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Official: Upcoming Model S Price Increase & Timeline

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Wonder what more they can strip out of the barebones 40 kWh sub-$50K car... Or, is that price level not going to hold anymore?!
This is the main question. The current margin on the 40kWh car must be slim given how Tesla seems to be disincentivizing it. Any change would have the greatest proportional effect on that car. Goes to show what a great deal it currently is.
 
Roadster went from $100K to $130K... hopefully not of that magnitude. Or, maybe, hopefully for everyone here, a big jump, as it would increase the resale value of your asset (assuming the market bears the new price).
 
Roadster went from $100K to $130K... hopefully not of that magnitude. Or, maybe, hopefully for everyone here, a big jump, as it would increase the resale value of your asset (assuming the market bears the new price).
Well, not quite true. The Roadster went through several price increases from $92K to $99K and then to $109K for the 2.0. They added the Sport option for the 2.0 and 2.5.
 
I don't have a good feeling about the timing this time, releasing this info a few weeks before european pricing will be announced. I suspect we will see the price increase immediately over here...

Totally agree. This seems to be coordinated with the release of EU-prices. Maybe this is why we still have no EU-prices? I am all in favour of Tesla making money, but if we`re talking about more than a few percent I`ll be very disappointed. I made my reservation this summer, and they state in their information that current reservation holders won`t be affected. But when prices are not released, they`ll shurely jack up the EU prices immediately and by that affecting current reservation holders.....
 
This is a shame, I guess I don't share the sentiment about the price increase everyone else does. Coming from the perspective of someone who planned to reserve next year, if this increase is something to the tune of 10k or more, I may just wait for Gen 3 or wait even longer to reserve. I know it may be great for the company, but just giving my 2 cents. I want a Tesla, I want one real bad, but I am not willing to stick so much money out there that I could use to pay off my house :p
 
I hate this announcement. There are no "good" reasons for this IMO.



I expect the average selling price for Gen III will be $50k. Base price will be $40k after federal tax credit. I don't see Tesla beating Chevrolet on pricing.


Considering most commenters and the general naive public think the Model S is for the rich and 1% (never to consider the several variable as to why the price is high for now) this will not help their case with them.
 
If they are grandfathering in current reservation holders, then the price increase will be hitting deliveries made around next August or so. This is nothing unusual in the auto business, is it?

I reserved on July 2nd, 2012. At the time the only estimate of delivery they could give me is "Spring 2013".
Given all of the delays and where they are now, I'm not sure when I'll see "P10010", but I expect it could be even later than their estimate... They have been overly optimistic on delivery so far, and I don't see that trend ending, but I hope it will as a TSLA shareholder. How long can they keep putting in tremendous overtime and 7 day work weeks? They can't work any harder, their going to have to work smarter, but building cars is hard work.
 
Considering most commenters and the general naive public think the Model S is for the rich and 1% (never to consider the several variable as to why the price is high for now) this will not help their case with them.

Agreed.

What happened to the mission of making EVs mainstream? Raising prices hurts that mission. The car is already 2-3x the cost of the average car sold in the U.S.

If it's not a profit-optimization issue but rather a cost issue, then that's no consolation. I'm increasingly confident that GenIII will come in at $40k after tax credit, and the attractive configurations (i.e. range of 250+ miles) will be $50k+.
 
just wondering about this price increase... is it possible that they can slightly tweak the battery size at this point... i.e. could the 40 and 60kwh have been under revision this year to go toward 45 and 65kwh when production on these actually begins. I'm not an engineer, perhaps this would be a fundamental change that would take substantial spending and considerably more than a timeline of 6 months or a year.

I suggest a battery increase because it would bring the not yet released 5 cycle EPA range numbers for the two smaller batteries close to the 160 and 230 miles Tesla got at 55 mph. coupling this with a price increase would avoid stubbing toes of people who bought 85kwh battery. (I'd be assuming few thousand who already reserved 40's and 60's would be getting a free upgrade).

fwiw, I very much like the idea someone suggested of $2500 increase, and inclusion of service plan.

this may just be my wishful thinking that they really show value for the price increase... things are going so very well with the current value proposition of the car.
 
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Tesla is raising the price because they can. Simple supply and demand. Look at the acceleration rate of reservations (as opposed to simply the rate of reservations). You don't have to be a rocket scientist to see that they probably won't be able to meet demand in a year, which is about when the increase will kick in.

I also predict most Gen III cars will sell for 50k or more with a target base price of 39 - 40k. Demand will be so high at that point there's no reason to price it lower. Several of my friends have made S reservations, but I've talked to at least 100 people who say they are waiting for "the mass market EV" from Tesla.
 
Tesla is raising the price because they can. Simple supply and demand. Look at the acceleration rate of reservations (as opposed to simply the rate of reservations). You don't have to be a rocket scientist to see that they probably won't be able to meet demand in a year, which is about when the increase will kick in.

I also predict most Gen III cars will sell for 50k or more with a target base price of 39 - 40k. Demand will be so high at that point there's no reason to price it lower. Several of my friends have made S reservations, but I've talked to at least 100 people who say they are waiting for "the mass market EV" from Tesla.

They have supply and demand in their favor now. Heck, they had 10k reservations before they delivered their first Model S! The reservation book is still full with early adopters, EV fans, and auto enthusiasts. Fast forward a year from now when those reservations have been filled, and I don't see Tesla selling 40k units/year (20k Model S and an additional 20k Model X) at an average selling price of $70k. I expect Model S prices to come down in 12 - 18 months once the reservation backlog thins out.
 
Agree with the comments above about supply and demand. At current reservation rates they would need to exceed planned production by quite a bit just to maintain the backlog. With the trouble that they are having meeting planned production this seems incredibly unlikely in the near term.

If they can't build enough cars and the backlog keeps growing they are gong to find themselves in a position where they are leaving money on the table. Eventually, people are going to go elsewhere for a car because the wait is too long. They need to balance the price so that it only attracts the number of reservation holders that they can handle.

They misjudged the market; it says this car is too cheap. This has been obvious to me for some time (see the private sales that have taken place), but the fact that we have so far surpassed the expected demand has solidified it in my mind. Think about it, the plan was 20k cars: 10k from U.S. and 10k from overseas; but the U.S. market is signaling that it can handle 20k all by itself! What is Tesla to do? Not sell outside the U.S. until they can produce 40k a year? That's not optimal. They need to raise the price to reduce demand to a reasonable level where they can have any hope of meeting it.

This is a good thing. For a counter example see the insane leasing available for a Volt. You think they are doing that because they want to do society a favor? GM misjudged the market too; but, in their case they need to lower the price to raise demand to a level where their factory isn't sitting idle.

This is just good management from my perspective.

P. S. Let's take a sec and praise Tesla on their transparency with this one. We asked for communication whether it's good news or bad, and that's what we got.
 
I hope the Gen III stays at $30K base price but I'm not counting on it.

Normal inflation would increase the price of a ~$30k car by ~$2k in 2015 anyways.

As to possible reasons, I am in the "all of the above" camp.

We are talking a timeframe of ~2 years from the time the original pricing was announced to when this policy is likely to take effect. General inflation is an issue, but so is commodity price inflation. And Tesla DOES know more about their real cost structure now, and Tesla DOES need to hit their gross margins, and it's clear that demand is likely higher than their capacity to produce cars. And it's well known at this point that the market is skewing heavily towards the higher end, and Tesla needs to cater to the needs of their actual customers as opposed to the theoretical ones they planned around in 2010.
 
Although I am curious as to what is driving the price increase, it is not surprising at all that the cost is going to go up -- hopefully in the short run. As an earlier poster pointed out, making EVs available to the mainstream requires manufacturers to lower the prices on the automobiles. However, unless one of the giants (GM, Ford, etc. ) comes out with an EV that has 200+ miles of range, Tesla needs the capital to invest in research as well as be prepared to take some losses on mainstream EVs that are perhaps worth more than their selling point.

I've been a part of this camp, so I do see some of the hypocrisy in saying this, but we can't have it both ways. Tesla reached out and in black and white told us that we should expect some changes. The description of those changes was a little vague, but at least they are preparing us. So, it seems as though we should be acknowledging Tesla for being a better communicator in this situation.

In terms of the timing of this announcement, I do find it a little odd that it is coming that this time. Holidays. No price yet for EU models. Regular production has not occurred yet. Model S has been out there (realistically) only a couple of months. Personally, I would have waited until 2013 to make the announcement.

I don't think everyone who has a reservation should be granted the 2012 price. If this were the case, I could defer for 9 months and take possession in Dec 2013. What I do think needs to occur is for Tesla to specifically state how long reservation owners have to lock-in before they are subject to the price changes. Is it 30 days? 45 days? 90 days? I suspect it is 30 days, but it would be nice if it were 90 days. I doubt it, though.

I can't imagine any major jumps in price point. Maybe the service will be included now. I agree that the 40 kWh version probably can't go up in price, but a 5% price increase in 60 kWh and 85 kWh versions wouldn't be unreasonable. Add heated seats to the options. Maybe supercharging will now be an option for all models. Time will tell.