Possible hidden costs

[JeffK]

$400 for a tire rotation, "inspection", wipers, air filter and keyfob batteries in Tennessee? Yeah, there's some healthy profit there.

You get that once a year, subtract the yearly costs of the property tax, electricity, utilities, cost of actual goods, wages of all employees, etc.

It'd make sense that these prices would go down with scale but for now they make sense with such low volume.

 

[ModelNforNerd]

$400 for a tire rotation, "inspection", wipers, air filter and keyfob batteries in Tennessee? Yeah, there's some healthy profit there.

Not always Tesla's fault. A certified mechanic in MA charges $80/hr for labor.

And the wipers and filter? Doubt AC Delco or JC Whitney sell Tesla-specific ones.

 

[jaguar36]

Not always Tesla's fault. A certified mechanic in MA charges $80/hr for labor.

And the wipers and filter? Doubt AC Delco or JC Whitney sell Tesla-specific ones.

That's why I said in Tennessee where salary rates are much lower than in MA or CA.

The Air Filter is $8.50 (from Tesla) Wipers are not Tesla specific and can be had from AC Delco or JC WHitney (or Amazon, Autozone, Walmart...)

You get that once a year, subtract the yearly costs of the property tax, electricity, utilities, cost of actual goods, wages of all employees, etc.

It'd make sense that these prices would go down with scale but for now they make sense with such low volume.

Low volume? Have you been to a service center lately? They're packed. Unless you're suggesting that the warranty work shouldn't be paying for the fixed costs of running a service center.

 

[JeffK]

That's why I said in Tennessee where salary rates are much lower than in MA or CA.

The Air Filter is $8.50 (from Tesla) Wipers are not Tesla specific and can be had from AC Delco or JC WHitney (or Amazon, Autozone, Walmart...)



Low volume? Have you been to a service center lately? They're packed. Unless you're suggesting that the warranty work shouldn't be paying for the fixed costs of running a service center.

You didn't quote warranty work... you quoted a 1 year service price $400

What would you want for warranty work...
1. You bring your car in
2. Tesla repairs under warranty and labor get paid
???
3. Profits?!!

 

[ModelNforNerd]

That's why I said in Tennessee where salary rates are much lower than in MA or CA.

The Air Filter is $8.50 (from Tesla) Wipers are not Tesla specific and can be had from AC Delco or JC WHitney (or Amazon, Autozone, Walmart...)



Low volume? Have you been to a service center lately? They're packed. Unless you're suggesting that the warranty work shouldn't be paying for the fixed costs of running a service center.

Could always buy a Chevy and take it to the Walmart Auto Center or whatever they call it.

 

[jaguar36]

You didn't quote warranty work... you quoted a 1 year service price $400

What would you want for warranty work...
1. You bring your car in
2. Tesla repairs under warranty and labor get paid
???
3. Profits?!!

What? I'm saying they profit on the service. I'm also saying that the fixed costs of the service center should be born by both the warranty repairs and the service costs. The amount the "property tax, electricity, utilities," adds to the service work should be tiny.

Consider this, many ICE dealership, who make most of their profits on service, charge far far less for the same service.

If you want to believe everything Elon says go right ahead, just don't ever go back and fact check any of it or you will be sorely disappointed.

 

[Garlan Garner]

I thought the same thing Jeff did. The quote from Jeff that you replied to was talking about the service centers, so it made sense to assume you were also talking about service centers. If you're going to go off on a tangent, please leave directions so the rest of us can follow along

Reference me using the words "Service Center".

Follow what I say...not what you think I'm saying...then you will be following along just fine.

 

[JeffK]

Reference me using the words "Service Center".

Follow what I say...not what you think I'm saying...then you will be following along just fine.

It was difficult because you did response to a comment solely about service centers.

 

[Topher]

$400 for a tire rotation, "inspection", wipers, air filter and keyfob batteries in Tennessee? Yeah, there's some healthy profit there.

That doesn't indicate 'profit', just 'expensive', or even 'outrageously expensive'. The way to check 'profit' is to look at the financial report.

Thank you kindly.

 

[Garlan Garner]

That doesn't indicate 'profit', just 'expensive', or even 'outrageously expensive'. The way to check 'profit' is to look at the financial report.

Thank you kindly.

Sorry...there is no doubt profit built in.

Tire rotation - No hardware needed - only mechanic time - who is getting paid anyway.
Inspection - No hardware needed - only mechanic time - who is getting paid anyway.
Wipers - At most $30?
Air Filter - At most $50
Key Fob Batteries - If most $10.

I'm struggling to get to $100....so - yes - there is indeed profit built in.

 

[ModelNforNerd]

Sorry...there is no doubt profit built in.

Tire rotation - No hardware needed - only mechanic time - who is getting paid anyway.
Inspection - No hardware needed - only mechanic time - who is getting paid anyway.
Wipers - At most $30?
Air Filter - At most $50
Key Fob Batteries - If most $10.

I'm struggling to get to $100....so - yes - there is indeed profit built in.

But whose profit.....?

Tesla isn't building their own air filters, wipers, or key fobs. So to determine if Tesla is profiting off those items, you'd have to know how much they are paying their suppliers.

Now the suppliers.....I imagine they have a healthy margin on those items listed.

 

[Garlan Garner]

But whose profit.....?

Tesla isn't building their own air filters, wipers, or key fobs. So to determine if Tesla is profiting off those items, you'd have to know how much they are paying their suppliers.

Now the suppliers.....I imagine they have a healthy margin on those items listed.

Come on now.

Who's profit do you think? Tesla's.

I'm not mad at that at all. I root for Tesla to make all kinds of money. My motto is - "Get Paid".

There is no way Tesla is buying parts and selling them to us at a lesser price than their suppliers charged them. For example ( in my example ) - If Tesla charges us $50 for an air filter, be assured that the Vendor charged Tesla less than $50 for the filter.

My total charges for the $400 service call didn't even come to $100 in parts. And that's fine with me. Get paid Tesla.

 

[ModelNforNerd]

Come on now.

Who's profit do you think? Tesla's.

I'm not mad at that at all. I root for Tesla to make all kinds of money. My motto is - "Get Paid".

There is no way Tesla is buying parts and selling them to us at a lesser price than their suppliers charged them. For example ( in my example ) - If Tesla charges us $50 for an air filter, be assured that the Vendor charged Tesla less than $50 for the filter.

My total charges for the $400 service call didn't even come to $100 in parts. And that's fine with me. Get paid Tesla.

I never once said they were selling parts at a loss. Didn't even hint at it. As a shareholder, I'd be a little upset if they were using parts as a "loss leader", considering the amount of profitable quarters they've had so far.

But the tangent that we're all off on now implied that Tesla was gouging people at service centers, I was just trying to point out that's likely not the case. You have to take into account what they've paid for the part, and like you've said, if Tesla is charging its customers $50, rest assured they paid at least $48 for it.

 

[JeffK]

Sorry...there is no doubt profit built in.

Tire rotation - No hardware needed - only mechanic time - who is getting paid anyway.
Inspection - No hardware needed - only mechanic time - who is getting paid anyway.
Wipers - At most $30?
Air Filter - At most $50
Key Fob Batteries - If most $10.

I'm struggling to get to $100....so - yes - there is indeed profit built in.

You mentioned that the mechanics are getting paid anyway.... where does that money come from?

Consider this in the entire state of Michigan there are 400 registered Teslas according to the Detroit news.

If the state only had a single Tesla service center (which they don't but let's pretend)... if everyone went once per year to the service center for yearly maintenance then that generates as you've calculated $400 - parts so lets say $300 * 400 cars = $120,000

Is that enough to pay salaries for mechanics and all staff plus money to keep the lights on, shipping of parts, AND any other expenses?? This is not to mention with warranty work Tesla loses money. even at $400x400 = only $160,000 and this is per year

 

[Garlan Garner]

You mentioned that the mechanics are getting paid anyway.... where does that money come from?

Tesla has that answer. There are probably buckets and buckets of money in Tesla's possession. Just like the company I work for. I don't know what bucket they get paid from, but obviously they get paid out of one of them. Whether they are working on my car or not...they are getting paid - that's my point. Their service folks just aren't sitting there available ( even if they have nothing to do ) for free. They don't work on a job-by-job basis. They get paid whether they are working or a car or waiting to work on a car that hasn't come in yet.

Simple answer - Tesla is paying them out of the things they sell us individuals or from things they sell other companies ( ie. battery packs and/or AI products ). Either way I'm sure its legit payments or else the financial vultures would have eaten Tesla up by now.
Point is - My opinion is - That they pay everyone out of the price they sell their cars for. Its probably not hidden, however I don't care enough to look into it.

 

[Garlan Garner]

I never once said they were selling parts at a loss. Didn't even hint at it. As a shareholder, I'd be a little upset if they were using parts as a "loss leader", considering the amount of profitable quarters they've had so far.

But the tangent that we're all off on now implied that Tesla was gouging people at service centers, I was just trying to point out that's likely not the case. You have to take into account what they've paid for the part, and like you've said, if Tesla is charging its customers $50, rest assured they paid at least $48 for it.

"I" said that they are not selling parts at a loss. I didn't say you said it.

I used that to make a point. Tesla is making money on parts. All dealerships do. Maybe it isn't much, but they do.

"I" think they are price gouging on labor....but I suppose that if "Everyone" does it....then that sets precedence.

 

[Topher]

The way to check 'profit' is to look at the financial report.

2015:
Revenue from Service: $305,052,000
Cost of Revenue, Service: $299,220,000
Profit: $5,832,000 (2%)
Profit per service center: $25,000
Profit per vehicle: $58.32

Thank you kindly.

 

[Jayc]

Profit per vehicle: $58.32

Thank you kindly.

Interesting. That could mean one of two things.

× Tesla don't try to make any significant profit from service center visits.

× Owners end up making so many visits to service centers that any profits gained from annual services simply disappear due to warranty covered repairs.

I'd like to think it is the former case.

 

[dsvick]

Tesla has that answer. There are probably buckets and buckets of money in Tesla's possession. Just like the company I work for. I don't know what bucket they get paid from, but obviously they get paid out of one of them. Whether they are working on my car or not...they are getting paid - that's my point. Their service folks just aren't sitting there available ( even if they have nothing to do ) for free. They don't work on a job-by-job basis. They get paid whether they are working or a car or waiting to work on a car that hasn't come in yet.

Simple answer - Tesla is paying them out of the things they sell us individuals or from things they sell other companies ( ie. battery packs and/or AI products ). Either way I'm sure its legit payments or else the financial vultures would have eaten Tesla up by now.
Point is - My opinion is - That they pay everyone out of the price they sell their cars for. Its probably not hidden, however I don't care enough to look into it.

Tesla is most likely not paying their service technicians from revenue they get from other from other segments of their business. Each segment has it's costs, overhead, and selling prices calculated quite thoroughly and then things get priced accordingly. If they are taking money from one segment to cover the costs in another you're essentially saying that they're overcharging in the first one.

Service centers are meant to sustain themselves (perhaps not individually but as a group), not be sustained by other parts of the business. Once the Model 3 comes out I would expect that the rates for services will go down. There will be more cars out there getting annual service where Tesla is actually paid for it. As opposed to the relatively few that are out there now.

 

[dsvick]

Interesting. That could mean one of two things.

× Tesla don't try to make any significant profit from service center visits.

× Owners end up making so many visits to service centers that any profits gained from annual services simply disappear due to warranty covered repairs.

I'd like to think it is the former case.

It's probably a combination of both. Service costs for the S and X are high because there are so few of them and they need to cover all of the fixed costs for the service centers. As the Model 3 comes out I would think there will be more paid service visits so the cost, at least for the Model 3, could be cheaper. Also, assuming the Model 3 is simpler and has less issues, there should be less warranty service visits and more time for paid ones.