Waitlist Update: 2009 Price Set, Sort of

[siry]

@dogtown - there is a long lead time in the costs incurred in gearing up for production and especially building our the infrastructure required to service the cars. Our payment structure is designed to help mitigate that capital requirement. By offering a full refund until 90 days before delivery, we minimize the risk for customers, but we know there is still risk. As a potential buyer, you need to be comfortable that the company has a stable foundation and that the backing of its investors will prevent the worst scenario that you are concerned about. Our investors have put $145M into the company and Elon has personally accounted for more than a third of that. They have a very strong incentive to keep the company on strong footing. We recognize that it isn't for everyone, though, and don't expect that everybody will agree to the terms. I hope that in that case that those customers who don't want to reserve now will buy a Roadster one day in the future. You should talk to your concerns with your sales consultant or you can ping me directly at [email protected].

 

[Dogtown]

Man you sure know how to kill a thread.

 

[pgwoosley]

Balancing Risk vs. Reward

It is best if each person determines their own assessment of the level of risk, but this may help to compare the level of risk to the level of reward. The examples of risk used below are purely for illustration.

1. Take your estimate of the probability that you will get your deposit back (or get the car) as a decimal fraction. For instance, if you assess the probability that you will get $/car at 80%, use 0.8.
2. Divide the number in step one into 1. (so, 1/0.8 = 1.25)
3. Subtract 1.0 ( 1.25 -1.0 = .25)
4. Multiply the number in step 3 by the deposit. ( so, .25 * $60,000 = $15,000)
5. The break-even reward would be that the car is worth $15,000 over sticker to you with this assessment of risk.

If you assess the risk factor at 50%, the break-even premium over list would be $60,000 over list.

If one were approaching this as a business investment, the reward should be considerably higher than the break-even number. But, if one were looking at it purely as recreation (such as in Vegas) something a little less than break-even would be acceptable and expected to be less than break-even.

Of course, this is a highly simplified approach. It ignores time value of money, and ignores the possibility that you will get part, but not all of your money back. Fortunately, most people keeping the car will not have to pay any taxes on reward -- sales tax, license fees, or income tax, but most people would have trouble deducting any lost of their deposit.

Better venture capital managers often shoot for a 50% per year return on each individual investment and shoot on achieving a 30% per year on all of their VC investments.

 

[juk]

Blackmail??

Tesla are now saying 'if you don't invest another $55,000 with us at zero percent return for nine to twelve months we won't sell you your car with which you've paid a $5k deposit in good faith.'

Sounds like blackmail to me!!! Sounds at the very least it should come with some stock options, because it sounds like tesla are confusing their investors with their customers.

The timing of the whole affair stinks too. Suddenly they announce that they will be selling in Europe and then wham, they've got their hand out for another $55,000. Well what do you do if you think you can sell the cars for an extra $40,000 in Europe to clear some production space??? I know; you send an email to your customers demanding more money and hope that enough of them will get upset and leave. That's two birds with the one stone.

Then there's the whole issue about the security of one's deposit. Tesla are embroiled in two lawsuits at the moment, which i know is the american way, but it doesn't instil confidence when you're handing over another 55 large. Whilst they're solvent now, things could change very quickly with a few warranty claims.

And last, but not least. The roadster is still Vaporware.

The whole idea of the $5k deposit was to hold a place in the cue. The more risky, higher investment, early adopters get a special edition. Something has gone very very wrong with the concept of the $5k deposit. If i was one of those customers i'd be very very livid.

LIVID.

 

[BBHighway]

If i was one of those customers i'd be very very livid.

And since you are not a customer, this affects you how? Do you work for a Tesla competitor, by chance? Fisker maybe?

I drove the Roadster, and for vaporware, it drove mighty fine.

 

[juk]

I have a relative on the waiting list. I was really excited for them until now. There are no competitors, that's the problem.

 

[DDB]

And since you are not a customer, this affects you how? Do you work for a Tesla competitor, by chance? Fisker maybe?

I drove the Roadster, and for vaporware, it drove mighty fine.

I wouldn't call it vaporware either, but I do think a little criticism is constructive. Everyone here wants to see Tesla perform well, but it is getting to be out of reach for the middle class, especially with economic conditions. I suppose everyone here already knew that $100K vehicles are a bit pricey for most. Plus early adopters knew there would be kinks.

IT has been over a month of production...and for production, it's SLOW.

 

[BBHighway]

Yeah, right now Tesla has a product in high demand, and not much competition, so they get to set the prices and terms. Law of supply and demand. No point in letting it bother you though, since none of us much control over it.

Other exotics have been known to have customers jumping through hoops. I understand if you're not a long time customer of Ferrari, you're not even allowed to purchase certain models.

 

[doug]

I agree that the $5k deposit now sounds a little like it was bait and switch. Redefining the labels for the deposits (i.e. changing what the deposit meant after the fact) and asking for such a large deposit at this point is a bit tacky.

I think I already said something about this in another thread... here it is:
http://www.teslamotorsclub.com/news...delivery-info-siry-ttac-article.html#post7497

I don't think [the] waiting is necessarily bad. Delays are expected to happen. The problem as I see it is that Tesla has been holding customers' money for so long, interest free. I guess Tesla needs the cash at this point, given that they are now soliciting $60K from 2009 buyers and I guess will soon be taking money from European customers. This is fine as long as customers know what their getting in to. However, it's a little inconsistent in that at the beginning (back in 2006??), Tesla said they were reluctant to take customer money, but enthusiastic customers essentially forced them to.

Tesla should offer some explanation as to why they want such a large deposit so early. The case may be that they really need the capital. Or perhaps they've done some research or have some experience that says you have to charge a deposit this large to separate out those who truely have intent to buy. Or maybe they're doing it simply because they can. Who knows. At any rate, it would be nice if they were more straight forward about it.

But the car is by no means vaporware. I fully believe they will deliver... eventually. Just bad form to be asking for that much now especially when not a single normal customer car has yet to be delivered.

 

[Kardax]

I think what "juk" is saying is at least partly true. Demanding that deposit-holders pay up will definitely thin the herd, so to speak. It'll be a reality check for a lot of people. They'll have to weigh all the things going for & against Tesla and decide if they want to remain in line or return to the sidelines for now.

This action is fine, in my opinion. The waiting list is far too long. When/if Tesla gets production rates up to a reasonable level, it won't matter much whether you're #800 or #2000...

-Ryan

 

[vfx]

Demanding that deposit-holders pay up will definitely thin the herd,

There are 600 in the 2008 order cue (Ok, 599)

I have read that there are 900 (and once a 1000 ) cars are on order.

Do you think that all 3 to 400 depositers will make the jump to $60K without some Roadsters buzzing around giving the car and company some (street) credibility? That's the problem here.

It's not the money. It's the timing.

 

[pgwoosley]

If the objective were solely to weed out the orders which are not serious, the company could place the deposits into a trust account so that there would be no insolvency risk. They also could allow customers to supply a bank letter of credit to verify the seriousness of orders.

 

[Brent]

This action is fine, in my opinion. The waiting list is far too long. When/if Tesla gets production rates up to a reasonable level, it won't matter much whether you're #800 or #2000...
-Ryan

This is a good point. I can understand why the initial 600 people put up deposits -- they got to be part of an exclusive club of early adopters. For the rest of us, however ... well, I think I'd rather wait until I can walk into a store with cash and walk out with a car, or at least have a delivery time measured in months rather than years.

 

[Cobos]

As someone mentioned further up the thread for the highest end ferraris you can't even order them, you get an offer to order one. So even though I see why Tesla at this point needs the cash to maintain a positive cash flow I can't see why this is such a problem. You either really want this car and then you take the risk in upping to 60 000 (and the loss of interest) or you wait until they are ready and buy it for 200 000 on ebay. Or wait for the 2009 model which should have better seats, transmission and shorter delivery time. In Norway I get the feeling normal delivery time for a normal sedan or wagon is easily in the 2-3 month range, and that's for Volvos and Fords. This is a 100 000 sportscar so there's no minimum wage earnier possibly getting screwed out of their savings...

I do understand having to pay 60 grand right away to keep your spot in the line hurts but I fail to see how this is a big problem.

Cobos

PS: Since I'm lieing in bed due to a recent back injury I might be a bit more grumpy than usual...

 

[SByer]

I don' think you're being grumpy. I think, being what it is, is that the Roadster is attracting a more than "usual" number of those who haven't previously shopped for super cars before. Some adjustment in expectations may be necessary.

I looked into getting a Ferrari. You end up essentially having to buy the car without even being able to test drive it, and still wait at least a year for delivery. Even a new 911 usually comes with a 6 month wait. I got mine used partly for that reason.

I'd bet against ever being able to walk in, plop cash down, and driving out in a Roadster.

 

[BBHighway]

To me, a better question is "Will Tesla go to easier terms for Whitestar". That car is designed to appeal to a completely different buyer.

I suspect that they will. The Roadster will always be an exotic, and have prices and terms that are commensurate. The Whitestar (can't wait until they have a real name for it), should be on a waiting list at first, but fairly quickly go to a more normal "walk in to the dealer and make a purchase" type of transaction.

With the showroom opening coming up the first week in May, I hope they take that occasion to show what the Whitestar looks like, and give it a real name.

 

[juk]

Cobos, I do understand how you recent back injury hurts but I fail to see how this is a big problem. All a matter of perspective y'see.

Tesla need to distinguish it's investors from it's customers. The $5k deposit was all it was supposed to be and now they have gone back on that. If Tesla needs capital then it should be asking of it's investors or seeking new investors.

 

[Cobos]

Well that's where we disagree, since the buyers in the near future have to produce almost 100 000 anyway, I can't see the problem with demanding 60 000 now. After all for most of the people in line that is actually good news. Since for every customer that drops out of line there are about a few hundred customers behind him in the line that will be happy. That way Tesla gets money, the majority of customers get happy as they move forward in line. No need to dilute the investors investments by pulling in more money.

I can see why your family doesn't like it, but since the Roadster is such a hot item right now Tesla can do it. As you say it's supply and demand, and the supply part got issues

Cobos

 

[Dogtown]

Tesla need to distinguish it's investors from it's customers. The $5k deposit was all it was supposed to be and now they have gone back on that. If Tesla needs capital then it should be asking of it's investors or seeking new investors.

This is my point exactly. The whole point of investing is the risk/reward. For a consumer of a product there is no upside potential. You just get what you paid for. In fact there is a negative reward in that you lose potential earning from that money. Sounds a lot like a tax refund. Interest free loan, and at the end I get back what was mine in the first place.

There may very well be enough people out there that are willing to do this. However, this is not the same as asking investor to pony up the cash for a car knowing that it will add clout to the company and benefit their investment. I get no such benefit.

It may just be that I am not the target market for the car. I do not have the cash just laying around. On the other hand I do make time to participate here and many other places. It just seems like an odd move. I do not have any conspiracy theories about it. I just don’t think it was very well thought out. The 2009 wait list models are not the same as the founder’s series or even the original 2008 models.

There are some real people out here who would like to support the cause as best we can. We can not support with a pile of cash. Of course we are all here on this and many other forums. We know the press comes here to review what is going on with the company. It seems pretty obvious which would be deemed more credible in the media… a billionaire who only drives the car 500 miles in 2 months or someone that has taken out a loan for his daily commuter to help save the environment. We are all investing in our own way. Tesla needs to make sure they do not confuse those areas. Maybe this forum does not have as much value to them as I think it would.