Tesla car buying experience

[smorgasbord]

At the last annual meeting, Elon Musk talked about how Tesla is trying to make the car buying experience better. And, I agree they have in many ways.

However, there's still one area in which Tesla does the same annoying practice that all other car manufacturer's do - not telling you what the car is actually going to cost you.

When I viewed my order, it gave me a PDF file, which shows my cost as $93,600. However, the legal paperwork I signed shows a total of $111,587.76. That's a difference of $17987.76. That's more than 19% higher! One can buy a decade's worth of gasoline with that money.

What accounts for this difference?
- Exclusion of $7500 Fed Tax rebate
- Exclusion of $990 "Tesla Personal Delivery" fee
- Exclusion of $180 "Final inspection, prep, and coordination" fee
- Exclusion of $8565 Sales Tax
- Exclusion of $664.76 Vehicle License Fee
- Exclusion of $81 "Registration, Transfer and Titling" fees
- Exclusion of $7 California Tire Fee

To me, this is worse than the fees airlines tack on to their ticket prices - a practice which upset people enough that there's a law going into effect to change that. To be blunt, it's sleazy of all car companies, including Tesla, to exclude the delivery and inspection fees, since you can't get the car without paying them. Hey, maybe they should tack on an electricity fee if I want the car with a full battery. Similarly, it's not right to subtract a tax rebate, but not add taxes you do pay.

Now, I am more understanding with the sales tax and registration fees since those are outside of Tesla's control, but if Tesla is really serious about making the car buying experience top-notch, they'd include a preview of those costs before you click the final commit button. If you compare to ordering something from Amazon.com, the Tesla experience is worse. I thought Tesla doesn't want that to be true.

I understand Tesla is doing these things because of consumer price sensitivity, and that all other car companies do the same thing, but apparently Tesla is not groking how much of a shot to the stomach that this perceived price increase at purchase committal is. Tesla has stated they want to be vastly better, and in this regard, they're not.

 

[AnOutsider]

I dunno, I don't see the big deal. I can't imagine them showing a different price based on the state and township you're in (sales tax, local tax, local registration fees etc). They could include the 990 (I don't think I got the 180 on mine, but I'll check), but the rest is stuff outside of their control. In all actuality, some dealers don't even charge it and you're responsible for it on your own (got one of my cars from Montana, paid the base price, then got hit with all the fees and tax when I went to title it locally). It's not their responsibility IMO.

 

[Beavis]

Those numbers weren't a surprise to me. They have been discussed on this forum quite a bit already.

 

[chmod a+wrx]

Well, I think they are a surprise in the sense that we (or at least I) have spent so much time looking at the design your Model S site and see that fixed number that we forget about the other usual things. But, I agree that Tesla should put in there the mandatory Tesla fees......

 

[markwj]

IMHO: Mandatory fees payable by everyone should be in the PDF. Local taxes, registration charges, and federal rebates should not. There should be a note in the PDF to state that local and federal taxes, charges and rebates are not included.

Ok, in an ideal world they should, but I see the complexities with trying to track changing local costs for the 80+ places they are selling this.

 

[KangarooAustralia]

The Situation in Australia is much simpler and most cars are advertised with a "Drive Away No More to Pay" price.
Our Government has already legislated for the auto and airline industry that the price must include all Taxes and extra charges. Airlines were the worst before the legislation.

It's easier because we don't have any State Sales Taxes anymore. Our Federal Government convinced the states to abolish them when a National Goods and Services Tax (GST) was introduced in July 2000. Then the Federal govenment shares out the GST money collected to the states to spend. (The states always complain about their share of course)

BUT! There is this horrible thing called a Luxury Car Tax (LCT) of 33% on top of the 10% GST inclusive price.
Any cars over $59,133 incur the tax.
However, If the car is deemed a fuel-efficient car then it applys to cars over $75,375.

A fuel-efficient car is defined as having a fuel consumption that does not exceed seven litres per 100km
that's 40.35 miles per gallon in America (1 litre per (100 kilometres) = 235.214583 miles per gallon)
TESLA should definately qualify! :biggrin:

 

[efusco]

I don't think there was any effort to hide the information, but it is hard to find and is scattered among forums and several areas on the web site. In this brave new world of internet purchasing it would be nice if everything was laid out nice and clear. It wouldn't be that hard to figure state/local taxes, when you finalize your order it does it right for your in seconds, so the software is there and active.

 

[Cobos]

I'm pretty sure most of Europe has legislation that requires you to disclose the full price even on most sales material, so getting the software updated to handle the "full" price earlier in the sales process seems like a good idea. The whole concept of you having to manually add sales tax at the register to know how much you should pay for your item IS illegal in any shops in Europe. It took me a full week the first time I was in the US to realise why my calculation for how much money I would pay never matched up with what the person at the register said. The whole concept was very foreign to me.

Cobos

 

[Lloyd]

The Situation in Australia is much simpler and most cars are advertised with a "Drive Away No More to Pay" price.
Our Government has already legislated for the auto and airline industry that the price must include all Taxes and extra charges. Airlines were the worst before the legislation.

It's easier because we don't have any State Sales Taxes anymore. Our Federal Government convinced the states to abolish them when a National Goods and Services Tax (GST) was introduced in July 2000. Then the Federal govenment shares out the GST money collected to the states to spend. (The states always complain about their share of course)

BUT! There is this horrible thing called a Luxury Car Tax (LCT) of 33% on top of the 10% GST inclusive price.
Any cars over $59,133 incur the tax.
However, If the car is deemed a fuel-efficient car then it applys to cars over $75,375.

A fuel-efficient car is defined as having a fuel consumption that does not exceed seven litres per 100km
that's 40.35 miles per gallon in America (1 litre per (100 kilometres) = 235.214583 miles per gallon)
TESLA should definately qualify! :biggrin:

Perhaps they can sell you the car, sans battery and install the battery after the tax is levied........

 

[NigelM]

When I viewed my order, it gave me a PDF file, which shows my cost as $93,600. However, the legal paperwork I signed shows a total of $111,587.76. That's a difference of $17987.76. That's more than 19% higher! One can buy a decade's worth of gasoline with that money.

What accounts for this difference?
- Exclusion of $7500 Fed Tax rebate
- Exclusion of $990 "Tesla Personal Delivery" fee
- Exclusion of $180 "Final inspection, prep, and coordination" fee
- Exclusion of $8565 Sales Tax
- Exclusion of $664.76 Vehicle License Fee
- Exclusion of $81 "Registration, Transfer and Titling" fees
- Exclusion of $7 California Tire Fee


Now, I am more understanding with the sales tax and registration fees since those are outside of Tesla's control, but if Tesla is really serious about making the car buying experience top-notch, they'd include a preview of those costs before you click the final commit button. If you compare to ordering something from Amazon.com, the Tesla experience is worse. I thought Tesla doesn't want that to be true.

I'm not sure what you're looking at, but my initial pdf quote shows both delivery and final inspection costs and doesn't include the tax rebate. It was specifically pointed out to me in writing that this was a preliminary quote and that a further detailed MVPA would be supplied for approval. So sure, local taxes and fees are missing but are included on the final MVPA. Seeing as taxes are different from County to County (never mind between States!) is tough to see how Tesla is supposed to include this stuff in their initial quote. Every time anyone makes a purchase locally, they get to see what the local taxes are so it shouldn't come as a surprise.

BTW (1), a curiosity of the American system is that even when we buy a meal, the restaurant menu advertised price doesn't include delivery (wait staff) or taxes.

BTW (2), Amazon has been avoiding collecting local taxes for years and is only now having to start collecting taxes in some jurisdictions and their advertised prices don't include local taxes.

Ok, in an ideal world they should, but I see the complexities with trying to track changing local costs for the 80+ places they are selling this.

Make that 80+ places, hundreds if not thousands....the problem here in the U.S. is that local taxes can even come down to a city level. That's why products of any sort are price-quoted without taxes.

 

[jerry33]

The $7,500 rebate shouldn't be subtracted from the base price (just mentioned) on the Design page. The $990 delivery, and $180 prep should be on the Design page. The others are too location dependent to be included.

 

[Robert.Boston]

Now, I am more understanding with the sales tax and registration fees since those are outside of Tesla's control, but if Tesla is really serious about making the car buying experience top-notch, they'd include a preview of those costs before you click the final commit button.

The "finalize" button does not create a contract between you and Tesla, which is different from Amazon and other on-line retailers. "Finalize" triggers the creation of the final MVPA, which reveals all costs applicable to your particular delivery. It's not until you return the MVPA that you "commit." So, I don't think there's any deception, but it is more complicated.

In the US, buying cars is more like buying real estate, and all the fees, taxes and charges always create a difference between the accepted offer price and the final payment you need to cut.

 

[CyberDutchie]

The $7,500 rebate shouldn't be subtracted from the base price (just mentioned) on the Design page.

I remember it was that way at first, but then they changed it to list the lowest price (with rebate applied). My guess is they wanted the under $50k entry price to stick.

Most reviews I've seen list the low price and explain that it's after tax rebate. So their strategy seems to have worked.

 

[KangarooAustralia]

Sounds like a crazy system to me but I guess it's a legacy of how the US developed as a nation over time. Getting 50+ states to agree to a better system, I imagine, is pretty much impossible. (In Australia, we only had 6 States and 2 Territories to get to agree to abolish State Sales Tax and that was hard enough for the Politicians)

 

[favo]

I think it would be fairly simple to include all fees and taxes even in initial quotes, presuming the purchaser's location is specified (probably by zip code) to calculate the taxes. Tesla has to be able to calculate the taxes at the time of actual purchase, so why not before? They can simply include a note that says taxes (and maybe some of the fees) are based on purchase location and are subject to change. As far as the rebate is concerned, just have a line item that is Total Payable at Purchase and below that show the possible federal tax credit and a Net Cost line or similar. Also include a note that tax credits may not apply to all individuals, other state and local rebates/credits may be available, consult your tax attorney, etc.

 

[jerry33]

I think it would be fairly simple to include all fees and taxes even in initial quotes, presuming the purchaser's location is specified (probably by zip code) to calculate the taxes. Tesla has to be able to calculate the taxes at the time of actual purchase, so why not before?

Because there are a lot of zip codes. If every Tesla sold in the next 18 months went to a different zip code, there would still be a lot of zip codes left over because there are over 40,000 (and my guess is that some zip codes will have many Teslas registered). In addition, the taxes in each zip code are not static. So you're asking a lot of work (both the initial set up and the ongoing updates) and they would still have to be manually verified at the time of sale.

In my opinion, the ideal way would be to show the following lines:

1. Base price, unaltered.

2. The various options.

3. Personal delivery.

4. Preparation.

5. Total

6. Federal tax credit

7. Net total after rebate.

8. Your local government may have additional incentives which you may qualify for.

 

[favo]

Because there are a lot of zip codes. If every Tesla sold in the next 18 months went to a different zip code, there would still be a lot of zip codes left over because there are over 40,000 (and my guess is that some zip codes will have many Teslas registered). In addition, the taxes in each zip code are not static. So you're asking a lot of work (both the initial set up and the ongoing updates) and they would still have to be manually verified at the time of sale.

I don't see how this is any different from how they have to calculate tax at the time of sale. Undoubtedly it's all done in software, and probably farmed out to some software as a service provider (like this one).

 

[jerry33]

I don't see how this is any different from how they have to calculate tax at the time of sale. Undoubtedly it's all done in software, and probably farmed out to some software as a service provider (like this one).

Maybe or maybe not. I'm not sure I would want an outside firm knowing every time someone used the Design Studio.

 

[stopcrazypp]

I don't see how this is any different from how they have to calculate tax at the time of sale. Undoubtedly it's all done in software, and probably farmed out to some software as a service provider (like this one).

When I buy stuff online (for example a computer at Dell or stuff from BestBuy). The confirmation you get when ordering is only an estimate of the sales tax. Only the email confirmation gives you the actual number they charge to your card (it usually only varies a few cents). A car is probably even more complicated because there are various fees you have to pay (not just the tax).

 

[favo]

When I buy stuff online (for example a computer at Dell or stuff from BestBuy). The confirmation you get when ordering is only an estimate of the sales tax. Only the email confirmation gives you the actual number they charge to your card (it usually only varies a few cents). A car is probably even more complicated because there are various fees you have to pay (not just the tax).

I suspect this is because they have zillions of transactions and don't want to pay for the calculation each time (assuming it's done as a 3rd party service). Tesla won't have the same volume, but perhaps they have to pay more for calculation on large purchases such as cars. Presumably they could at least add state sales tax, which should be easy and free to calculate, with a proviso that it's just an estimate and other local taxes may apply.