TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker and becoming a Supporting Member. For more info: Support TMC

Tesla doesn't like Canada :(

Discussion in 'Tesla' started by bcsteeve, Jun 19, 2017.

  1. bcsteeve

    bcsteeve Member

    Joined:
    Jul 18, 2015
    Messages:
    179
    Location:
    Kelowna, BC Canada
    The actual exchange rate as of today is 1.32 Canadian dollars for every US dollar. So the fact Tesla charges Canadians an effective exchange rate of 1.37 is bad enough, but that's not really the problem. The problem is that in global commerce, you can't really price your product based on exchange rates, as consumers have no control over this external factor. Most companies - at least that take their markets seriously - price locally based on competition (real or perceived) in the marketplace.

    I decided to take a look at how Tesla and its "competition" price their products in Canada. It clearly shows other manufacturers are more eager for Canadian business:

    Chevy Bolt has an effective exchange rate of 1.182 CAD to USD.
    Chevy Volt is 1.207
    Nissan Leaf is only 1.133
    As stated earlier, Tesla is a whopping 1.374

    That disparity makes the Bolt a cheaper car, in Canada, vs. the Model 3. But in the US the Bolt is the more expensive vehicle.

    Does it makes sense for Tesla to price the car in Canada compared to how much the same car costs in the US? Or does it make more sense for them to price it relative to the competition? I guess arguments can be made both ways. But right now, it does make for an expensive Model 3. When I hear people routinely suggesting that $55k to $60k will be a normal price for the Model 3... I absolutely shutter when I consider that takes a mind-numbing 92 thousand dollars (after exchange and taxes) out of my savings! That is an insanely expensive vehicle and, frankly, one that simply isn't justified by what the model 3 is. Even the base price (if such a car ever exists) clocks in at almost $54k. The most I've ever spent on a car - a brand new Cadillac STS - was $30k and the average price of a car here was only $27563 in 2015.

    Interesting exercise... let's go with Elon's estimate of $42k being the average price. What can you get for $42k in the US car market? What kind of cars are in that range? That amount equates to $57,540 CAD (using Tesla's current exchange rate). I wonder if we look at what kinds of cars that gets us in Canada... how that compares to the US list? I haven't done it yet, but I suspect you'll see nicer cars on the Canadian list.
     
    • Like x 2
    • Disagree x 2
  2. sandpiper

    sandpiper Active Member

    Joined:
    Sep 25, 2014
    Messages:
    2,015
    Location:
    Ontario, Canada
    I think part of it is that the Tesla has a high non-Nafta content because the battery is made in Japan. And so there is a 6.1% tariff applied. The M3 battery is made in the US, and so this should not be so.
     
    • Like x 1
  3. bcsteeve

    bcsteeve Member

    Joined:
    Jul 18, 2015
    Messages:
    179
    Location:
    Kelowna, BC Canada
    Wouldn't same apply for GM? Nissan, certainly? I'm not well versed on those so maybe their batteries are North American?

    I think you're giving Tesla a pass where they don't deserve it, necessarily. My thought is that they are pricing it simply from their home market standpoint without regard to external markets. I don't think this is wise, at least in the long run. Short term, they'll certainly sell whatever they bring here, particularly when the "competition" isn't nearly as compelling. But that will change.
     
    • Like x 1
  4. sandpiper

    sandpiper Active Member

    Joined:
    Sep 25, 2014
    Messages:
    2,015
    Location:
    Ontario, Canada
    I'm not giving them a pass. 31% + 6.1% = 37.1%. So there's the difference.

    I can't explain why GM prices the way that they do. There are certainly marketing reasons. A lot of companies price differently in different markets. Also, I'm not sure how this enters into their math, but GM (unlike Tesla) has a lot of Canadian content in their vehicles. And so they're somewhat hedged against currency swings.
     
  5. RiverBrick

    RiverBrick Active Member

    Joined:
    Mar 23, 2014
    Messages:
    1,632
    Location:
    Québec
    Apparently, there is a trade agreement between Canada and South Korea explaining why there's no tariff on the Bolt.
     
  6. McRat

    McRat Active Member

    Joined:
    Jan 20, 2016
    Messages:
    3,607
    Location:
    Norco, CA
    GM also has 3 factories in Canada with 10,000 employees. And there is something called NAFTA as well.

    A Camaro is cheaper in Canada than the US. Camaros are not made in Korea (Lansing), but then again, neither is the Bolt EV, it's made in Orion MI out of global parts. The Camaro is made out of global parts too.
     
  7. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    4,955
    Location:
    South Surrey, BC
    I would suggest that we don't freak out over the price of a Model 3 in Canada until we know the price of a Model 3 in Canada.

    I'm not certain that's the case. I think most companies base their price on supply and demand and what they can reasonably charge. But assuming your position is true, then if you find the Leaf, Bolt, Volt or other vehicle competition to the Model 3, and is priced better based on the exchange rate, then buy one of those vehicles instead. That's how the free market works.

    For me, I don't see any of them as even coming close to being competition, given the lack of a fast charging network, so I have no interest in any of them, and thus I am willing to pay more for a Model 3 -- but that's just me. Everyone will have to make that decision for themselves, and if the Model 3 loses sales in Canada because of it, to the extent that Tesla has more supply than demand in Canada, I can see them dropping their prices -- but I can't see that happening for some time.
     
  8. sandpiper

    sandpiper Active Member

    Joined:
    Sep 25, 2014
    Messages:
    2,015
    Location:
    Ontario, Canada
    The next few months might be interesting. The M3 will clearly put downward pressure on the price of the S. And I get the sense that Tesla's capacity is easily meeting demand right now.

    Plus, Canada is generally considered a more frugal market that the US. It's why we have some lower end Asian models that aren't available south of the border.
     
  9. bcsteeve

    bcsteeve Member

    Joined:
    Jul 18, 2015
    Messages:
    179
    Location:
    Kelowna, BC Canada
    Was anyone "freaking out"?

    And really, we do know the [relative] price. There's no reason at all to expect they'll price the 3 differently than the S and X, which have identical US/CAD exchanges.

    Your supply and demand argument is correct... although defeatist. You act like it isn't something that can be influenced. If you're in a Mr. Moneybags situation that you're willing to overpay for something "just cause" well, good on you I guess (but then why not get an S???). I personally don't like the idea that I'm overpaying for anything. It is, frankly, irrelevant that the Model 3 is superior. That justifies it costing more than a competitor, sure... but relative to other world markets, not so much. That's the whole point of this thread - to discuss the relative pricing compared to other markets... not whether or not a 3 is better than a Leaf. The Bolt *is* a more expensive vehicle in the US compared to the 3 (assuming the 3 actually does come in at $35k) but is MUCH cheaper in Canada. That is a wonky situation that doesn't sit well.

    As a $35k USD car, I think the 3 is a bargain. As a potentially $90k CAD car? That's a joke. Now that's not apples to apples right there, but just the very notion that this "every man's car" could possibly approach a $90k is ridiculous.
     
  10. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    4,955
    Location:
    South Surrey, BC
    #10 Canuck, Jun 19, 2017
    Last edited: Jun 19, 2017
    I have an S. I want a Model 3 too.

    But to me, it's not "overpaying". It's only overpaying to you because you see the other vehicles as competition so you can buy one of those and get essentially the same thing. I don't see it that way since they are not competition in my view.

    I see turning a base $35k Model 3 to a $90kCan car as freaking out, or at least extreme exaggeration.

    What I find funny is that if Tesla does what you state, and charges less for a vehicle in Canada than in the US, after accounting for the exchange rate, then someone in the US could start a thread entitled "Tesla doesn't like the US :( "

    Really, the fairest thing for Tesla to do is allow the price of their vehicles to rise and fall with the exchange rate. It wasn't too long ago that our dollar was over par and vehicles were flowing up from the States like crazy. I live right on the border and the car dealers marketed to us. My Leaf is from Washington state. No one was complaining about exchange rates at that time.
     
    • Helpful x 1
  11. bcsteeve

    bcsteeve Member

    Joined:
    Jul 18, 2015
    Messages:
    179
    Location:
    Kelowna, BC Canada
    Teslas certainly were not "flowing up from the States like crazy"... or at all. A Canadian can *not* import a Tesla vehicle from the US except for a very limited range of VINs applying only to the Roadster.
     
    • Like x 1
  12. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    4,955
    Location:
    South Surrey, BC
    That wasn't my point. My point is: when our exchange rate was closer to, and even over, parity you didn't see all those other car makers lower their prices in Canada -- which is why people went down to the States to get cheaper vehicles. So using the exchange rate does NOT...

     
  13. bcsteeve

    bcsteeve Member

    Joined:
    Jul 18, 2015
    Messages:
    179
    Location:
    Kelowna, BC Canada
    You're missing MY point :)

    Markets are independent. For the most part. Of course you get the odd person buying in one market and importing... whatever, that's minor. The Canadian automotive consumer market doesn't care what the US automotive consumer market is doing, and vice versa. EVERY manufacturer (other than Tesla) prices their Canadian market cars based on Canadian market factors... primarily where they fit in relation to their competition. Your personal subjective opinion on the Model 3's competition is at odds with the definition of the term. Every other long range EV in the market *IS* - by definition - competition for the Model 3, whether or not you yourself would consider buying one. This is a macroeconomic discussion here, not "what would Canuck do". Like you said, supply and demand. On the demand side, that isn't affected at all by political external factors such as exchange rates.

    We can stroke your ego if you wish... I'm happy for you that you're rich. There's no animosity, objection, jealousy, judgement or sarcasm intended with that. You are well off enough that you can own an S and pay whatever they want for a 3 and you're fine with that. You seem quite intelligent, so clearly you can understand you're in the extreme minority. People like you may sustain demand for a little bit... but that will taper off extremely quickly as they get to the 2%-ers. They will start to look at what else you can get for the same money. SADLY (and I mean that), most people don't factor in the zero emissions bit too much yet. I do. Unlike you, I can't afford to over pay for this car. Like you, however, I will... I'm already committed to the 3 being my next car. That's because I want to support Tesla and I want to do what I can for the environment. But most will be convinced by its perceived value, which isn't there at the 50k, 60, 80, 90k dollar ranges. A stripper model 3 - in Canada - cost DOUBLE the average new car price in this country. And 37.4% of the reason why has nothing to do with supply and demand (well, S&D of the item in question at least. It has everything to do with S&D of the currency to investors).

    Its a long term mistake to price it as they are. The shame, from my perspective, is that it is a tiny mistake that they may never notice because Canada is too small market.
     
    • Disagree x 1
  14. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    4,955
    Location:
    South Surrey, BC
    But we don't even know how they will price it in Canada. We can take some direction from the Model S/X but that's all that is -- and it may be directing us in the wrong direction.

    Before I bought my Model S I never thought I'd spend that much on a vehicle. While I can afford it, I wasn't born with money - quite the opposite. I was born with little food in the cupboards -- and I've worked really hard for every dime I have. So I do know the value of a dollar. I'm just saying that we need to wait and see -- and not claim that other car makers care about us more than Tesla -- because they clearly didn't when our dollar was over par.

    I don't like to overpay for anything but I also don't want an EV that I can't take a reliable road trip with. I think the vast majority of people are like me and when they look at a Bolt vs. 3 they will see that just because a vehicle is a long range EV they are not necessarily competition if one is so vastly superior. Those banks of Superchargers I've used at the Best Western in your town didn't arrive there overnight. Nor did the ones in Merritt (yet to be used by me since they recently opened), Kamloops (I've used them a lot), and the ones I use most: in Hope -- twice most weekends to and from my cabin.

    I've been doing EV road trips since before one supercharger was opened in Canada. So I well remember keeping my fingers crossed that the Suncountry EVSE across from the Blue Moose in Hope was vacant, then waiting forever to charge -- so it was not always fun. As such, I look at the Bolt very different than you do. In fact, I won't even look at it until GM has a fast charging network with banks of maintained fast chargers from here to Florida, like Tesla. Am I willing to pay more for that? Of course. Given the amount of people who stretched to buy a Model S over so many other vehicles, I can see a lot of people stretching more than the cost of a Bolt to get that Tesla advantage with the Model 3.

    Don't get me wrong -- I want competition to Tesla -- and soon -- but I just don't see any on the horizon. As I said in another thread, all the other automakers are good at talking about building a fast charging network while Tesla is good at actually pulling the permits and building them.
     
    • Like x 2
  15. bcsteeve

    bcsteeve Member

    Joined:
    Jul 18, 2015
    Messages:
    179
    Location:
    Kelowna, BC Canada
    No, you don't look at it differently than I do. We both look at it the same. I wouldn't consider a Chevy Bolt under any circumstance. Again, I think you miss my point. Nevermind.
     
  16. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    4,955
    Location:
    South Surrey, BC
    I think we do get each other's points. Good debate -- thanks. There's no right or wrong -- just different views.

    I look forward to meeting you one day -- perhaps at a supercharger with your Model 3. :)
     
  17. smac

    smac Active Member

    Joined:
    Aug 4, 2013
    Messages:
    1,443
    Location:
    Nottinghamshire
    I'm not sure who I agree with here @Canuck or @bcsteve :)

    I too was not born to money. I worked really hard to the point of building a firm with offices in the US, Australia, Canada, Sweden and my country of origin the UK.

    My view is while money is fungible between currencies, you have to be careful in establishing the pricing levels a product is able to bear in that market We NEVER priced in GBP and cross converted.It was always about what the local market would bear.

    That didn't mean our sales guys would refuse discounts in AUD or CAD. BUT If they were asked to exceed the discretionary deals. It would come back to the UK, and we'd look at it in our reporting currency (GBP) and make a judgement call. (After all who knows... by the time the cash came in, the currency conversions could work against you, wiping out any profits you may have made on the deal :(

    Now in some ways I applaud Tesla for being more upfront about the intricacies of multi-currency transactions, However I can see why the reporting currency ultimately wins.
     
  18. Canuck

    Canuck Active Member

    Joined:
    Nov 30, 2013
    Messages:
    4,955
    Location:
    South Surrey, BC
    Me too.
     
  19. SaskBoy

    SaskBoy New Member

    Joined:
    Jul 25, 2017
    Messages:
    1
    Location:
    Saskatoon Canada
    Why can't a Canadian resident buy a Tesla in the US, drive it back to Canada, and registered it there (assuming the Canadian has an address in the US)?
     
  20. Chickenlittle

    Chickenlittle Active Member

    Joined:
    Sep 10, 2013
    Messages:
    1,701
    Location:
    Virginia
    I totally agree. Tesla should follow drug company model and develop products in USA and sell cheaper abroad leaving Americans the burden of paying for the development costs. Also should complete Canadian supercharger system throughout the country even in areas without significant population (why not just as reasonable). You write the petition and I will sign it. Let's also ask for a longer warrantee period since harsher climate, seems only fair
     
    • Like x 1

Share This Page