Very illogical decision on a very logical reasoned company?

[necho]

Very frustrated about a pricing decision for Switzerland by Jerome, may I ask for your thoughts?

I'm an owner of two fully loaded P85+ (Sig. and Prod.) and an X Sig. reservation holder, one of the first orderer of the S in Europe. In October I have ordered two P85D maxed out, one with soonest delivery (March), one scheduled for May. Due to currency fluctuations Tesla has dropped the price in Switzerland by about USD 8000, I thought same situation as one year ago, when they adjusted the price of the open orders (since its currency based price drop, so Tesla exchange the money to USD when final payment is received, yes and some remains in local currencies but the price drop is only a fraction of the currency drop, 5.x % vs 10.x %). But now Jerome decided to stick to the contracts.

I wrote him and tried to explain that it doesn't make any sense, but got a standard reply not answering any arguments. I freaked out most when he used words like 'because of consistency and fairness', since it's the opposite.

Here my arguments, may I ask for your thoughts, am I wrong?

i) One year ago, same situation, but price was adjusted on open orders (consistency?)

ii) up to now, no quote for my current P85+, obviously now also price of used cars dropped, so I only get the bad side of this price drop (fair?)

iii) my first car is produced and in transit to Europe, cancel and reorder add 3 month waiting time (have waited 4 1/2 years for my Sig. will survive it). Tesla will have to find a new buyer, and the new buyer is obviously only going to pay the lower price, so why not to keep a long time supporter happy and give it to him for the same price, Tesla only gains the reservation fee to make me unhappy?

iv) my second car has no VIN yet, if I reorder I will have same delivery time, but I have to cancel, reorder, repay fee to get the same as I have ?

Does this behavior for pricing make any sense to anybody?

I don't care about the price of the car, I think it's the best car on the market you can get and I would have paid more without hesitating. But I'm getting very annoyed if someone try to treat you unfair against any logic. Your thoughts?

 

[Jacina]

I was debating if I wanted to write something about the bad experience I had but this post encourages me to do so.

After checking my budget, and trying out a tesla, I decided to buy one. This was on the 15th of January, then the Euro crash happened, well its more like the Swiss Frank suddenly increased in value towards all other currencies by 20%. Strictly spreaking, everything that is imported should become 20% lower, so I decided to wait, after waiting a while, its obvious that Tesla belongs to the "bad" companies that doesn't instantly react. Being Swiss I'm used to getting price gouged by companies like that

Anyway I decide to call tesla a bit later in the month, to ask if there will be a price reduction. Answer (directly from Tesla) no, there will not be. So I ordered.

TWO FREAKING DAYS LATER THE PRICE DROPS (around 7.5%) I mean come on what the f is the communication issue with this company.

So I call, explain I just ordered and would like the new prices, I get the runaround pretty much because management can't come to a decision. Its around here I realise I'm dealing with a company with a completely retarded information policy. Instead of letting them run out the clock I decide to immediately cancel the order, since doing that GUARANTEES me the lower price at ZERO cost to me (and Tesla gets to deal with additional bureaucracy)

I have not reordered yet, generally I stop dealing with companies that behave like retards, so I'm back to considering my options.

There is absolutely no reason at all to not give the lower prices to existing orders:

- For people within the 14 day its an obvious no brainer, unless you like bureaucracy, saving 7.5% by just saying "I cancel my order" seriously? You add the risk of losing customers though.
- For people with existing orders that care about money they will just tell Tesla to stuff it and keep the car, and reorder a new one, save 7.5% - 2500 thats still money made, oh and a pissed off customer.

People that'll just ignore the 5-10k you could save, those people yes, you'll get their money, oh but they'll probably be pissed off too. As a bonus you get stuck with a car, that is worth less due to the price drop as well, worth exactly as much less as you could have given to a customer that trusted you enough to buy a tesla.

So to make 5-10k extra on each car that is still 12.5% OVERPRICED, and to piss off customers, Tesla pulls this stunt. I'm going to reconsider buying a BMW.

- - - Updated - - -

Swapped some sentences at the end, sorry for the readability issue

 

[Matias]

"The purchase price of the Vehicle as indicated in your Vehicle Configuration attached to this Agreement is not subject to change"

Works both ways. No increase, no decrease,

I'm one of those guys, who thinks, let's stick to the written agreement.

 

[Jacina]

I agree, so I cancelled, since that saves me money and costs me nothing, can't say the same for Tesla.

People not accepting their cars? People save money (lose a little though) and Tesla loses more due to losing the car value AND having another unsold car on its hands.

Both ways Tesla ****s over itself and pisses off customers, some might call that a win win, I just see a lose lose.... but hey I don't care, I just now need to decide if I want to deal with a company that doesn't give a ..

 

[necho]

... and fade out any logic, let's stick to the bureaucracy ... it doesn't make any sense but it is written there, yeah ... I'm sure that's what made Tesla to develop such a great car ...

"The purchase price of the Vehicle as indicated in your Vehicle Configuration attached to this Agreement is not subject to change"



Works both ways. No increase, no decrease,

I'm one of those guys, who thinks, let's stick to the written agreement.

 

[youpidou]

Hello necho,

Your arguments make a lot of sense to me and I understand your irritation, especially since you have been a long time customer.

I am a new customer, waiting for delivery of an S85D in late March, with a difference of about 5% between the contractually agreed price and the new displayed price. I have not contacted Tesla to request a price adaptation. Actually, my initial order was for a non-dual motor Model S, and I was able to change the order in Oct 2014 without penalty, although my initial car had already been built (so they said). I was rather happy about that turn of events, even though it meant additional waiting time.

To me, especially in light of the resale value in the country, Tesla Motors should really revisit their price adaptation decision for existing contracts. It would be much more clever for the company and its image than rigid application of the signed terms. The currency exchange shock was more than just normal fluctuation, it calls for a specific reaction. Which seems to be exactly what ICE brands are doing in Switzerland right now. Why not Tesla Motors?

 

[frosken]

I for one am very happy they don't change the price for existing orders when they adjust their prices.

If I where to order a new P85D with identical specs it would cost me 14,000USD (110.000NOK) more than I will pay for the one I have not yet received. The Norwegian prices has gone through the roof but existing orders are not affected.

 

[necho]

Obviously the other side is the nice part for a customer, but what I do not understand is that Tesla does not have a strategy for these scenarios. Looks like Jerome or whoever is responsible for a corporate strategy is playing an amateur league here. Don't get me wrong I like the new and fresh approach Tesla take as a car dealer, but if they do international business, they should have a clear strategy, which is not obvious for me, but I might miss here something. They also hired professionals with experience to develop that car! It would have been easy to write for each signed international contract a put option in the respective currency. Add this little premium to the reservation fee and you're done with happy clients. If foreign currency goes up, you make the car cheaper and the client will get the lower prices, if the foreign currency goes down, you keep the promised price with the signed contracts while new prices goes up, and clients are even more happy ...

I for one am very happy they don't change the price for existing orders when they adjust their prices.

If I where to order a new P85D with identical specs it would cost me 14,000USD (110.000NOK) more than I will pay for the one I have not yet received. The Norwegian prices has gone through the roof but existing orders are not affected.

 

[Glitch]

I for one am very happy they don't change the price for existing orders when they adjust their prices.

If I where to order a new P85D with identical specs it would cost me 14,000USD (110.000NOK) more than I will pay for the one I have not yet received. The Norwegian prices has gone through the roof but existing orders are not affected.

Same here, the 85D that I have ordered and not yet delivered would cost me now 9000 USD (8000 Euro (Netherlands)) more than when I purchased it a few months ago. Basicly my car is worth more now than a few months back strange idea

 

[lolachampcar]

nicho,
Perhaps Tesla has a hedge in place (paid for already) which protects them against such fluctuations in revenue from confirmed orders. Learning to do this the hard way from getting burned in the past may be the change the prevents flexibility today. This is just a guess on my part but it is something a smart company would learn the hard way to do.

 

[Rheazombi]

Seems to me like a lot of people who just want a free lunch. A contract is a contract, period. The whole point of the deposit is to lock the car in at that price, precisely because markets fluctuate. Some people will benefit from this and some people won't.

Feel free to cancel your order and lose your deposit, Tesla is supply constrained anyway. There are plenty of people who are more than willing to buy one off the lot.

 

[GreenT]

Seems to me like a lot of people who just want a free lunch. A contract is a contract, period. The whole point of the deposit is to lock the car in at that price, precisely because markets fluctuate. Some people will benefit from this and some people won't.

Feel free to cancel your order and lose your deposit, Tesla is supply constrained anyway. There are plenty of people who are more than willing to buy one off the lot.

You're saying that the whole point of locking in the price is because of markets? Huh? Disagree.

 

[Jacina]

Rheazombi, on each contract for a car you can pull out of the sale by forfeiting the 2500 (in Switzerland)

The prices dropped by MORE than 2500 for each car, so for every customer it would be CHEAPER to just order another car, leaving Tesla stuck with a car that is worth less (due to the prices dropping) and an irritated customer.

Or in my case where I'm in the first 14 days and would get it ALL back if I decide not to order, I get to reorder, and they get to do the bureaucracy of reimbursing me and then starting the process over, additionally this gives an undecided customer another chance to rethink the whole thing... So in my case they get an irritated customer and gain more overhead

Both situations are ONLY lose/lose situations, in none of them does Tesla make money... so its just plain obstinate stupidity to decide to pull this.

For me, I now need to rethink doing business with a company that (in my experience to date) gives a sh... about me. (Note: the Tesla employees have been great in all this)

 

[ItsNotAboutTheMoney]

You're saying that the whole point of locking in the price is because of markets? Huh? Disagree.

I disagree too, but do agree with Rheazombi that this seems to be seeking a free lunch. Due to currency fluctuations and inflation, the price could change, so to remove uncertainty they lock in the price. Once locked they won't increase the price if the dollar strengthens, so why should they lower the price if the dollars weakens? If they lower but don't raise, they'll just have to pay more to hedge.

 

[Rheazombi]

You're saying that the whole point of locking in the price is because of markets? Huh? Disagree.

It's part of it, but the time limit within which you can cancel your order (way before they start building it) is certainly to lock in prices.

 

[NigelM]

It's part of it, but the time limit within which you can cancel your order (way before they start building it) is certainly to lock in prices.

I doubt it. The lock-in of deposit is to give Tesla some security when they start building the car.

Minor currency movements are not usually an issue either way but big swings cause crazy situations and I think the two posters from Switzerland have a valid argument that it's silly for them to be better off by cancelling and re-ordering when Tesla has the cars anyway (in the OP's case en-route to Europe).

 

[Rheazombi]

It makes absolutely no sense that someone bought the car at a certain price, the markets change and then they expect Tesla to adjust the price so that it only benefits THEM and never Tesla. I might as well have asked Tesla for a coupon for 10% off, just cuz. It's not Tesla's fault that some country's dollar went to crap. All Tesla expects is the same amount in US dollars that the buyer originally was going to pay.

 

[efusco]

I for one am very happy they don't change the price for existing orders when they adjust their prices.

If I where to order a new P85D with identical specs it would cost me 14,000USD (110.000NOK) more than I will pay for the one I have not yet received. The Norwegian prices has gone through the roof but existing orders are not affected.

Bingo! It would be insane if Tesla was adjusting pricing on every whim of the stock market or dollar/Euro/Franc price fluctuation. While frustrating for Necho, it works out in Frosken's benefit. I think the frustration should be toward the Swiss Gov't for their decision that devalued the currency.

 

[necho]

Regarding the contract I see it the way that I as a client I'm ready to buy immediately the car, but Tesla need 4 months to fulfill their part of the deal because it is not possible to build the car in 24h, thus I would say Tesla should be worried about how to secure those 4 months waiting period, since they cannot deliver as quick I can deliver the money. Since they can dictate the price it is an unfair game, because Tesla can change the prices, knowing that the contract is fixed. In the case when they tell you 2 days before a price drop, there is none, is definitely not to be considered as fair.

Another point is, the car is been built in the US, and I think Tesla produce all major components of the car in-house, maybe except Mercedes parts (in EUR, which got cheaper) and Recaro? seats (in EUR, as well). That means all production costs in those 4 month period are denominated in USD, and the exchange rate really only matters the minute the payment is being done and has to be exchange into USD.

Saying that, maybe the sales planning guys have forgot to secure the EUR fluctuations and were surprised by the weakening Euro and they cannot increase the prices on written contracts. So now they think to cover their stupidity they rip off the Swiss by not adapting their price ... hmm, I'm loving this

- - - Updated - - -

CHF was increased in value ...

As said in the beginning, I could not care less about the money, I would be a happy person if they would have left the Swiss price unchanged, and as said the car is fantastic for its price .. its the unfair treatment of their most loyal clients, and even worse, those who already had a Tesla have suffered also from the price drop.

As Jacina has already mentioned, this behavior is a lose/lose, you build up a client base over years and then you treat them as the biggest idiots?

Bingo! It would be insane if Tesla was adjusting pricing on every whim of the stock market or dollar/Euro/Franc price fluctuation. While frustrating for Necho, it works out in Frosken's benefit. I think the frustration should be toward the Swiss Gov't for their decision that devalued the currency.

 

[lolachampcar]

Just out of curiosity, why does the original poster not cancel when the car is at the Service Center ready for delivery, eat the $2500 then buy the car as it sits for the new price like anyone else that walks in the SC and sees the car?