Impact of February 28 Announcement on Current 100D Owners

[bob_p]

While new technology products are typically expensive when they're introduced and then see price decreases as the technology matures, yesterday's price drop is considerable and could have a huge impact on current customers, by lowering future re-sale prices.

The X 100D we purchased last summer is now $15K cheaper. The S 100D we purchased 2 years ago is now $18K cheaper.
While this was inevitable, Tesla should do something for customers who purchased vehicles in the last few years, that will likely see a quick drop in the value of their Tesla vehicles.

Since Tesla is pushing hard to achieve and sustain profitability, they won't be able to provide cash refunds to those customers, however there are several things they could do that wouldn't have much financial impact.

For recent vehicles (all S/X 100D's - the current Tesla S/X models), Tesla could activate software-limited features, at no charge. This will cost Tesla little or nothing, and since those customers had already decided not to purchase those upgrades and likely wouldn't purchase them anyway. This would include activating EAP, FSD and vehicles with 72A chargers software limited to 48A. For the FSD activation, those owners should be charged for the HW3 processor upgrade in order to take advantage of the FSD activation, but that would still be much less than the cost of activating FSD after delivery.
And for the affected customers, Tesla should provide a credit on a future S/X purchase if their current S/X is used as a trade-in (less the value of the software activations).

While this program will reduce Tesla's revenue for future S/X sales, it might also encourage those owners to purchase more expensive S/X vehicles for their replacements, than going to the less expensive 3/Y models.

With all that Tesla announced yesterday, it's not surprising they didn't take into account the large impact this will have on current owners, essentially reducing future re-sale by 15% of 100D's purchased in the last 2 years. And if enough owners press Tesla about this, perhaps they will do something to reduce the negative impact of yesterday's announcement on their current owners.

In addition to the significant price decrease, they also have a potential problem with owners who purchased EAP and not FSD, since they've replaced EAP/FSD with AP/FSD (AP is now only TACC plus AutoSteer; NOAP, AutoPark & Summon are now part of FSD, likely because they decided those features need HW3).

 

[BigD0g]

While new technology products are typically expensive when they're introduced and then see price decreases as the technology matures, yesterday's price drop is considerable and could have a huge impact on current customers, by lowering future re-sale prices.

The X 100D we purchased last summer is now $15K cheaper. The S 100D we purchased 2 years ago is now $18K cheaper.
While this was inevitable, Tesla should do something for customers who purchased vehicles in the last few years, that will likely see a quick drop in the value of their Tesla vehicles.

Since Tesla is pushing hard to achieve and sustain profitability, they won't be able to provide cash refunds to those customers, however there are several things they could do that wouldn't have much financial impact.

For recent vehicles (all S/X 100D's - the current Tesla S/X models), Tesla could activate software-limited features, at no charge. This will cost Tesla little or nothing, and since those customers had already decided not to purchase those upgrades and likely wouldn't purchase them anyway. This would include activating EAP, FSD and vehicles with 72A chargers software limited to 48A. For the FSD activation, those owners should be charged for the HW3 processor upgrade in order to take advantage of the FSD activation, but that would still be much less than the cost of activating FSD after delivery.
And for the affected customers, Tesla should provide a credit on a future S/X purchase if their current S/X is used as a trade-in (less the value of the software activations).

While this program will reduce Tesla's revenue for future S/X sales, it might also encourage those owners to purchase more expensive S/X vehicles for their replacements, than going to the less expensive 3/Y models.

With all that Tesla announced yesterday, it's not surprising they didn't take into account the large impact this will have on current owners, essentially reducing future re-sale by 15% of 100D's purchased in the last 2 years. And if enough owners press Tesla about this, perhaps they will do something to reduce the negative impact of yesterday's announcement on their current owners.

In addition to the significant price decrease, they also have a potential problem with owners who purchased EAP and not FSD, since they've replaced EAP/FSD with AP/FSD (AP is now only TACC plus AutoSteer; NOAP, AutoPark & Summon are now part of FSD, likely because they decided those features need HW3).

Tesla dropped the price of my S and added features by $10k a month after delivery, I got squat, you'll also get squat, just accept it, because they don't care they have your money.

And EAP / FSD is going to be a complete freaking fiasco now, I won't be shocked if those that got EAP already will get the FSD package for free so they don't need to manage it.

 

[Schoms]

I agree, bob_p -- after taking ownership of my S 100D in October, the only remorse I have with the purchase is not waiting (clearly hindsight, as I didn't predict a significant price drop). It's one thing if it's a new model/refresh, but from what I'm hearing, it's essentially the same car. I'm not mad... just bummed.

I do like your suggestion about FSD, as that would cost them virtually nothing. Who knows, maybe that will come to fruition, if Elon feels bad. Though I'm sure lawyers will get involved with another lawsuit and take 99% of whatever benefit is won.

Still enjoying the car. We'll see if anything happens.

 

[harry]

I would expect that relatively few of us bought our Tesla(s) thinking about selling them quickly. Resale value doesn't show up in lists of top features people look for. I know that by the time we sell ours, the value will be minimal.

I bought a computer four months ago and today a machine with the same specs would be cheaper. Good thing I didn't buy it to resell.

 

[boonedocks]

Disagree...there are plenty of us that have paid for every single upgrade you mentioned above. Giving those away to those that didn't purchase them when ordering would be completely unfair to those that did. (Unless Tesla issues a complete cash refund by check to those of us that have already paid for them)

 

[jorobsand]

I know this sucks. This will always suck. But it is part of every major purchase you will ever go through. You have little to no influence over future resale value. There is always a risk that is part of the purchase.

Tesla is just like any other investor-owned company out there. At the end of the day, they answer to shareholders and they are looked out for first and foremost (despite Elon's preference that this shouldn't be the case).

This has happened time and again with Tesla and one shouldn't expect the pattern to change any time soon. Just proves the saying true, the absolute best time to buy a Tesla is today and the absolute worst time to buy a Tesla is today.

 

[calleserra]

I’m ok with it. I think of it as having bought a piece of technology like a flat screen 40” plasma TV for $15k in the late 90s. I mean, that technology and experience is nothing compared to a $3k LG 65” OLED TV nowadays. Betamax and Bluray, same thing. Price drop comes with the territory when technology, economy of scale, and early adopters are involved. I welcome price drop with excitement because it’s a promise that I’ll be getting something better and cheaper when I decide to replace my current P85D. I understand what you’re saying as I felt the same way when P90D came out, the Ludicrous mode which trampled the Insane haha, then the facelift, the AP2.0, 2.5, etc.

 

[jcasetnl]

This is why most car companies do model years, even if there are very few or no changes. It gives them a reason to do price revisions on a schedule that consumers are, generally speaking, comfortable with. It creates and apples to apples basis for comparison.

The case of EVs is complicated by the tax credits expiring. And it's complicated further because the S is getting long in the tooth, so the price drop has to account for both. It's a double-whammy.

Preferably, their planning would have dropped the price incrementally over the last few years (or next few), but I don't think the business has the bandwidth for that kind of flexibility. But that same lack of bandwidth is why I don't think you'll see much in terms of give-backs.

 

[GeoX750]

The question to me is more what this says about the future of Tesla. They must have been forced to do this because of a huge lack of demand--even though there is still no competition. Seems like P models were really not moving, they are swapping P models in for those who ordered regular models before the price cut ?

Demand must be non-existent out there, which does not bode well for Tesla. They might just be too early to the EV revolution.

Cutting prices like this may not help that a much long term. The S/X is clearly in the need of a refresh, because it is so late cycle--not because it is actually behind any competitors. A refresh is the only thing that will create demand again.

 

[HX_Guy]

Disagree...there are plenty of us that have paid for every single upgrade you mentioned above. Giving those away to those that didn't purchase them when ordering would be completely unfair to those that did. (Unless Tesla issues a complete cash refund by check to those of us that have already paid for them)

While on a different scale, this happens with all car manufacturers. One example that comes to mind are rear view cameras - once an add on option, are now included (yes it’s now a law that they must be included but that doesn’t change that they were once an add on and those buyers did not get a refund).

 

[jcasetnl]

I also wonder if it's because luxury Euro consumers are taking a "wait and see" because of the upcoming Jaguar and Porsche.

 

[croman]

I am lot more concerned that I was duped into buying FSD in 2016 based on a set of promises and features that Tesla has now withdrawn (Level 5, summon anywhere in nation, driverless no supervision, "Full self driving" (see deceptive videos we put out!)). This is literal bait and switch. Tesla has to have attorneys, right? They haven't all quit or become Rudy Guilianis?

 

[Sunshine State]

I also wonder if it's because luxury Euro consumers are taking a "wait and see" because of the upcoming Jaguar and Porsche.

The Jag has been out for a while now but isn’t selling very well. After driving one I can tell you it’s not comparable in range and it’s performance is way behind a performance S or X dispite their silly comparison videos.

 

[Big Toys]

When buying my CPO, my car was $80K new. 20K miles and 3 years later the original owner ate $30K for the privilege. Add to this the M3 issues only a few months ago, big promises and poor delivery, and my car delivered with screen bubbles.....

 

[minderbinder]

I bought a 100D in November. This doesn't bother me one bit.

 

[ghostrunner]

Bought my 100D just over a year and half ago and this doesn't bother me at all, hell every car you buy as soon as it drives off the lot you lose 20% in deprecation.

 

[dennis_d]

bought X100D last June , don't really care about price drop

 

[Tic-tac-toe]

It's a car. It depreciates... it's not stocks, real estate,... it's a consumer good like tvs and shoes... and luxury cars depreciate more rapidly than any other cars. So what. I bought my P100D in September and I never loved a car so much. If I wanted "value", I would have bought another Honda Civic or even a M3. LOL!

I like to upgrade my phone every year and my computer every two years. I am not going to be bothered about Tesla lowering their prices now to make more sales and survive as a car company.

 

[ucmndd]

I bought a house in 2008. A year later it was worth $100,000 less because the builder in the neighborhood dropped prices. I marched into the sales office and demanded compensation because it wasn’t fair. After all, I paid more for the same exact house!

Thankfully they agreed and cut me a check on the spot for $80k to make me whole.

Oh wait, no they didn’t because that would be ridiculous.

 

[HX_Guy]

I bought a house in 2008. A year later it was worth $100,000 less because the builder in the neighborhood dropped prices. I marched into the sales office and demanded compensation because it wasn’t fair. After all, I paid more for the same exact house!

Thankfully they agreed and cut me a check on the spot for $80k to make me whole.

Oh wait, no they didn’t because that would be ridiculous.

LOL! Until the last line I was like damn, thats one generous builder!

But yeah, I dont understand the outrage. Some disappointment maybe, but as already pointed out things like this happen all the time.