevin Harney]

I seem to recall that your first assumption is incorrect already. I believe that the cost is lower than that now and will be even lower in 2-3 years.

 

[constraint]

The leaf's battery pack without any thermal management i believe is $375 per kwh and cell prices for cheap Chinese 18650 batteries are getting close to $250 which is several years ahead of many predictions Saying that ballpark estimates of Telsa is selling their battery's at $500 per KWH (difference between 40 and 60) and if you assume they are making a profit off that then cost would be closer to $400 per KWH. Best case we are looking at 10% improvement in lithium batteries per year with only 3 years until the Gen 3 goes into production. This means that the battery pack design has to be locked down in 2/2.5 years.

2 years before pack design lock down means that none of these "breakthrough" lab experiments will be ready in time. If you have any researched articles that can show where my assumptions are off please let me know.
Thanks

 

[Kevin Harney]

I thought I had read it .....

Here

 

[Grendal]

The leaf's battery pack without any thermal management i believe is $375 per kwh and cell prices for cheap Chinese 18650 batteries are getting close to $250 which is several years ahead of many predictions Saying that ballpark estimates of Telsa is selling their battery's at $500 per KWH (difference between 40 and 60) and if you assume they are making a profit off that then cost would be closer to $400 per KWH. Best case we are looking at 10% improvement in lithium batteries per year with only 3 years until the Gen 3 goes into production. This means that the battery pack design has to be locked down in 2/2.5 years.

2 years before pack design lock down means that none of these "breakthrough" lab experiments will be ready in time. If you have any researched articles that can show where my assumptions are off please let me know.
Thanks

Kevin Harney is correct. Elon would be very clued in to what Panasonic is doing and where they are going with their batteries. I'm sure he based that prediction on what they have told him. I'm sure that's also why he has quoted a tentative price for the Gen III. My guess would be that Tesla is going to be paying less than $200 per kWh for their Gen III batteries. That is for just the batteries. There are other costs. There will be a price to ship those batteries to the US.

 

[constraint]

The article is stilll specifically talking about cell cost and not pack cost at or below $200. But given those numbers assuming pack cost of 250 instead of 300 then Tesla would need to make a BMW 3 series for 21k.

Around here cheap BMW 3 series go for 36k base price. So the base Telsa is going to be roughly the exact same price as a base BMW using a more expensive drive train more expensive materials for the shell of the car (aluminium) and without the economy of scale of BMW?

I would love to see Telsa pull it off (well technically i would love to see an electric pickup truck) but that is just an extremely tall order with a 40 kwh pack.

 

[Norbert]

The article is stilll specifically talking about cell cost and not pack cost at or below $200. But given those numbers assuming pack cost of 250 instead of 300 then Tesla would need to make a BMW 3 series for 21k.

Around here cheap BMW 3 series go for 36k base price. So the base Telsa is going to be roughly the exact same price as a base BMW using a more expensive drive train more expensive materials for the shell of the car (aluminium) and without the economy of scale of BMW?

I would love to see Telsa pull it off (well technically i would love to see an electric pickup truck) but that is just an extremely tall order with a 40 kwh pack.

The target seems to be $30k after tax credit, but if at the time of introduction they achieve $35k, that's still OK. Assuming that the Model S achieves sufficient margins at $50k, that's a price reduction of $15k.

Assuming the battery price goes from about $400/kWh at Model S volumes, to about $250/kWh at Gen III volumes, for the 40 kWh pack, that's $6k less in cost, leaving $9k difference.

For a car that is a good bit smaller, can use less expensive materials for the interior, can be a bit simpler in many ways, a $9k cost reduction doesn't sound impossible with a 5x or 10x higher volume in mass-production and better supplier prices at those volumes.

 

[JRP3]

Also remember the "30K" price target is for the base model, which may indeed not match a BMW.

 

[Grendal]

The article is stilll specifically talking about cell cost and not pack cost at or below $200. But given those numbers assuming pack cost of 250 instead of 300 then Tesla would need to make a BMW 3 series for 21k.

Around here cheap BMW 3 series go for 36k base price. So the base Telsa is going to be roughly the exact same price as a base BMW using a more expensive drive train more expensive materials for the shell of the car (aluminium) and without the economy of scale of BMW?

I would love to see Telsa pull it off (well technically i would love to see an electric pickup truck) but that is just an extremely tall order with a 40 kwh pack.

I agree with JRP3. The $30K Gen III will be a very stripped down version just to hit the promised price. I expect them to follow the Model S sales pattern and keep the $30K price for six months to a year. There will be a lot more add-ons than there is with the Model S. I truly expect to pay $50K to $60K for a nicely equipped and max pack car. The average price for the Model S seems to be $65K to $75K for the 16K reservations. I'd guess the average price for the Gen III will be $45K to $55K.

 

[aronth5]

I agree with JRP3. The $30K Gen III will be a very stripped down version just to hit the promised price. I expect them to follow the Model S sales pattern and keep the $30K price for six months to a year. There will be a lot more add-ons than there is with the Model S. I truly expect to pay $50K to $60K for a nicely equipped and max pack car. The average price for the Model S seems to be $65K to $75K for the 16K reservations. I'd guess the average price for the Gen III will be $45K to $55K.

Agree, the 2013 BMW 3 Series has a price range from $36,500 to $60,800. As long as the GenIII is competitively priced Tesla will be ok. However, with the price of cars going up each year, by the time the GenIII is available I wouldn't be surprised if keeping the base model cost below $40k will be a major challenge. Lets hope the tax credit is still available. From Autoblog: "According to TrueCar.com's data, the average selling price of a new car sold here in the U.S. last month (April 2012) was $30,748, marking an all-time record (last year's figure was just $28,771)"

 

[keithz]

I think people are being wildly optimistic in some areas and aren't taking the big picture into account (namely that Tesla's entire product portfolio will also have to evolve). Add to that the evolution of competitor's products.

For this reason, I think the Gen III will have to offer 200 miles EPA range as a minimum. That would mean a 50 kWh battery (IMHO) as the base offering. An easy offering when this pack will cost the same in 2016 (when I think the car will be delivered to customers) as today's 40 kWh pack.

I also think this means you'll see other offerings change. No more S40. The base Model S will be a $65k 75 kWh true premium full-size sedan with 250 miles EPA range. The top-end Model S will be come with a 100 kWh battery delivering a proper 300 miles EPA range.

The Gen III will be a $40k offering with a 50 kWh batt as the base model, delivering 200 miles range and a 75 kWh battery as the alternative offering 300 miles range. A $40k sedan should have a maximum cost of $30-$32k if we assume a gross profit margin of 20-25%. If the battery pack still costs $16k, that leaves $14k to put together the car. Given what Tesla has learned from the Model S, I don't think it's a stretch.

Lastly, there's a learning curve here and constant cost reduction (especially on batteries). So it's quite possible, that Tesla may be willing to accept lower margins at launch and a steady growth in margins as the Gen III sales progress.

 

[aronth5]

Welcome to the forum!

 

[Grendal]

I think people are being wildly optimistic in some areas and aren't taking the big picture into account (namely that Tesla's entire product portfolio will also have to evolve). Add to that the evolution of competitor's products.

For this reason, I think the Gen III will have to offer 200 miles EPA range as a minimum. That would mean a 50 kWh battery (IMHO) as the base offering. An easy offering when this pack will cost the same in 2016 (when I think the car will be delivered to customers) as today's 40 kWh pack.

I also think this means you'll see other offerings change. No more S40. The base Model S will be a $65k 75 kWh true premium full-size sedan with 250 miles EPA range. The top-end Model S will be come with a 100 kWh battery delivering a proper 300 miles EPA range.

The Gen III will be a $40k offering with a 50 kWh batt as the base model, delivering 200 miles range and a 75 kWh battery as the alternative offering 300 miles range. A $40k sedan should have a maximum cost of $30-$32k if we assume a gross profit margin of 20-25%. If the battery pack still costs $16k, that leaves $14k to put together the car. Given what Tesla has learned from the Model S, I don't think it's a stretch.

Lastly, there's a learning curve here and constant cost reduction (especially on batteries). So it's quite possible, that Tesla may be willing to accept lower margins at launch and a steady growth in margins as the Gen III sales progress.

Since you're talking about the future then anything can happen. I can see that, in the future, the Model S40 might go away. Tesla dropped it for Europe and they seem to be getting plenty of orders for their larger pack Model S's that they might be able to afford losing the low end.

I think you're dead wrong about the Gen III. Elon seems to have gone out of his way to follow through on certain promises and keeping the Gen III in the $30K range seems like one of those "hard" promises. I'm confident the car will be $30K in the way the S40 is $50K with the tax break. I also think the smallest pack Gen III will be a bare bones car and there will be a lot more add-ons. I do think you will get 200 miles for $40K but that will be an upgraded pack. We shall see.

 

[keithz]

Welcome to the forum!

Thanks! To be fair, I am a long time lurker.

- - - Updated - - -

Since you're talking about the future then anything can happen. I can see that, in the future, the Model S40 might go away. Tesla dropped it for Europe and they seem to be getting plenty of orders for their larger pack Model S's that they might be able to afford losing the low end.

I think you're dead wrong about the Gen III. Elon seems to have gone out of his way to follow through on certain promises and keeping the Gen III in the $30K range seems like one of those "hard" promises. I'm confident the car will be $30K in the way the S40 is $50K with the tax break. I also think the smallest pack Gen III will be a bare bones car and there will be a lot more add-ons. I do think you will get 200 miles for $40K but that will be an upgraded pack. We shall see.

Never said the Bluestar would not be $30k. But I do believe that Elon is banking on the tax credit to carry him over the finish line.

And I don't think he'll sell a very basic vehicle just to get to that price point. Why? Because such a compromise would be very damaging to Tesla's brand as the no-compromise car brand. It'd be like Apple selling a compromised laptop to get to a cheaper price point. I hope Elon is more principled than that.

As for the S40. It's toast. Look at Tesla's lineup with the Model X. The S40 is clearly a compromise, to allow Tesla to offer an entry point under $50K. With the Gen III, there's no need for this charade.

 

[Oyvind.H]

The average price for the Model S seems to be $65K to $75K for the 16K reservations.

Actually, according to my calculations (and with signatures left out of the picture) the Model S average price is about 80-85,000USD taxes and ev incetives excluded.

 

[JRP3]

Looks like Gen3 will be delayed :crying:

Tesla Motors Inc, maker of the Model S electric sedan, aims to earn its first profit later this year and launch a cheaper electric vehicle within three to four years, Chief Executive Elon Musk said.

http://www.reuters.com/article/2013/01/14/autoshow-tesla-profit-idUSL2N0AJ0GX20130114