Official: Upcoming Model S Price Increase & Timeline

[CapitalistOppressor]

". . .the same price set over three and a half years ago. . .A straight 8.75 percent CPI increase would now yield a base price for Model S of $62,400, an increase of $5,000. Tesla is increasing prices only half that amount. . ."

I agree that Tesla is handling this well and that if demand supports it, they're perfectly entitled to a price increase. Really no complaints from me. I will say, though that their positioning is pure corporate spin. They set that price three and a half years ago knowing the car wouldn't be delivered until 2012, and therefore set the price for 2012 deliveries. You couldn't take delivery of a Model S 3 1/2 years ago, so the price never applied to a vehicle then--just vehicles now. Again, not complaining at all, just pointing out that the "logic" is really just public relations positioning.

I agree, and lol'd at that. But in fairness, I buy the proposition that this price increase is really affecting folks who will finalize sales in 2013. Plus I seem to recall that their original announcement was that Model S would be ready in 2011. So counting 2 years of inflation isn't totally crazy.

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Spatters, I suspect that has more to do with power output (perf vs. non-perf) than capacity. The software side is no problem to update. I can't imagine any barriers to a larger capacity pack such as 120kWh for a car that was originally 85kWh...as the 120 kWh pack's power output can be controlled to match 85 kWh levels.

Disclaimer: I've taken some EE courses....but I am not an EE.

It's not just output. The batteries weight, and weight distribution are different. The suspension, handling and structure are all engineered around those values. Sure, you can switch the battery, but your handling would be sub-optimal.

 

[JRP3]

Why pay $12000 now when it may costs significantly less

Why do people pay for extended warranties when they don't make financial sense? Some people like insurance. Me, I'd take my chances.

 

[CapitalistOppressor]

I have a completely different view on this. I'm no expert on lithium ion battery costs, but according to the resources I see all over the net, including a statement from Elon Musk himself, the prices of lithium ion batteries should continue to drop significantly year over year, even after accounting for inflation. Why pay $12000 now when it may costs significantly less (especially after adjusting for inflation if you were to put your money elsewhere and let it grow) than that 8 years from now? It doesn't make any sense to me at all why ANYONE would elect for this option now and prepay it. I expect the impact that Tesla is going to have on this industry is going to force many manufacturers to copy their design and result in major competition between lithium ion battery vendors, thus promoting healthy competition and significantly drive the prices for batteries down even further than the current estimations for prices to drop in 8 years. I mean the only thing really would be if batteries prices drop so much but Tesla never passing this savings on to the consumer and instead use that growing spread to increase their profit margins...but I can't see that happening when 8 years from now there will be other major players in the EV industry they'll have to go head to head against to keep their prices competitive.

Declining Lithium-Ion Battery Costs Could Knock Thousands Off the Price of Electric Cars | Inhabitat - Sustainable Design Innovation, Eco Architecture, Green Building
Cost of Advanced Lithium-Ion Batteries for EVs Dropped 14% Last Year, 30% Since 2009 : TreeHugger
Lithium-ion battery costs will still be about $400/kWh by 2020

The 85kWh price is ~$141/kWh. Even accounting for potential price drops, that's a fairly reasonable price. And if prices don't drop as much as expected, Tesla is gonna get reamed.

Edit: Besides, there is the OEM factor to consider. You will likely have a great deal of difficulty sourcing a battery through any vendor besides Tesla. If you don't prepay for your battery, they would be fully justified in charging an arbitrarily high cost for a new battery.

 

[stopcrazypp]

Spatters, I suspect that has more to do with power output (perf vs. non-perf) than capacity. The software side is no problem to update. I can't imagine any barriers to a larger capacity pack such as 120kWh for a car that was originally 85kWh...as the 120 kWh pack's power output can be controlled to match 85 kWh levels.

Disclaimer: I've taken some EE courses....but I am not an EE.

I think the biggest difference is supercharge support (it's likely not cheap to add it afterwards depending on how accessible the hardware for it is). But besides from that there shouldn't be too big a difficulty in upgrading to a larger pack.

Although in terms of pricing I can see that they might want to limit the 85kWh replacement pack to only 85kWh battery owners simply (or have different pricing for the other packs) simply because Tesla gets a smaller pack when they exchange your old battery for a new one (compared to getting a used 85kWh pack that probably has more than the 60kWh and 40kWh packs brand new). They do an exchange for the Roadster's agreement, so I suspect they will do the same for Model S.

It's only $12k for 85kWh because they get a valuable used pack in return that can be used for the SolarCity home energy storage program. That's how Tesla knows they will do fine with this pricing even if battery prices don't drop very quickly.

 

[Robert.Boston]

The 85kWh price is ~$141/kWh. Even accounting for potential price drops, that's a fairly reasonable price. And if prices don't drop as much as expected, Tesla is gonna get reamed.

From Tesla's POV, $141/kWh in the pocket today is cheap money even if battery price don't drop much. Tesla's costs of funds from the equity market is at least 10%, which more than doubles the value of the $141 paid today, looking 8 years forward.

 

[brianman]

Why do people pay for extended warranties when they don't make financial sense? Some people like insurance. Me, I'd take my chances.

People thought I was nuts for spending (I think it was ... ) $2k for a warranty when I bought a used Jeep GC.
They changed their tune when 2 years later Jeep spend $6k replacing parts under the hood. I forget all the details, which is a nice benefit if it being their money not mine.

 

[strider]

Edit: Besides, there is the OEM factor to consider. You will likely have a great deal of difficulty sourcing a battery through any vendor besides Tesla. If you don't prepay for your battery, they would be fully justified in charging an arbitrarily high cost for a new battery.

Well, w/ industry-standard cells, if they try to gouge us then folks will set up shop to replace cells. There are folks who do Li-Ion EV conversions so there is knowledge out in the world. If they can do it cheaper than Tesla they will.

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People thought I was nuts for spending (I think it was ... ) $2k for a warranty when I bought a used Jeep GC.
They changed their tune when 2 years later Jeep spend $6k replacing parts under the hood. I forget all the details, which is a nice benefit if it being their money not mine.

But like Bonnie said, it's insurance. I paid $1,500 for the extended warranty on my Corvette and never used it. So if you have the money and it will help you sleep better at night then go for it. Otherwise, save your money and take it as it comes.

 

[Grendal]

I think the biggest difference is supercharge support (it's likely not cheap to add it afterwards depending on how accessible the hardware for it is). But besides from that there shouldn't be too big a difficulty in upgrading to a larger pack.

If someone buys an aftermarket pack later on then there's no guarantee the replacement batteries will be good enough to allow the supercharger to properly charge them without damaging the individual cells if they aren't as good as the current Panasonic cells.

Just a thought...

 

[Zer0t]

When I put my deposit down I was told I would probably configure in the June/July timeframe of 2013. When I was notified of the price increase, and that I am not affected if I configure in a reasonable time, it also said I could be asked to configure between now and late January. Does that mean capacity at the factory is increasing at a great rate? I thought once you configure it was about 90 days till delivery? Curious I was expecting the car end of summer at earliest but sounds like mid-spring, which would be fine for me.

 

[bosgig]

Isn't one major issue with aftermarket battery replacement going to be the proprietary cooling technology? I'm guessing the entire unit would have to be replaced, not just individual cells, if you were to try to get the battery from another supplier. That pretty much would rule out it having the same cooling technology, and therefore probably the whole idea. Please correct me if I'm wrong.

P.S. Tesla if you're listening please provide us a path to upgrade to the then state-of-the-art battery in 8+ years!

 

[JRP3]

People thought I was nuts for spending (I think it was ... ) $2k for a warranty when I bought a used Jeep GC.
They changed their tune when 2 years later Jeep spend $6k replacing parts under the hood. I forget all the details, which is a nice benefit if it being their money not mine.

You were nuts for buying a Jeep, notorious for poor build quality :wink: I've worked on a few of them. Seriously, you're better off buying quality products and never buying the extended warranty in the long run. Extended warranties are offered for one reason, the companies make money on them because they usually don't get used.

 

[bosgig]

Plus I seem to recall that their original announcement was that Model S would be ready in 2011. So counting 2 years of inflation isn't totally crazy.

I was following them back pre-IPO and saw them on their IPO roadshow, but honestly I couldn't remember for sure myself, so I looked up the S-1 for their IPO from January 2010. It states "We currently intend to begin volume production of the Model S in 2012 with a target annual production of up to approximately 20,000 cars per year." That doesn't mean that they weren't originally thinking 2011 before that, of course. At any rate, I'm splitting hairs (and again, not criticizing the price increase).

 

[dsm363]

I was following them back pre-IPO and saw them on their IPO roadshow, but honestly I couldn't remember for sure myself, so I looked up the S-1 for their IPO from January 2010. It states "We currently intend to begin volume production of the Model S in 2012 with a target annual production of up to approximately 20,000 cars per year." That doesn't mean that they weren't originally thinking 2011 before that, of course. At any rate, I'm splitting hairs (and again, not criticizing the price increase).

I believe they were originally planning on late 2011 for deliveries and that got pushed back to summer 2012 about 18 months ago. Not totally sure about the timing of all of this but it was 2011 for awhile.

 

[Enadler]

When I put my deposit down I was told I would probably configure in the June/July timeframe of 2013. When I was notified of the price increase, and that I am not affected if I configure in a reasonable time, it also said I could be asked to configure between now and late January. Does that mean capacity at the factory is increasing at a great rate? I thought once you configure it was about 90 days till delivery? Curious I was expecting the car end of summer at earliest but sounds like mid-spring, which would be fine for me.

@Zer0t I am in the same boat you are however my take is they want to get all the configurations in earlier. By getting all the configurations in now they can better schedule their component deliveries as well as their production cycles. To the best of everyones knowledge no one expects Tesla to be at a run rate of better than 400 cars/ week anytime soon. That being said I think there is an opportunity to move up in the sequence by being ready to push the finalize button as soon as your email comes. The notification states that sequencing will now be based on when final configurations are made.

 

[KingKitega]

Just got the following email from Tesla Hong Kong.. Seems here reservation holders by year end will get a ~$2k deduction from the official prices! :smile:

Model S Reservation Holders,

We have announced a price increase for the Model S yesterday in the US.

This is our first price increase since the announcement of Model S and it is very important that we implement this in a way that recognizes people like you, who already have a Model S reservation with us. For anyone who has or makes a reservation by end of day on December 31, we will be deducting an estimated 17,000HKD* from the final price of your Model S. In other words, you will not be affected by the price increase as long as you finalize your order within a reasonable, predefined timeframe.

We hope to have cars available for you to see and test drive soon in your local market. Approximately 3-4 months prior to the production of your Model S, we will invite you to finalize your order.

Customer satisfaction is our highest priority and we will always strive to deliver to you the most innovative cars in the world while minimizing price increases as we have done today.

If you have any comments or questions, please feel free to contact us at[email protected].

*Please note the discount amount is not yet finalized and is subject to change either up or down if currency exchange rates change significantly.

 

[neroden]

The 85kWh price is ~$141/kWh. Even accounting for potential price drops, that's a fairly reasonable price. And if prices don't drop as much as expected, Tesla is gonna get reamed.

Edit: Besides, there is the OEM factor to consider. You will likely have a great deal of difficulty sourcing a battery through any vendor besides Tesla. If you don't prepay for your battery, they would be fully justified in charging an arbitrarily high cost for a new battery.

Since all the evidence is that the batteries degenerate on an as-used or charge-cycle basis rather than a years-of-use basis, and I'm a low mileage driver, I don't expect to have any reason to replace my battery whatsoever. So there's that. The battery replacement insurance would make more sense for a high-mileage driver who expects to be burning his pack out repeatedly by driving 300 miles a day or more.

 

[Robert.Boston]

Since all the evidence is that the batteries degenerate on an as-used or charge-cycle basis rather than a years-of-use basis, and I'm a low mileage driver, I don't expect to have any reason to replace my battery whatsoever.

I believe that the battery experts on these boards have stated that both calendar time and cycles contribute to battery degeneration. Cycling is worse, I believe.

 

[JRP3]

Cycling is certainly more of a factor. Just ask Hansorg VonGemingen (sp?)

 

[STxTesla]

Model S Price Hike $2500

PC Magazine reports that the Model S price hike is going to be $2500. I don't know if it has been posted anywhere...I just read the article.

The link:

Telsa Model S Price Bump Gets Official: $2,500 | News & Opinion | PCMag.com


Ah...just saw that George B wrote about the price increase in his Blog at Tesla's website.

 

[Iz]

We have received many requests for a Battery Replacement Option. We are happy to now offer this option for all three battery variants. This option will provide you a new battery anytime after the end of the eighth year at a fixed price. Prices are as follows: $8,000 for the 40 kWh battery, $10,000 for the 60 kWh battery, and $12,000 for the 85 kWh battery.

Assuming battery advancements are made, these configurations should be somewhat obsolete in 8-years with the exception of 85kWh.