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Reading this... I feel like this can easily be solved by an over the air update and Ford will trumpet that at every chance they get. But here's the thing... the fix is going to be a combo of limiting fast charging rate and full throttle acceleration. The vehicle is going to be a good chunk worse instead of better with this update.

Ford has a legal obligation to fix the problem without limiting acceleration. Otherwise, customers will successfully sue for not replacing the contactors with more expensive contactors that can actually handle the advertised 0-60 mph times.

There is a reason Tesla tends to advertise 0-60 mph times that are easy for them to hit and that are often later improved.
 
You don't believe people are getting "boned" by these price increases? So you think runaway demand relative to supply driving up inflation isn't hurting consumers by increasing prices far beyond reason while adding nothing of value to the product itself?

You don't think the Lyriq looks cool as heck?

There's no doubt that I'm here to be a contrarian voice and that's more pronounced in this thread specifically, less so in other parts of this forum, but the thumbs up below my username suggest some usefulness to the posts.
Nobody’s being boned by Tesla. 🙄 The choice is always available to order or not order a Tesla. If someone thinks they’re going to be paying too much for a Tesla that they won’t get for 6-12 months, they are entirely free to not order, cancel order and/or wait. Heck, they can even go buy an EV from someone else.

You know who is getting boned, though? Every single person and every single company that has to put fossil fuel in a vehicle to navigate their life and businesses. Every single person who’s looking at paying $8 for an avocado or a roll of toilet paper because of those fossil fuel prices. That’s who.

I’ve no idea what a Lyriq looks like, but I drove mini vans for decades - and not because I have 12 children - so clearly a cool looking transporter isn’t a top criteria for me. I don’t even care about panel gaps. 😳

Let me be the first to thank you, Captain Contrarian, for your anti-heroism. We definitely all are the better for your sacrifice.
 
FYI: My Model Y estimated delivery was pushed back from Aug-Oct to October 10 - December 05. :( See signature for details of spec ordered
Similar delay here. This morning my LR Y (wh/wh, no add’l options) est’d delivery was delayed by 6 weeks, from 8/2-9/13 to 9/11-10/23. Ordered on 8/9/21. Price difference now +$12k since order date.
 
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Reading this... I feel like this can easily be solved by an over the air update and Ford will trumpet that at every chance they get. But here's the thing... the fix is going to be a combo of limiting fast charging rate and full throttle acceleration. The vehicle is going to be a good chunk worse instead of better with this update.

Sorry, but disagree. If the contactors are undersized (problem Tesla had in the early S), there is no other solution but to replace them. You can buy time by throttling power, but not fix the problem.
 
Normally I wouldn’t laugh at ford for fumbling with their EVs but considering they take every chance they get to troll Tesla, even having a full time social media troll on the payroll in the form of Levine…lol. A big recall on a product they just admitted isn’t profitable even with a $7500 subsidy.

Haha.
 
Unless something changed, wire harness pricing is adjusted based on the cost of copper (trailing average I think).
One could extend that to castings and injected molded parts.

I would hope that Tesla takes this as an opportunity to move to their 40/48V wiring architecture that they mentioned years ago (most recently I could find it mentioned was by Elon ~1 year ago with his sit-down with Sandy Munroe at SpaceX Boca Chica).

Something like this would greatly reduce the "miles" of wire in a car by something like 20X. The downside is that it would require a complete revamp of the electrical system and all related components.
 
First principles thinking would seem to favor adjusting the set price of each model to manage demand vs. trying to hit a preconceived gross margin estimate. It's undesirable to either have waiting lists of a year or more or to have finished product building up with no willing buyers. Tesla is currently so far away from losing money on each sale that it makes no sense to base selling prices on anything but demand. This makes managements job easier because the game is to simply make as many cars as possible and then adjust pricing as needed to manage sales demand.

This leaves gross margin projections fulfilling only one role, that of financial and product planning within the company. They need a reasonable idea of what their finances will look like a year or two down the road. Tesla publicly links price increases to supplier price increases mostly for optics. It makes sense to people that when suppliers raise their prices, that Tesla should as well.

It's also true that one disadvantage of having waiting lists is that the company is taking on commitments to sell a car a year down the road at a certain price while the buyer can walk away at any time. If demand suddenly drops, as unlikely as that may be, Tesla will lower prices to increase demand, irrespective of their cost to produce or the number of non-binding reservations they once had. When a manufacturer lowers pricing it's never because they are passing on the savings of lower supplier costs to their customers, no, it's to increase demand for one of two reasons: to move unsold product (real or anticipated) or to increase production and ensure large enough demand will be there based on company estimates and projections.

Unprecedented demand for EV's has found Tesla selling them for well below actual market value. That is evidenced by used cars selling for more than new cars. In hindsight, management should have raised prices sooner and more aggressively, but hindsight is 20/20. I can't fault them for this because it's not realistic to expect anyone to be able to forecast future demand perfectly and it's better to err on the side of giving people a good deal vs. creating a situation where they are scrambling to lower prices as reservations are cancelled and inventories build up. Always err on the side that causes less problems if you are wrong.
!! Great post.

One of the big advantages of selling cars below value (but with significant margins) is Tesla customers walk away from an expensive purchase with an instant sense of satisfaction. Owning a Model Y LR and watching its resale price increasing on a monthly basis even as I’ve used it over the past year has been oddly satisfying. I know this isn’t profit maximizing, but does contribute to brand loyalty. I doubt anyone buying a Model Y for $59k right now (6 months old pricing) feels gouged at the moment.

Also worth pointing out how big a flaw this is in the dealership model. While Tesla has been able to capture these rising costs by increasing prices slowly, Ford‘s dealers have been raking in huge markups while Ford has lost money on the Mach E.

Ford customers are unhappy coming out of what is likely a frustrating dealer experience where they pay thousands more than MSRP and their vehicle starts depreciating immediately. Tesla customers pay exactly what everyone else did when they ordered and their car is worth more than retail when they roll off the lot. Easy to see who has the happier customers.

Hopefully these market conditions don’t continue (my personal spending power and my retirement are declining in lockstep… seriously cannot afford this). But Tesla’s model is setting them up for maximum returns and super loyal customers coming out of this mess.
 
Gigapress said:
My intuition agrees with this. Do you or anyone else have hard evidence that this is so? I’m wondering if that’s buried in the 10-Q or published supplier contract announcements or something.
Also - on the 10K (not 10Q) I found in the Exhibits, some supplier agreements.
See the Panasonic agreement here:
Panasonic Agreement

See section 4 where Metal Adjustment and Lithium Adjustment are discussed.
Tesla is protecting itself from lithium price hikes with a fixed priced contract. Would not be surprised if they are doing or looking to do the same with other key Metals.

PIEDMONT LITHIUM SIGNS SALES AGREEMENT WITH TESLA
The Agreement is for an initial five-year term on a fixed-price binding purchase commitment from the delivery of first product, and may be extended by mutual agreement for a second five-year term. The Agreement covers a fixed commitment representing approximately one-third of Piedmont’s planned SC6 production of 160,000 tonnes per annum for the initial five-year term as well as an additional quantity to be delivered at Tesla’s option
 
Price increase is the topic of the day in EV land, wondering what kind of component and materials cost increases in ICE world affect the pricing of ICE powered vehicles.
Lots of materials going into ICE vehicles are affected. A huge chunk of car materials cost are steel and aluminum. Also secondary things like copper and the cost of finished electronics (chips, etc).

The big problem ICE vehicles have is the cost of operating them has massively increased. This increased the premium an EV supplier can charge for their vehicle. It is a price increase which customers see but vehicle makers cannot affect. Every dollar gas goes up increases the amount people are willing to pay for EVs. That makes it tougher for ICE vehicle makers to increase prices, so if they are less affected by inflation, they are also less able to increase prices.
 
My delivery date also just got moved out AGAIN. M-Y LR Black with 3rd row seats (no FSD)
Ordered Nov 1, 21
Previously Aug - Sep 22 today changed to Sep 30 - Nov 11
@The Accountant are you keeping track of these changes as well? Or just the new order delivery estimate?

I am happy I have my M3 in the meantime… just hard to watch the interest rate go up while I wait. (At least I have 10k “discount” price locked in)
 
!! Great post.

One of the big advantages of selling cars below value (but with significant margins) is Tesla customers walk away from an expensive purchase with an instant sense of satisfaction. Owning a Model Y LR and watching its resale price increasing on a monthly basis even as I’ve used it over the past year has been oddly satisfying. I know this isn’t profit maximizing, but does contribute to brand loyalty. I doubt anyone buying a Model Y for $59k right now (6 months old pricing) feels gouged at the moment.

Also worth pointing out how big a flaw this is in the dealership model. While Tesla has been able to capture these rising costs by increasing prices slowly, Ford‘s dealers have been raking in huge markups while Ford has lost money on the Mach E.

Ford customers are unhappy coming out of what is likely a frustrating dealer experience where they pay thousands more than MSRP and their vehicle starts depreciating immediately. Tesla customers pay exactly what everyone else did when they ordered and their car is worth more than retail when they roll off the lot. Easy to see who has the happier customers.

Hopefully these market conditions don’t continue (my personal spending power and my retirement are declining in lockstep… seriously cannot afford this). But Tesla’s model is setting them up for maximum returns and super loyal customers coming out of this mess.
What happens to customers who are paying the new higher prices and then watch prices decline at the back end?

What happens to orders locked in at lower prices that are pushing out into a higher-rate environment and who will be hit with higher financing costs?
 
Normally I wouldn’t laugh at ford for fumbling with their EVs but considering they take every chance they get to troll Tesla, even having a full time social media troll on the payroll in the form of Levine…lol. A big recall on a product they just admitted isn’t profitable even with a $7500 subsidy.

Haha.

Doesn't this describe Tesla circa 2012-2019?
 
That’s not how transitions work at all. I’d suggest you go though the history of major transitions in different sectors and industries that have happened throughout history. When the inflection point is reached, there’s no turning back. And no, high oil prices are NOT a result of push away from fossil fuels. That’s a media narrative being pushed that doesn’t align up to facts. The facts are oil producers, especially here in the US, could be producing more. They’ve chosen not to and to not make any future investments either.

Also, given oil is by far the main driver of this inflation run that hits every part of the supply chain, when oil goes down, prices of EV’s will go down in relation. EV’s will always be financially beneficial against ICE. They were back when oil/gas was much cheaper. The difference is now, gas prices are making the average consumer much more aware of the financial benefits
I mean I agree here, but with a slight caveat.

Fossil fuel companies do no want to invest in new capacity because they know demand has peaked. Investing in increasing capacity right now is not the profit maximizing move.

Would you invest $millions in expanding capacity knowing that in 5 years demand will be lower? EVs are part of this story. It’s just an indirect/ knock on effect.
 
Gigapress said:
My intuition agrees with this. Do you or anyone else have hard evidence that this is so? I’m wondering if that’s buried in the 10-Q or published supplier contract announcements or something.

Tesla is protecting itself from lithium price hikes with a fixed priced contract. Would not be surprised if they are doing or looking to do the same with other key Metals.

PIEDMONT LITHIUM SIGNS SALES AGREEMENT WITH TESLA
The Agreement is for an initial five-year term on a fixed-price binding purchase commitment from the delivery of first product, and may be extended by mutual agreement for a second five-year term. The Agreement covers a fixed commitment representing approximately one-third of Piedmont’s planned SC6 production of 160,000 tonnes per annum for the initial five-year term as well as an additional quantity to be delivered at Tesla’s option
It’s questionable whether Piedmont will be able to actually deliver anything. The lithium is there, but the company faces significant local resistance.
 
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Doesn't this describe Tesla circa 2012-2019?
You realize the difference between gross margins/profits and operating margins/profits right? Tesla always had postive.....very positive gross margins. They just had to ramp production high enough to cover operating costs.

Ford's situation is very different. They're flat out saying.....we can't make a positive gross margin. Drastically different situation
 
What happens to customers who are paying the new higher prices and then watch prices decline at the back end?

What happens to orders locked in at lower prices that are pushing out into a higher-rate environment and who will be hit with higher financing costs?
Assuming prices even come down in the first place, what would happen is that those customers will either:
  1. Deal with it and take delivery
  2. Cancel their order and get back in line to wait for another 12 months to get the new lower price
Interest costs are a small portion of the overall purchase cost, by the way, especially since people who can afford a $50k+ car tend to have good credit ratings.