deonb
Active Member
I want to say one word to you. Just one word. Are you listening?
Plastics.
Plastics.
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The Graduate?!I want to say one word to you. Just one word. Are you listening?
Plastics.
They can probably make some good estimates of what people will ultimately buy using the distributions found on the Model S. Do some people buy a base Model S? Sure, but it's not common, and so you don't need to price your products based on it. You might lose money on it as a matter of fact, and it's okay.If they don't expect there to be customers who buy the base model then Tesla leadership is stupid.
They can probably make some good estimates of what people will ultimately buy using the distributions found on the Model S. Do some people buy a base Model S? Sure, but it's not common, and so you don't need to price your products based on it. You might lose money on it as a matter of fact, and it's okay.
It's going to be just fine - I think people are worrying too much.
The base price of the car is what they committed to, but if they find costs are higher than anticipated, they can easily "adjust" the average selling price by modifying the upgrade costs. Some of those upgrades are going to be seen as essential, and so they have wiggle room. For example, I wouldn't be considering a Tesla if they didn't offer Autopilot. Therefore, if they find they need another $500 on the purchase price of the car to achieve their margin targets, then just add that to Autopilot costs. People like me will get it either way. If it becomes too expensive, I'll obviously just cancel my order entirely, but otherwise, I'm not getting a Tesla without Autopilot.
They can probably make some good estimates of what people will ultimately buy using the distributions found on the Model S. Do some people buy a base Model S? Sure, but it's not common, and so you don't need to price your products based on it. You might lose money on it as a matter of fact, and it's okay.
It's going to be just fine - I think people are worrying too much.
The base price of the car is what they committed to, but if they find costs are higher than anticipated, they can easily "adjust" the average selling price by modifying the upgrade costs. Some of those upgrades are going to be seen as essential, and so they have wiggle room. For example, I wouldn't be considering a Tesla if they didn't offer Autopilot. Therefore, if they find they need another $500 on the purchase price of the car to achieve their margin targets, then just add that to Autopilot costs. People like me will get it either way. If it becomes too expensive, I'll obviously just cancel my order entirely, but otherwise, I'm not getting a Tesla without Autopilot.
but the bare minimum would include supercharging, autopilot, AWD, and a cold weather package.
IMHO - Because they don't expect for anyone to buy a Model 3 at $35K. Average price will be a lot higher.
My guess is they won't be rolling off the production line for less than $50K for a year or two after production starts.
The Graduate?!
I don't think volume reduction would result in equivalent cost reduction. Only some materials (like steel/Al) will cost less. A lot of other parts will cost the same (unless something else is done). Labor will be the same as well.Take a base model S.
$66k
Shrink the length 15%, shrink the height 5% shrink the width 5%... total 25% reduction.
Now it is $50k
It also "moves down" from the entry luxury car target Tesla has been gunning for. Look what comes standard in a BMW 3 Series and you'll have market expectations indexed. As a counter example, Chevrolet is hoping to sell a $20,000-looking Bolt for $37,000. I don't think Tesla would be smart to follow that example.I'll guess that 'plastics' (i.e. lower quality parts) will be an important factor.
Perhaps the brakes move from Brembo to a lower-cost supplier. Perhaps the sun visors get bought from the same M#@&*%#@s that built the ones in my Honda (that I've had to replace several times now). Maybe the stock seats become more like a Honda Civic than an Acura. Maybe instead of high-end Michelin tires, the stock tires come from Hankook.
There are a lot of places to take $5, $10, $50 out of the cost of various components. Sure, the perceived quality of the car moves down from the $100K strata to the $40K strata, but that's still a long way up from the low-end Kia's and Hyundai's of the world.
IMHO - Because they don't expect for anyone to buy a Model 3 at $35K. Average price will be a lot higher. My guess is they won't be rolling off the production line for less than $50K for a year or two after production starts.
They might have real competition from established manufacturers building cars at a lower price point if they make that assumption. I know I would start looking
That doesn't mean they're going to tolerate selling those $35k cars at a loss. While the average transaction price will clearly be significantly higher than the entry point, that entry point car still needs to be profitable.
If they don't expect there to be customers who buy the base model then Tesla leadership is stupid.
And Tesla will be in bad shape if it doesn't sell a single Model 3 under $50k for 2 years (late 2019/early 2020)
I'm not worried about Tesla's price points in regards to the company making a profit on the vehicle. I know consumers will buy the base 3 at $35,000. I know Tesla knows that as well. I know many consumers will purchase multiple options and that Tesla is expecting an average price of over $40,000. My comment was directed at a poster who said Tesla "do[es]n't expect for anyone to buy a Model 3 at $35K." OF COURSE they do. They'd be stupid not to.
I'm sure they expect there to be some who buy the base model, though I suspect they'll hold off on producing those as long as possible in order to give the battery costs time to drop even further. I don't think it'll be 2 years though, probably summer/fall of 2018.
Elon MuskVerified account@elonmusk
Model 3 orders at 180,000 in 24 hours. Selling price w avg option mix prob $42k, so ~$7.5B in a day. Future of electric cars looking bright!
Elon says average is $42K, That means they are expecting some to sell for $35K and some to sell well over $42K