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

[tronwinski]

This might be true. But, the Model 3 was being advertised as bring EV to the masses.

I feel I am one of the more [lucky] masses - and that is why I don't drive a Mercedes, Audi, BMW, Porsche etc. If the car was not advertised or promoted as being affordable - I would not have looked at it.

More importantly - what we or businesses say is important. Tesla claims to be different. Tesla is NOT Mercedes, Audi, BMW, Porsche.

If Tesla is NOT Mercedes, Audi, BMW, Porsche etc why behave like those guys or engage in practices similar to those guys ?

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.

 

[Tomayr]

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 ?

I don't think you get the most important part. It is not how many toppings the pizza has, but the actual cost to manufacturer those toppings. The "cheap" version of the model 3's price is NOT possible without the economies of scale. (ability to buy 1 ton of pepperoni at a cheaper cost than 1LB of pepperoni), and that is not possible until they are producing 5k/week steady.

 

[SluyterCapital]

Lots of assumptions and opinions. Interesting discussion however the real and only answer is to trust that Tesla knows better and is doing the right thing for the overall interests of its main stakeholders.

 

[Munch]

The Ontario rebate has changed a few times since the Model 3 reveal. There was nothing to assure anyone that there would be a $14K rebate by the time Ontario could order.

Ontario is only a small piece of the 400,000 reservation pie.

 

[tronwinski]

These are the salient facts as I understand them:

- Tesla is for profit business with an environmental consciousness angle/slant.
- Tesla said they were manufacturing an EV vehicle for the masses at some future dates
- They are very smart folks. They crunched their numbers and checked their spreadsheets.
- Their numbers will have showed them the best and worst case scenarios.
- Any smart person or business will do their projections on worst case scenarios.
- Model 3 - base version is their worst case scenario. i.e $35k or $45k.
- They are making a profit even on the worst case MOdel 3 base scenario. Make no mistake about that. If they are not making some profit they will be out of business by now.

- Assuuming they are buying or outsourcing some parts for their cars - There is NO economy of scale in buying one super high-end high performance Engine (1 kg Shark Fillet minion topping ).
There is economy of scale when you buy 10 regular standard engine (1 TON pepperoni topping)

I don't think you get the most important part. It is not how many toppings the pizza has, but the actual cost to manufacturer those toppings. The "cheap" version of the model 3's price is NOT possible without the economies of scale. (ability to buy 1 ton of pepperoni at a cheaper cost than 1LB of pepperoni), and that is not possible until they are producing 5k/week steady.

 

[tronwinski]

I agree. Ontario is indeed a small piece of the pie. But the same underlying principles exists in all Tesla markets. Claiming to make an affordable EV for the masses - but turning around and instead trying to up-sell or push what people may not be able to afford - under the guise of "if people don't buy this more expensive thing - we will fold up shop and the environment might suffer as a result".

The Ontario rebate has changed a few times since the Model 3 reveal. There was nothing to assure anyone that there would be a $14K rebate by the time Ontario could order.

Ontario is only a small piece of the 400,000 reservation pie.

 

[Koflach]

We all get the frustration in losing your rebate but Tesla isn't manufacturing the Model 3 for Ontario. BC residents are losing out on our chance at a rebate every day that goes by without a delivery as there is a set amount of funds available and once it's gone, it's gone. It's simply bad timing for what the Ford government is implementing, that's all.

 

[sauce]

whatever new imbecilic rules/changes any new Government (PC, Doug Ford etc) decides to enact.

You nailed it right there. Tesla's planning happened much before Ford's election. It's also kind of a stretch to believe Tesla would hinge their North American production and sales strategy around one province's electoral choices.

I do understand and empathize with your frustration for losing the EV credit (I sort of went through similar when QC government cut subsidies for Tesla from 8k to 3k) but really, sometimes you win, and sometimes you don't.

 

[azred]

I think this Canadian customer thread was started by the former Director of Strategic Planning for Blackberry.

 

[tronwinski]

I think this Canadian customer thread was started by the former Director of Strategic Planning for Blackberry.

 

[wallstguy]

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.

Dude you're not listening. Regardless of when you ordered, if your Tesla wasn't in your physical possession by July 11th, you do not qualify for the rebate. That is the term for the rebates on Teslas specifically.

 

[eepic]

I agree. Ontario is indeed a small piece of the pie. But the same underlying principles exists in all Tesla markets. Claiming to make an affordable EV for the masses - but turning around and instead trying to up-sell or push what people may not be able to afford - under the guise of "if people don't buy this more expensive thing - we will fold up shop and the environment might suffer as a result".

I disagree, they sent an email invitation to configure and it gave an option to get a LR+PUP now, or other builds later with an estimate of when it would be. As has always been the case for Tesla and others, more optioned models are delivered before less optioned models because that's what the economics of the business allow.

Realistically, if you wanted it structured the other way around would be less "Tesla would fold up shop if they launched the base model first", more "launching base model first would mean base model starts at $40k rather than $35k"

You can still buy the base model next year at $35k USD, they never promised it would be less than that. That the government rebate situation in Ontario didn't work out isn't their fault.

 

[NoBeard]

Dude you're not listening. Regardless of when you ordered, if your Tesla wasn't in your physical possession by July 11th, you do not qualify for the rebate. That is the term for the rebates on Teslas specifically.

AND...
Even if you were to beat all the odds and win a campaign to extend the same courtesy to M3 order holders as the stealerships got and get extended to a September delivery, it's HIGHLY unlikely that the affordable M3 would be delivered by then, so Lose, Lose.

Tesla sells more expensive options first to put more PROFIT in the bank and keep the ship afloat. Build time on the car won't be significantly different for a cheaper car but the profits on the cheaper cars are much smaller, so if the overhead expenses aren't being covered, no company, no Teslas for anyone.

It's a shame that you lost out on the rebate, but those of us who never have had a chance at a rebate welcome you to the larger club, you need to do the math to see if it works for you on the new reality, and if it doesn't, look elsewhere.

 

[kzod]

Tesla did what was in their best interest and are working hard to help consumers take advantage of EV rebates while they still exist. If they aren't profitable yet building as many cars as they possibly can with the most profitable options I don't see how selling the same amount of cars that cost 40% less would help them. In any case they were able to take advantage of the rebate to encourage people to buy ASAP since the price of a nearly fully optioned car would be comparable to a base car that won't get the rebate.
I'd say 80% of us didn't buy the car we intended. Most probably would have taken AWD, and many of those with the SR battery. That was my initial plan. But seeing that the rebate (which was ridiculously high) wouldn't be around long we took what we could get.

 

[phtp]

Anyone else feels this is like math class?

 

[Corsair]

Ford is riding on populist rhetoric, killing $14k of EV incentives/rebates is a no-brainer, a soft target with minimal backlash while keeping his voters happy and promising to slash budget.

Your frustration lies with the present ON government, voted in by Ontarians, nothing to do with Tesla on how they wished to conduct their business model.

 

[systemBuilder]

In 2018, Li-Ion batteries (according to GM) cost about $140 per kWh and are falling 7% a year in price. The Model 3 Standard model comes with a 50 kWh battery. Therefore, the prices would be:

2016: $160/kWh = $8000 for the battery cells
2017: $150/kWh = $7500 for the battery cells
2018: $140/kWh = $7000 for the battery cells
2019: $131/kWh = $6540 for the battery cells

Tesla is building a factory production line like nobody has done for the past 60 years ~ scaling from 10k cars per year to half a million - it hasn't been done in most of our lifetimes. There is a very high risk and the costs are extraordinary (think $2B). Therefore, Tesla immediately loses $2B in building up a mass-production line in their factory and needs to focus on cars that are highly profitable. Those first 10k cars cost $200,000 each! 70% of the people buying Tesla Model 3s (according to the public spreadsheet) buy the EAP for $5,000, ergo, $3500 of instant profit right there. I imagine that MOST of the $35k car-buyers cannot afford EAP. Therefore, you can see that by putting off the $35k car right now, Tesla has an additional $4,000 of profit per car, and it keeps the company financially safe in case they need the money for an emergency during production scale-up (recall?)

Also, Tesla does not make reliable cars at the outset, the Model S was highly flakey for the entire first 2 years - half the door handles failed, and many of the motors! By limiting production and kissing peoples' butts, Tesla managed to survive and learn how to make the Model S successfully. It was not efficient and It was not cheap to do! The $35k car buyer is MUCH MORE demanding than the $50k car buyer! The $35k buyer has a ZILLION options including Toyotas and Fords that NEVER break. With an extra $10k of profit Tesla can kiss butts when the cars break, they are helpless to help the $35k buyers because margins are slim! So they need to get the bugs out on the higher-end cars before they risk going after the midrange market!

I do believe that MANY people wanting the $35k car will get a federal subsidy. SOME sort of subsidy is available until the end of 2019. Because battery prices will fall another $500 in 2019, I think that the subsidies will work out like this:

2017, 2018 cars: $7500 subsidy, 50,000 + 125,000 = 175,000 cars.
2019 1st-half: $3750 subsidy, 125,000 cars, HALF of these will probably be $35k cars
2019 2nd-half: $1950 + $500(maybe) price-cut = $2500 subsidy, MOST OF THESE WILL PROBABLY BE $35k cars.

So I imagine that roughly 200,000 cars will see some kind of subsidy. I hope you get your car, good luck, I am still waiting (since June 16, 2016) for mine!

 

[Canuck]

Also, Tesla does not make reliable cars at the outset, the Model S was highly flakey for the entire first 2 years - half the door handles failed, and many of the motors!

Failed door handles are unreliable cars? A lot of owners of those earily cars would strongly disagree with your characterization of "highly flakey". Yes, minor things needed fixing, and some things got redesigned, but overall those are some great builds still holding up strong. I'll take a large frunk, 80 amp chargers over the builds today. Those highly flakey cars also beat out all other car makers in the most important "would buy again" question at 90%:

Car Brands Ranked by Owner Satisfaction

If your information was true, the first 2 years of irrate owners of highly flakey cars are no where to be seen in the survey. But let's not let facts get in the way.

I suspect your information comes from reading forums rather than actually owning one of those early model Ss?

 

[SmartElectric]

Owner of Classic Tesla S, first 6000 VIN's, the car is outstanding, far better quality than our traded in Mercedes was.

 

[phtp]

In 2018, Li-Ion batteries (according to GM) cost about $140 per kWh and are falling 7% a year in price. The Model 3 Standard model comes with a 50 kWh battery. Therefore, the prices would be:

2016: $160/kWh = $8000 for the battery cells
2017: $150/kWh = $7500 for the battery cells
2018: $140/kWh = $7000 for the battery cells
2019: $131/kWh = $6540 for the battery cells

Tesla is building a factory production line like nobody has done for the past 60 years ~ scaling from 10k cars per year to half a million - it hasn't been done in most of our lifetimes. There is a very high risk and the costs are extraordinary (think $2B). Therefore, Tesla immediately loses $2B in building up a mass-production line in their factory and needs to focus on cars that are highly profitable. Those first 10k cars cost $200,000 each! 70% of the people buying Tesla Model 3s (according to the public spreadsheet) buy the EAP for $5,000, ergo, $3500 of instant profit right there. I imagine that MOST of the $35k car-buyers cannot afford EAP. Therefore, you can see that by putting off the $35k car right now, Tesla has an additional $4,000 of profit per car, and it keeps the company financially safe in case they need the money for an emergency during production scale-up (recall?)

Also, Tesla does not make reliable cars at the outset, the Model S was highly flakey for the entire first 2 years - half the door handles failed, and many of the motors! By limiting production and kissing peoples' butts, Tesla managed to survive and learn how to make the Model S successfully. It was not efficient and It was not cheap to do! The $35k car buyer is MUCH MORE demanding than the $50k car buyer! The $35k buyer has a ZILLION options including Toyotas and Fords that NEVER break. With an extra $10k of profit Tesla can kiss butts when the cars break, they are helpless to help the $35k buyers because margins are slim! So they need to get the bugs out on the higher-end cars before they risk going after the midrange market!

I do believe that MANY people wanting the $35k car will get a federal subsidy. SOME sort of subsidy is available until the end of 2019. Because battery prices will fall another $500 in 2019, I think that the subsidies will work out like this:

2017, 2018 cars: $7500 subsidy, 50,000 + 125,000 = 175,000 cars.
2019 1st-half: $3750 subsidy, 125,000 cars, HALF of these will probably be $35k cars
2019 2nd-half: $1950 + $500(maybe) price-cut = $2500 subsidy, MOST OF THESE WILL PROBABLY BE $35k cars.

So I imagine that roughly 200,000 cars will see some kind of subsidy. I hope you get your car, good luck, I am still waiting (since June 16, 2016) for mine!

That's assuming all batteries are created equally, which it's not. Tesla has far superior battery technology than any other EV manufacturers. Take the 2018 leaf for example, it doesn't even have a proper active thermal management system.

I disagree that Toyota's and Ford's never break. Maybe not reported in the news because no one cares about it unless it's a recall affecting thousands of people making it news worthly. Tesla as the underdog has always been in the microscope and popular in media so the perception is it's all problematic.