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High Capacity with same price or ...?

Discussion in 'Model S: Ordering, Production, Delivery' started by stealthnhawk, Mar 11, 2014.

  1. stealthnhawk

    stealthnhawk Member

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    As battery cost reduces, will Tesla
    1) keeps 60/85kWH version and lower the Model S price
    2) increase the battery sizes/ranges and keep the same price
    3) neither.. keeps profit for themselves (I can't see this happening when Model E comes out..)

    Any thoughts?
     
  2. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    Tesla has indicated a gross margin target of around 30%?, with possiblility of dropping to 20% in the longer term. Personally I'd not expect cuts in the base price until Gen 3 at least. Tesla needs to add to the base trim and driver amenities to bring it up to par for the pricing segment and there's usually better value in improving trim than cutting price.
     
  3. lloyds

    lloyds Member

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    Highly doubt they would decrease pricing. If anything they would try to improve margins by creating bundles that increase the overall pricing of the same vehicle. We've seen this happen from '12-'14.
     
  4. neroden

    neroden Happy Model S Owner

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    In the next few years -- #3. The profit won't be distributed, though. It'll be plowed straight back into building Superchargers, building the Gigafactory, setting up a second production line at the Tesla Factory, etc. etc.

    Tesla will keep doing this until they aren't production-constrained. If they start having trouble selling cars as fast as they can produce them, then the prices will drop.
     
  5. VolkerP

    VolkerP EU Model S P-37

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    Nope. Tesla will lower prices of Model S and X as soon as they are confident that their target gross margin is preserved. Why?
    - widen potential market share: much more customers in a $65k vehicle market than in $71k.
    - this will underline Tesla's statement that new technology will come down in price
    - consistent with the claimed policy of "fair pricing" - home market customers should participate here, no?
    - put pressure on competitors in premium market
     
  6. RDoc

    RDoc S85D

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    I'd say (2), increase battery size and keep the pricing.

    I also agree that they'll add more amenities as standard equipment. The S really doesn't have the equipment and interior of a luxury car at this point and by the time the X comes out, it will be competing against very well equipped vehicles such as the Volvo XC90 plugin hybrid.
     
  7. ecarfan

    ecarfan Well-Known Member

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    And every ICE luxury car is lacking the features that makes the Model S such an outstanding car. Meaning a state-of-the-art electric drivetrain that will silently power the car well over 200 miles before needing a charge, mind-bending torque and acceleration from a standstill up to well over US speed limits, an amazing 17" touchscreen interface that is extremely easy to learn and use, almost no maintenance requirements, a growing nationwide network of free "fuel", unparalleled luggage capacity in an aerodynamic shape with an extremely low CD value; need I go on?

    Those who state that the interior is not fancy enough and that the car does not have the latest collision avoidance systems or active cruise control feature when the car has only been in full production for less than 18 months and comparing it to cars made by companies that have been building automobiles for decades seem to be neglecting the big picture of what Tesla has accomplished in a very short time.
     
  8. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

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    There are 4 key characteristics of luxury vehicles:
    (1) Comfort
    (2) Performance
    (3) Amenities
    (4) Assistance

    By all reports, the Model S is very good at (2), but has deficiencies in (1), (3) and (4). Tesla is definitely working on (4), but to be a truly compelling premium car they also need to improve (1) and (3). Now, Elon Musk has said it's not a luxury car, but the problem is that once they release the Model E/Y, the demand for the S and X is going to drop precipitously unless they upgrade to make it worth the premium simply because the E/Y will likely offer everything except performance.

    I think that Tesla will want to maintain S/X as a high-margin platform for introduction of new technology so they'll continue to upgrade the base vehicle instead of cutting price.
     
  9. neroden

    neroden Happy Model S Owner

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    But there's no point in doing this if they can't meet the demand.

    What I said was: "Tesla will keep doing this until they aren't production-constrained." Maybe after the second production line starts running we'll see a price drop.

    I believe that Tesla's plan is to expand production as fast as possible, and to set prices low enough so as to remain production-constrained despite this.

    The extra "operating profit" from keeping the prices high will allow Tesla to expand production faster, and I think they have their eyes on that.
     
  10. dsm363

    dsm363 Roadster + Sig Model S

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    My guess is Tesla will keep prices the same but improve features as mentioned above. Maybe even bring back a third battery pack at lower price agile slightly increasing capacity (70, 90 and 110kWh packs for example) but likely not until 3rd gen car launches.
     
  11. lloyds

    lloyds Member

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    I highly doubt they will lower pricing to open up the consumer list for the S and X. This is why they are launching the E, which inherently fills some of that gap. I wouldn't be surprised if a fully equipped can reach $50k.
     
  12. AmpedRealtor

    AmpedRealtor Active Member

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    1) Never. That would foster a "wait and see" attitude among buyers, which is not good for sales.
    2) Most likely. This allows Tesla to improve the range and capabilities without raising prices, much like other technology products.
    3) Unlikely. This would be contrary to Tesla's ethos.
     

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