Model 3 Supercharging Capable Discussion

[Garlan Garner]

GG, you seem to want to shout people down. It's not terribly becoming. @stopcrazypp is a long time member trying to contribute to a logical discussion. It deserves the same type of thoughtful response.

Clearly the price of Supercharging is priced into the cars, or it wouldn't sustainably exist. However, you've been told this many times before, and I'll repeat it again. The $2500 number is for one specific trim level of vehicle, and it reflects a $500 change order. It was $2000 for that car when purchased new. That doesn't mean it was fully decoupled. As @stopcrazypp pointed out to you, the SEC filings show that it is earmarked (partially) as a marketing expense.

Another example of something that's partially decoupled is AutoPilot. Tesla doesn't install the hardware for free in those cars. The hardware exists, and it's priced in. If you want to enable Autopilot, it's currently a $3k package. Do it after delivery, and it's $3500. Does that mean that AutoPilot costs are $3500? Nope.

For everyone's sake, please stop throwing around the $2500 number. $2000 would be more accurate, but only in the sense that it was the price at purchase. It still means nothing about the cost of Supercharging. To get at the cost, you need to review the SEC filings, which is what @stopcrazypp was trying to tell you.

My apologies for disagreeing with a long time member. I'm done replying.

 

[Jersey Shore Tom]

What?

I pointed out that I posted facts in response to your imagining stuff.

You of course are entitled to your opinion and entitled to post it. I am entitled to point out facts that do not support your opinion.

I tend to be one of those reality based guys.

 

[Garlan Garner]

I pointed out that I posted facts in response to your imagining stuff.

You of course are entitled to your opinion and entitled to post it. I am entitled to point out facts that do not support your opinion.

I tend to be one of those reality based guys.

I'm done with this conversation. You are a long time member.

 

[Garlan Garner]

I'm not replying or directing this to anyone in particular. If you care to read it - feel free.

Even in the Commission File Number: 001-34756 and subsequent ones I don't see SuperChargers being funded by marketing expenses. Unless I'm reading wrong..... SuperChargers are being funded directly by sales I don't see anything listing "marketing expense". This SEC filing is in direct agreement with Elons statements.

I'm not shouting people down. I hope this isn't offensive to long term TMC members.
_____
UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-34756

Tesla Motors, Inc.

_____________________

Our plan to expand our network of Tesla stores and galleries, service centers and Superchargers will require significant cash investments and management resources and may not meet expectations with respect to additional sales of our electric vehicles or availability of Superchargers.

. Furthermore, the increasing number of Model S and Model X vehicles, as well as the significant increase in our vehicle fleet size that we expect from Model 3, will require us to continue to increase the number our Supercharger stations significantly.

Our capital expenditure needs include expenditures for the tooling, production equipment and construction of the Model 3 production lines, equipment to support cell production at the Gigafactory, more than 70 new retail locations and service centers, and approximately 250 new Supercharger locations.

 

[stopcrazypp]

I don't agree with what you pointed out. Must we all agree with you?

ELON said that the price of SC was baked into the price of the car. NOW - who would you trust? a person in a forum or the words from the CEO?

You can even purchase SC'ing if you want. "If you are unbaked...you can purchase it". Another quote from ELON.

@ohmman wrote a great response already, but I thought you already read my previous post below which makes it clear the way Tesla actually pays for SC costs.
Model 3 Supercharging Capable Discussion

I'm not asking you to trust "a person in a forum," but rather Tesla's SEC filing in 2015 detailing how they pay for the SCs. I don't believe Elon had ever explained this in detail publicly, but if you have a quote, feel free to post the source.

Here's how they paid for ongoing costs via deferred revenue:
"Our best estimate of the value of this deliverable is based on a cost-plus model that includes the estimated cost of energy that will be consumed plus a per-car estimate of forecasted Supercharger network depreciation, lease and maintenance costs expected to be incurred over the estimated eight-year life of the car plus a reasonable margin. We have also considered how we price certain options that include and exclude supercharging capability. Because we offer unlimited connectivity to our Supercharger network, we defer and amortize its related revenue ratably over the estimated life of the car."
@smac calculated from SEC filings where Tesla reported deferred revenue separately for superchargers that it worked out to $500 set aside per car (not the oft repeated $2000 or $2500). He also noted that even cars that did not have supercharger enabled had this money set aside also:
My car won't charge faster than 60kW

Here's how they pay for the network (as of end of 2013 40% to COGS and 60% as a marketing expense under SG&A):
"Generally speaking, Superchargers located on more frequently traveled routes with eight or more charging stations were those that we estimated would have a higher utilization rate and are recorded to cost of automotive sales. Supercharger stations expected to have low utilization rates serve more as a marketing function for Tesla and we recorded these costs to selling, general and administrative. As of December 31, 2013, we allocated 40% of our Supercharger network costs to cost of automotive sales and the remaining 60% to selling, general and administrative."

You can read in full here:
Letter to the SEC

They no longer report any of these separately in recent filings however, because spending on other areas are much larger than on SCs.

Tesla — Enable Supercharging

50000 cars with $2500 baked in - That's 125 million. I highly doubt they would have received $125 million on pay-per-use to this point.

See above, the figure is actually $500 not $2500. Also, Tesla set this number aside regardless of if supercharging was enabled on the car. The network installation costs are also shared by all vehicles (via COGS and SG&A expenses) regardless of if you opted for it.

My other point is that nothing stops Tesla from for example allocating $250 into each vehicle and make the rest from pay-per-use. The pay-per-use part will lower risk from rising ongoing costs, and the $250 will give them some upfront cash they can use. It does not have to be "all or nothing" approach as you are suggesting.

 

[Garlan Garner]

stopcrazzypp. I'm done with our dialogue.

 

[pkulak]

Wow, this thread got worthless really quick.

 

[Garlan Garner]

You guys can continue. Its better this way.

 

[dsvick]

I wonder now how many people will drop their reservation? While we all know they were going to remove supercharging when this is announced I would think it might make people who rethink their decision to go with a Tesla. I am thinking specifically people without charging at home like apartment or condo residents, people planning on doing a lot of long distance commutes, or people who plan on using their car for ride sharing.

Why would this make people drop? If someone didn't drop when they said no SC included, why would they drop now when they offer the solution to that?

I was in line with a young guy that was getting the Model 3 base model so he could use it for Uber/Lyft. He had a civic and figured with the cost of gas he was spending it would pay for the car itself given he was planning on using a supercharger to charge 2 or 3 times a day. I bet this will change his mind. Unless the cost of the credits is significantly less than filling up a 30MPG Civic where he could justify the large payment for a Model 3.

If he is going to be using it as much as he thinks then he sounds like the perfect person that should spend for the SC option so that it is included. In fact, if SC is included with a larger battery option (like a lot of people suspect/hope) then that sounds like an even better plan for him.

Another question this raises for me is what happens to preowned Model S and Model X. Would Tesla potentially take away the lifetime charging aspect of the car when it is sold to another owner? Is it life of car or life of ownership? If I sold a Model S to another party then I would expect them to be able to keep that ability. Now there is nothing to say that Tesla could remove that ability if they resell the car.

I don't own one so I don't know for sure but I thought it was for the life of the car. If it's part of the car then it has resale value and would be taken into account when it is traded in. So, when Tesla sells it, they'll keep it on there so they can add that to the sale price.

 

[stopcrazypp]

stopcrazzypp. I'm done with our dialogue.

I will respect your wishes to not continue a dialogue (I was going to also reply about the other rumor link you posted, which I don't see how it contradicts my argument), but I hope it did not turn into something personal. I also wanted to clarify I see you as an equal and am not appealing to seniority, nor do I think length of membership plays a factor in the validity of any argument. I'm only debating from a position of sourced facts.

 

[jkk_]

Why would this make people drop? If someone didn't drop when they said no SC included, why would they drop now when they offer the solution to that?

Indeed, I see no reason to drop reservation (excluding possible financial reasons etc. [people do unfortunately get laid off]) before some real facts are provided, be it about interior, SC payment scheme or battery/range sizes.