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Will the S model be priced too high?

Discussion in 'Model 3' started by ldgrmnmc, Aug 19, 2016.

  1. ldgrmnmc

    ldgrmnmc Member

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    I’ve had several friends ask me, as a Tesla owner, what the difference will be between my S and the MUCH cheaper 3 (basically $90K+ versus sub$40K). And I’m having a bit of difficulty answering that. The 3 should be smaller, but many people have posted that it isn’t that much smaller (and I’m not claiming that pricing between BMW 2, 4, 5 and 7 series necessarily makes total sense). The 3 may also be cheaper steel instead of aluminum. And the battery may be somewhat smaller. But beyond that, the technology is still all there. When people think of what really makes a Tesla (the tech, autopilot, big screen with app, etc), it’s all in the 3 as well as the S or X. So, does the pricing make sense? When the Model 3 launches late next year, will people still be willing to pay for a slightly larger S for more than twice the price?
     
  2. kort677

    kort677 Active Member

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    since it is still a concept car, who could give a reliable answer?
     
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  3. nwdiver

    nwdiver Active Member

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    People buy the 7 series (even though the pricing doesn't make total sense) pretty sure people will still buy the 'S' ;)
     
  4. Saghost

    Saghost Active Member

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    From what we've seen so far, I would expect that a large number of folks who bought the S would buy a 3 instead if they were buying two years from now.

    As others have said, there will still be a market for the S - folks who want the faster car or the bigger car and are prepared to pay for the privilege.

    The rest of us who just want an awesome electric car will likely buy a 3 instead. As long as Tesla's margin is adequate on the 3, I'm not sure that's a bad result.
     
  5. N5329K

    N5329K Member

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    The S (IMO) is more beautiful, has more useful cabin space and is more available (as in, now). It will likely remain the tech leader (or beta tester, or both) in the Tesla stable. The 3 looks great, not stunning, has less useful interior space and isn't yet available. The 3 fits in my garage, the S doesn't really, the 3 fits in my budget, the S doesn't really.
    Robin
     
  6. WileyTheMan

    WileyTheMan Member

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    It seems to be just perceived value. Driving around a series 7 BMW is more prestigious than a series 3. Certainly there are some differences in creature comforts between the two, and the overall size, but nothing earth-shattering that technically justifies the extra 50-100k.

    I can only imagine Tesla will just try to follow that model, and reposition the Model S so its more of a status symbol. But I think in order for Tesla to pull that off, they will have to retire the Model S and replace it with something else. The Model S is (oddly enough) too mainstream to be considered a status symbol.
     
  7. amb3rgris

    amb3rgris Member

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    As on other threads, it seems like the "3 will kill S demand" argument generates a lot of input.

    However, to your first question, which I interpret as "how is Tesla able to offer the 3 for so much less than the S?", I think no one really knows except for the engineers/accountants at Tesla.
    Certainly size (less materials, smaller battery), steel vs aluminum, etc are valid, but I would guess that the biggest reasons are 1. much lower price for battery packs, 2. scale/volume, i.e. spreading fixed costs over more units, and 3. experience and infrastructure gained from previous efforts.

    It would be interesting to see how Tesla could/would price a new product similar to the Model S with a working Gigafactory and current infrastructure.
     
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  8. SpiceWare

    SpiceWare Member

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    Why are you comparing a Model S with $24K+ worth of options/upgrades against a baseline Model 3? Seems to me the comparison should be $66K vs $37.5K, which is less than twice the price.
     
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  9. dgpcolorado

    dgpcolorado Member

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    #9 dgpcolorado, Aug 19, 2016
    Last edited: Aug 19, 2016
    Some things I like about the S that the 3 doesn't have are the liftback (much more storage space with easy access) and the lack of a glass roof. The big advantage of the 3 is the base price.

    Haven't decided which way to go but if the 3 offers a trailer hitch option (for a hitch mount bike rack) that might be enough to tip me toward trading in my S for a 3. Otherwise I might consider a newer CPO S60D (with the 75 battery) instead, which would be a lot faster Supercharging than my old style S60. (Unless Tesla upgrades all S60s to 75s for the CPO program, a distinct possibility.)

    Given Tesla's quality issues and very expensive repair costs, I am reluctant to own one without a warranty (I'm about to take my car 378 miles, each way, to Salt Lake City for a door handle repair, which also requires a motel bill, so even warranty service isn't "free"). Perhaps the quality issues will improve someday.
     
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  10. JeffK

    JeffK Active Member

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    If the model S starts using the new battery cells then the price could come way down or they might use that savings to add additional features.
     
  11. ldgrmnmc

    ldgrmnmc Member

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    You have a point there.....if you try to make the battery packs in the 3 and the S the same size for comparison.......I just bought a S 70D, and it was nearly $90K with the several options I got on it.....and if I have opted for the "75" upgrade, let alone the 90 size battery, it would have been even higher.
     
  12. shokunin

    shokunin P85 & S40

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    Have you read Elon's Tesla Master Plan? Basically, if they built the model 3 first, or second after the roadster, people would have ripped it on many levels for $100K car.

    They needed to build a luxury sized car big enough to pack in a large skateboard, with plenty of room and performance to justify the pricing and make a profit. This is all funding the development of the gigafactory and the model 3.
     
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  13. privater

    privater 2016 Model S60 owner

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    If we consider the current Model S 60 kWh with msrp $66000 and Model 3 55 kWh with msrp $35000
    Some options is standard on all Model S because of premium included into price:
    Supercharger access fee ($2500)
    4G LTE and internet streaming subscription for free ( usually cost $200 per year from Mercedes C-class ) if you add a normally 6 years contract, it's $1200
    GPS and Navigation map update ( usually cost $1500, and updates cost $300-500) so 6 years might cost $2500
    Auto Retracting door handles/side mirrors vs manual handles and mirrors ($1000)
    17" touchscreen with 12'' digital instrument cluster vs 15" touchscreen ($2000)

    Aluminum chassis vs Steel Chassis (~$10000)

    Total: $19200


    So to sum up, even if you build a Model 3 using all Model S tech and standard options, it will result in

    $35000 + $19200 = $54200

    Now, adds up:
    Model S is bigger in every dimension, more space and trunk/frunk size.
    Heavier with larger battery park
    and More powerful motors (0-60 Mph 5.8s vs 6s)

    Does those worth another extra $10000?


    Besides, you can get a Model S/X right now with $7500 federal tax credit and you have to wait Model 3 in another year or two and the possibility of losing $7500 tax benefits.

    That's my rationale of the pricing behind Model S vs Model 3
     
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  14. S'toon

    S'toon Knows where his towel is

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    Are you stating that Tesla will charge subscriptions for the 3 for things that are on the S? I think that's a shaky assumption.

    Musk states that the average 3 they think will cost $42,000.

    As for the OP's question, Musk has stated that the S/X will always have the cutting edge new technology of the various models. So no matter what the 3 has, the S/X will be better, and therefore have a premium cost.
     
  15. privater

    privater 2016 Model S60 owner

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    I just think it backwards:

    1. Supercharging is not free since the start of Model s 40/60 2012, you can still buy the access for $2500.
    2. Tesla's navigation system is licensed from Navigon by Garmin, it's not free on earlier model S, it's within an optional Tech package for $4250 at early time.
    3. 3G /4G connectivity are from AT&T, Tesla announced to give them to Model S/X owner free for 4 years, although they didn't charge anyone after 4 years (for now), still, AT&T charges Tesla for it's service.

    I think Tesla swallow those cost in the price premium of Model S/X to streamline the service.
    However it's highly unlikely Tesla will continue to cover those cost in mass product Model 3, it's unsustainable, so I won't say it's a shaky assumption.
    A baseline Model 3 can live without those convience features with substitutes: Charging at home, navigate with smartphone and tether with smartphone like every $35000 car in the market.
     
  16. Tiberius

    Tiberius Member

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    Ugh, go ask in the model S section.
     
  17. S'toon

    S'toon Knows where his towel is

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    Oh, I'm not disputing the supercharging cost, though I don't think it'll be the $2500, or even the original $2000.

    I think you're shakier on the navigation as that's a central function of the Tesla.

    I'm doubtful the 4G will be charged at present.
     
  18. proven

    proven Member

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    Don't forget that you are comparing the current Model S with a future Model 3 that we don't know everything about. At some point earlier this year I remember Elon saying that the S/X would still be the leader in tech... so I'm sure the newest features will be available on the S before the 3. The model 3 may launch with most of the stuff we now see in the S, but who knows what may be in the S in 18 months?
     
  19. RobStark

    RobStark Active Member

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    On top of the points already made comparing an 8/19/2016 Model S to a "late 2017" Model 3 makes little sense.

    Model S will have more standard and available options by then. It is constantly being upgraded.

    Once the new 20-70 cells are being mass produced at the GF the Model X and Model S will get them too. Upgrading the packs.

    "Perceived value" is nonsense.

    There is always a price premium for the TOL vehicle on top of the upcharge for the hardware upgrades, in large part, because there is smaller economies of scale.

    I doubt overall sales for Model S will go down after Model 3 introduction as Tesla expands into new markets like Korea and Russia and markets like the UK and China start to take off.

    But Model S sales may very well go down in its most mature markets i.e. California and Norway.

    BTW Globally BMW sells about 500k 3 Series per year and about 30k 7 Series per year. If you don't see the value in the TOL vehicle or don't have the funds get the cheaper one.
     
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  20. ecarfan

    ecarfan Well-Known Member

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    We know that the base Model 3 will be $35K and the base Model S is currently $66K (60kWh battery). I am unclear on why you say "$90K".

    At this point we do not know what features the S will have, either standard or optional, that the 3 will not have, either standard or optional, or what standard S features will be optional on the 3, or what features the S will have optional that the 3 will not have optional.

    Obviously, we know very little about the 3 beyond what it looks like, that it will have an EPA range of at least 215 miles, it will be "capable" of Supercharging, 0-60 in less than 6 seconds, seats 5 adults, will have all the AP hardware but the AP software will be optional, has a 15" center display, it's about a foot shorter and a few inches narrower than the S, and a few other things. That's all we really know for sure.

    So it sounds like your question is why will people pay so much more for an S when they can buy a 3?

    As @proven points out just above, Elon did say something to the effect that this S/X would always be better than the 3 in some unspecified ways. I do think that Tesla will have a balancing act to pull off to make sure the S is compelling enough so some people will prefer it over the 3 without hobbling the 3 in ways that make it much less appealing.

    But all car manufacturers that have a high end model line and a mid-priced model line deal with that balancing act. And they manage it. Plus, the S is significantly bigger than the 3, has significantly more cargo space, a bigger display, super cool door handles :cool: and likely optional features that the 3 will not have available. We don't know yet what those will be for sure, but clearly Tesla is giving considerable thought to how the two models compare and are priced.
     
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