Tesla up-selling is partly to blame for some people in Ontario not getting EV rebates

[tronwinski]

I am model 3 reservation holder and a huge Tesla/Elon fan [boy]. I reserved my spot on day 1. I care about the environment and try to do whatever little I can in my own limited capacity and sphere of influence.

I received an email to configure my model 3 a while back. I couldn't configure it because:

- The vehicle options that I can afford were not available or presented to me.


- There was probably no valid technical reason to justify prioritizing the more expensive model 3 options over the cheaper options.
-- Model 3 AWD Performance version is more complicated to Engineer/manufacture than Model 3 AWD.
-- Similarly Model 3 AWD version is more complicated to make than Model 3 RWD.

- Therefore simple logic tells me that it should be easier and faster to make something simple than it is to manufacture something complicated.

- Why didn't Tesla simply start manufacturing what logic and Engineering 101 say will be easier to make ? They say because the more expensive trims are more profitable. Fine, but:

You own a Pizza store. You are a visionary. Your objective is to run an environmentally responsible business and feed as many of the masses as possible.

-- If you have the choice of making Pizzas with a single topping costs that $1 and can be made in 10 minutes. And 10 people potentially can easily afford this single topping Pizza.

-- If you also have the choice of producing another Pizza with 10 different toppings, which you can sell for $10 and can be made in 15 minutes. However only 2 people can afford it this.

-- Now if the Pizza store says their objective is to feed as many of the masses as possible and run a business - which of the Pizza options would you concentrate on manufacturing given your stated objective ?

In conclusion - if Tesla had focused manufacturing smarts and time in releasing more of the affordable vehicles that MOST people wanted and hoped for - lots more folks would have placed their order and not be so impacted by whatever new imbecilic rules/changes any new Government (PC, Doug Ford etc) decides to enact.

 

[dwharrison]

The standard view on this is that Tesla needed the revenue from the more expensive models in order to stay solvent. That should change quickly this fall with production ramped up, but when they were only making small numbers of cars, they needed to maximize profit margin per car. As for your point on production times, the restrictions on production don't seem to have been due to expensive options, but rather on basic things. They had a choice - make 2000 cheaper cars or 2000 more expensive cars.

 

[Tummy]

Most high end manufacturers I'm familiar with (Mercedes, Audi, BMW, Porsche) release the mid to higher version first. Then a year later, the performance version and lower cost version. They are all trying to maximize profits. That's the reason.

 

[Munch]

Tesla is a business that needs to stay solvent. If they made the cheaper trim first they would have gone bankrupt. No cars for anyone. There's a reason they started with the Model S and X before the 3.

They already did their best to accommodate for the rebate. It's unfortunate you missed out but it's 0% Tesla's fault.

 

[darkenergy]

I understand your pain, but you should be directing it at the current government for pursuing a policy framework that benefits the oil industry at the cost of the electorate's good health and well being.

In Tesla's case, it was a question of making $20 pizzas instead of $12 pizzas and taking home $13 instead of $5. They still made the same number of pizzas, but that extra $8 paid for the building, staff, research and pizza oven. So the bank didn't foreclose.

Plus, and more to the point, those more expensive cars are taking sales away from BMW and Daimler. Forcing those manufacturers to either step up their EV game, or lose their business to Tesla.

 

[rypalmer]

Tesla faces existential threats. They are doing the logical thing by prioritizing higher margin trim levels, since it reduces their risk of running out of cash, or being able to raise additional capital at attractive terms.

 

[Uncle Paul]

Elon made a statement that initial low volume production made each Model 3 more expensive to make. That if he concentrated on making just the basic model the company would die. He did not want Tesla to die, so he concentrated on producing the more expensive versions first. Said that when volumes began to grow over 5,000 per week he would begin producing the base model.

He did the same thing with his roadsters, Model S and Model X. First production were loaded up Founders Editiions. If you ordered a loaded car you would get quicker delivery than the less optioned models.

This is just basic good business. Gotta get the company profitable at some point.

An offset was that customers ordering the early production of optioned cars had the highest chances of getting the Governmental Tax Credits and rebates. This significantly offset the premium prices they were paying.

So many Canadians wanted the Unicorn...a base $35,000 car that also got a $14,000 rebate. Alas the Ontario rebate was withdrawn before the base models could be rolled out. A $23,000 Tesla Model 3 (after rebates) would have been the bargain of the century.

Tesla made an extra effort to deliver as many vehicles as possible to Canada when that rebate became in jeopardy, but the cut off was caused by the Canadian Government, not Tesla.

 

[tronwinski]

IMHO - If Tesla was hurting for money for Salaries, R/D, building etc - All Tesla had to do was

- open up their online configurator to all reservation holders and/or everybody.
- Make the options - expensive, affordable, mid-level available for ordering. Note the word "ordering"
- Still maintain the same stated timelines - 2 months , 5 months, 5 years whatever. (Note that I waited 2+ years)
- First collect the $1000 refundable deposits.
- Ask for non refundable deposits of $3200 at the time of configuring or ordering
- The orders will still have been placed. Tesla will have $1000 + $3200 * <however many people configure)
- The silly Government clauses or who ordered what when will have been circumvented. Because Tesla can argue that people had placed their order since say 2016 ... with the intentions of relying on the promised Govt rebates.

Placing artificial restrictions on what can be configured was unnecessary.

Tesla planed and costed what was necessary to make X number of Pizzas to begin with. Trying to upsell an hungry person that can only afford a single topping $1 pizza does NOT make any sense.

I understand your pain, but you should be directing it at the current government for pursuing a policy framework that benefits the oil industry at the cost of the electorate's good health and well being.

In Tesla's case, it was a question of making $20 pizzas instead of $12 pizzas and taking home $13 instead of $5. They still made the same number of pizzas, but that extra $8 paid for the building, staff, research and pizza oven. So the bank didn't foreclose.

Plus, and more to the point, those more expensive cars are taking sales away from BMW and Daimler. Forcing those manufacturers to either step up their EV game, or lose their business to Tesla.

 

[BluestarE3]

You own a Pizza store. You are a visionary. Your objective is to run an environmentally responsible business and feed as many of the masses as possible.

-- If you have the choice of making Pizzas with a single topping costs that $1 and can be made in 10 minutes. And 10 people potentially can easily afford this single topping Pizza.

-- If you also have the choice of producing another Pizza with 10 different toppings, which you can sell for $10 and can be made in 15 minutes. However only 2 people can afford it this.

-- Now if the Pizza store says their objective is to feed as many of the masses as possible and run a business - which of the Pizza options would you concentrate on manufacturing given your stated objective ?

What if the pizza parlor's production is limited by the number of pizza ovens it has? And it doesn't have the ability to add more ovens quickly (capital, logistics, floor space, trained workers)? And the investors are signaling to the owner he needs to turn a profit quickly? Should he bake and sell the inexpensive pizza even though he doesn't have the capacity to "make it up in volume" or the higher-margin pizzas in fewer numbers? Yes, it takes less time to assemble a lesser-optioned pizza, but they all take the same amount of time to bake in the oven. So, if you can only bake X number of pizzas per business day and you need to maximize your profit to stay afloat, which type of pizza would you sell at the outset until such a time that your business is in a better position and you can expand production and meet the demand of the masses?

 

[tronwinski]

You see - there is also a reason why +450,000 people reserved the Model 3 and NOT the model S or X. Affordability.

I ordered/reserved the Model 3 BECAUSE it was promoted at the price I could afford after rebates and all had been factored in.

Tesla is a business that needs to stay solvent. If they made the cheaper trim first they would have gone bankrupt. No cars for anyone. There's a reason they started with the Model S and X before the 3.

They already did their best to accommodate for the rebate. It's unfortunate you missed out but it's 0% Tesla's fault.

 

[dwharrison]

- The silly Government clauses or who ordered what when will have been circumvented. Because Tesla can argue that people had placed their order since say 2016 ... with the intentions of relying on the promised Govt rebates.

What would that have accomplished? The new government decided that unlike essentially any other EVs, Teslas would lose the rebate regardless of when they were ordered assuming they had not been delivered by the day the cancellation announcement was made. Even if you had been able to order an SR car by now, there would have been no rebate for you.

Blame the PCs here.

 

[tronwinski]

I would sell or do the thing that gives me the quickest infusion of cash with the smallest effort. Here is a simple rough and exaggerated calculation:

100,000 Model 3 Base El Cheapo x $45,000 = $4,500,000,000

20,000 Model 3 Performance AWD blah x $75,000 = $1,500,000,000

What if the pizza parlor's production is limited by the number of pizza ovens it has? And it doesn't have the ability to add more ovens quickly (capital, logistics, floor space, trained workers)? And the investors are signaling to the owner he needs to turn a profit quickly? Should he bake and sell the inexpensive pizza even though he doesn't have the capacity to "make it up in volume" or the higher-margin pizzas in fewer numbers? Yes, it takes less time to assemble a lesser-optioned pizza, but they all take the same amount of time to bake in the oven. So, if you can only bake X number of pizzas per business day and you need to maximize your profit to stay afloat, which type of pizza would you sell at the outset until such a time that your business is in a better position and you can expand production and meet the demand of the masses?

 

[S'toon]

Elon made a statement that initial low volume production made each Model 3 more expensive to make. That if he concentrated on making just the basic model the company would die. He did not want Tesla to die, so he concentrated on producing the more expensive versions first. Said that when volumes began to grow over 5,000 per week he would begin producing the base model.

He did the same thing with his roadsters, Model S and Model X. First production were loaded up Founders Editiions. If you ordered a loaded car you would get quicker delivery than the less optioned models.

This is just basic good business. Gotta get the company profitable at some point.

An offset was that customers ordering the early production of optioned cars had the highest chances of getting the Governmental Tax Credits and rebates. This significantly offset the premium prices they were paying.

So many Canadians wanted the Unicorn...a base $35,000 car that also got a $14,000 rebate. Alas the Ontario rebate was withdrawn before the base models could be rolled out.

Tesla made an extra effort to deliver as many vehicles as possible to Canada when that rebate became in jeopardy, but the cut off was caused by the Canadian Government, not Tesla.

Actually it was caused by the Ontario government. Canada has no federal EV rebates.

The Liberal Party government of Canada tries to pretend their green, but all they have done was punt the effort of reducing green house gases to the provinces, while at the same time kowtowing to the big oil interests. It's sad when you folks in the States under Trump are still more green than we are.

 

[dwharrison]

I would sell or do the thing that gives me the quickest infusion of cash with the smallest effort. Here is a simple rough and exaggerated calculation:

100,000 Model 3 Base El Cheapo x $45,000 = $4,500,000,000

20,000 Model 3 Performance AWD blah x $75,000 = $1,500,000,000

What evidence do you have that they can build cheap cars 5x as fast as performance cars? Are you suggesting that if they switched to cheap cars, they'd be making 25,000 per week now?

 

[BluestarE3]

- The silly Government clauses or who ordered what when will have been circumvented. Because Tesla can argue that people had placed their order since say 2016 ... with the intentions of relying on the promised Govt rebates.

Continuing with the pizza parlor analogy: If the government announced that sales tax is going up on a certain date, are you saying the restaurant should allow patrons to "order" their pizzas now to lock-in the lower sales tax, but they won't be able to get and consume their pizzas until a later date? And you're upset the restaurant won't allow you to do that? That's not even taking in account the taxing authority likely will nix such a scheme and demand the difference in tax rates. In the end, who's responsible for the sales tax rate going up (or EV rebate going away)?

 

[tronwinski]

Yes - I partly blame the Government. But I am used to their incompetencies. I rely on my sweat and blood and vote with my wallet.

Tesla is a for profit business. I consulted my wallet and my conscience and decided to do business with Tesla and NOT the government.

Tesla could have done more and NOT put artificial restrictions or barriers on their customers. They could have opened up the tool for many people to order what they WANTED and still maintain the future estimated delivery dates. The Government argument about when something was "ordered" would have been moot.

Who ordered what and when is all going into Tesla's database somewhere. That would have been proof enough that people placed their orders.

What would that have accomplished? The new government decided that unlike essentially any other EVs, Teslas would lose the rebate regardless of when they were ordered assuming they had not been delivered by the day the cancellation announcement was made. Even if you had been able to order an SR car by now, there would have been no rebate for you.

Blame the PCs here.

 

[dwharrison]

Tesla could have done more and NOT put artificial restrictions or barriers on their customers. They could have opened up the tool for many people to order what they WANTED and still maintain the future estimated delivery dates. The Government argument about when something was "ordered" would have been moot.

We're dealing with a government that is taking the nearly unprecedented steps to pass legislation to protection themselves from liability when cancelling contracts. They're leaving businesses out in the cold with no compensation for their losses. Do you think that, given his apparently hatred for any sort of environmental program, Ford treat Tesla orders any different.

And as already mentioned, the cancellation terms for the rebate don't take into account when you ordered. If you didn't get your car by Wednesday, you're out of luck, no matter how long your order has been in place. Tesla opening up the ordering tool earlier wouldn't have made ANY difference.

I'm very sympathetic for the position you're in, but I don't see what Tesla could have done to satisfy you except risk bankruptcy by shipping less profitable cars during the early production-constrained period.

 

[tronwinski]

You are right. The Government is responsible for the EV rebate going away. No doubt.

Pizza Pallor :

- One day only sale - all Pizzas are tax free for ALL orders "placed" by mid-night today.
- But please note that due to Government guidelines and red tape you have to ORDER your pizza today before mid-night.
- You know that our Pizza's are great, and we are expecting lots of orders - so please expect a staggered delivery of your fresh pizza over the next one week - but you have to pay us today. We will send updates on the delivery day/time.
- 10 people come and order. Business collects 10 x $1 = $10 NO TAX to remit to govt. And no tax to charge customer.
-

Continuing with the pizza parlor analogy: If the government announced that sales tax is going up on a certain date, are you saying the restaurant should allow patrons to "order" their pizzas now to lock-in the lower sales tax, but they won't be able to consume their pizzas until a later date? And you're upset the restaurant won't allow you to do that? That's not even taking in account the taxing authority likely will nix such a scheme and demand the difference in tax rates. In the end, who's responsible for the sales tax rate going up (or EV rebate going away)?

 

[tronwinski]

I am NOT suggesting Tesla ship less profitable cars. They could have easily let people configure and order the cars they really wanted or could afford and kept the future delivery dates !!!!!!!!!

p.s. Please rest assure that there is profit even in the least expensive TESLA cars. Tesla is a for profit business.

We're dealing with a government that is taking the nearly unprecedented steps to pass legislation to protection themselves from liability when cancelling contracts. They're leaving businesses out in the cold with no compensation for their losses. Do you think that, given his apparently hatred for any sort of environmental program, Ford treat Tesla orders any different.

And as already mentioned, the cancellation terms for the rebate don't take into account when you ordered. If you didn't get your car by Wednesday, you're out of luck, no matter how long your order has been in place. Tesla opening up the ordering tool earlier wouldn't have made ANY difference.

I'm very sympathetic for the position you're in, but I don't see what Tesla could have done to satisfy you except risk bankruptcy by shipping less profitable cars during the early production-constrained period.

 

[tronwinski]

I don't have any direct evidence. Just common sense and logic... which I applied and showed in the Pizza manufacturing analogy : 1 topping vs 10 toppings. Which is easier or quicker or cheaper to make ?

What evidence do you have that they can build cheap cars 5x as fast as performance cars? Are you suggesting that if they switched to cheap cars, they'd be making 25,000 per week now?