Will increased battery capacity be a firmware upgrade?

[Troy]

A software-limited 60 kWh would have 5% lower profit margins than a regular 60 kWh. That's why they won't do it. In fact, Tesla couldn't act fast enough to discontinue the software limited 60 kWh Model S as soon as they came close to their delivery targets.

I understand that some people want to see a software limited 60 kWh Model 3 and therefore they are suggestion Tesla would do this. This is a completely unrealistic idea. Please check out the following discussion about the software limited 60 kWh Model S:

Feedback on my potential purchase?

In that topic, despite the evidence I presented, the OP thought Tesla would not discontinue the software limited 60 kWh. 8 days after that discussion, on 17th March 2017, they discontinued the 60 kWh Model S.

 

[brianman]

the base model will have a 60 kWh battery, will it simply be a firmware upgrade?

No. Assume the car will have the specs you buy or worse (if you're looking at horsepower) and buy or don't buy. Expecting or hoping for getting some bonus magic for free by Tesla taking a loss until/unless you decide to "upgrade" is just finding a way to be disappointed for nothing.

 

[SeaDoc]

Given the fact they encouraged all the 60 s/x to go 75 s/x recently, I bet they will have only one battery size initally for the 3, but software limited to either 60/75 with a power differential of 7K or so between them. This will simplify production to only one battery size, one roof, single drive initially, and probably a premium or standard interior option (nicer wheels vs not), some deluxe colors vs. standard. Just a guess...

 

[ItsNotAboutTheMoney]

Now that the inside knowledge is the base model will have a 60 kWh battery, will it simply be a firmware upgrade?

No.

As many, many people have noted the software-limited battery in the S/X60(75) was a temporary measure to boost sales of the S/X before the Model 3 hit the streets.

 

[timk225]

Assume we get a base battery of 60 and a 75 optional, and Tesla has a $130 per KW battery cost. Add Teslas' 30% margin to $130, and that is $170 per KW. 170 * 15 extra KW = $2550.

I'd definitely pay $2550 for the big battery, but if Tesla gets all silly with charging $5000 or so for it, no way.

Don't get greedy, Tesla. I know you need to make profits, but be reasonable about it.

 

[feslatan]

Almost certainly not. There will probably be two tiers of performance as well as two tiers of battery capacity and they'll probably be tied together. The old 60KwH/75KwH packs gave the same performance because they had the same number of cells to draw current from. For the Model 3 increased performance will be a major upsell feature and if history is any guide it will mean a larger battery pack.

Given Elon's desire for as few product variations as reasonable with the Model 3 this almost certainly means you get the lower-capacity, lower-performance option or the higher-capacity/higher-performance option, and that would require different battery packs (or software performance limiting or motors on low-end cars that are underpowered for the current available to them, which are both very unlikely).

 

[Troy]

What we know is that Elon has promised to the board that they will achieve 30% gross profit margin for 4 consecutive quarters. He agreed that this should be one of the milestones he has to achieve as the CEO. Here is the list: Tesla’s market cap reaches last milestone of Elon Musk’s $1 billion CEO stock option plan – will he stay CEO for long? Let me copy that here:

• Successful completion of the Model X Alpha Prototype; [completed]
• Successful completion of the Model X Beta Prototype; [completed]
• Completion of the first Model X Production Vehicle; [completed]
• Successful completion of the Model 3 Alpha Prototype; [completed]
• Successful completion of the Model 3 Beta Prototype; [completed]
• Completion of the first Model 3 Production Vehicle;
• Gross margin of 30% or more for four consecutive quarters;
• Aggregate vehicle production of 100,000 vehicles; [completed]
• Aggregate vehicle production of 200,000 vehicles; and
• Aggregate vehicle production of 300,000 vehicles.

Elon keeps his promises. When they reach these milestones, it will unlock a big chunk of shares for him. Elon is already buying more Tesla shares with his personal funds because he doesn't want his percentage to drop as they introduce more shares. Therefore you can bet that they will achieve the 30% target. They were around 28% last time I checked. They are not going to drop that a few percentage for no reason. The gross margin topic is the main topic during quarterly earnings calls. They are very focused on that. There is no chance we will see a software limited 60 kWh. The only way a software limited pack could happen is if they release a regular 75 kWh, a regular 60 kWh and then a few months later a software limited 55 kWh to fulfill the $35,000 base price promise. See my message above here.

 

[smak]

One problem with doing a software limited battery, is Tesla wants a certain amount of people who don't buy the upgrade, do it at a later date.

Problem with that is, this type of car purchaser can't really afford to just chunk out $5k in cash at a later date.

Adding $5k to their initial purchase, financed over 60-72 months, no problem.

But to just say I want to upgrade to the 75, here's $5k?

That's hard for a big portion of the Model 3 target.

 

[David99]

With the tight margins I doubt there is room to produce a larger battery without getting payed for it and hoping to get payed later.

 

[wdolson]

I strongly doubt the upgrade will be a software thing. If they only make one pack size, they have to pay the wholesale cost for the batteries that go into the small pack cars that aren't used. They are trying to make as much profit as possible on the car and the batteries are still expensive.

They are taking a calculated risk everyone will eventually upgrade to AP if they install the hardware. As the world moves to automated cars, it will became almost a necessity to upgrade to AP at some point in the future to be able to drive some places. Or at least that's probably their thinking.

But there is no outside force that would drive most if not all customers buying the smaller battery cars to upgrade, so Tesla would be installing expensive batteries that may never get used.