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Model S price increase looming?

From "Top Speed"
http://www.topspeed.com/cars/tesla/index423.html

Here is the article text in case the link does not work.....

Currently, prices for the Tesla Model S range from $57,400 to $77,400 — $49,900 to $69,900, if you add the $7,500 federal tax credit. However, we are all well aware of the fact that the Model S is being sold at, or even possibly well below, the cost to build it. This means that it is only a matter of time before a price hike is in order.

Tesla has now lifted the veil of silence on this topic and announced that there will be a price increase in the near future. Surprise! Well, not really, since the rumors have been floating around about a price increase for a while. There is no information on just how much of an increase we are looking at, but we would guess that it will be significant. It may even push the upper end of the Model S toward the base price of the Fisker Karma. One bit of information that Tesla let us in on is that some features that are now standard equipment will later become option packages, which means that we will not only see a price hike, but also a decrease in standard features.

This price increase will not apply to the existing reservations. Those customers who have placed a reservation will receive an email from Tesla where they will be advice to finish their configuration and order within a "fair, predefined time frame."

For those of you who do not remember, the Model S has a variety of battery and motor choices. Depending on the version, the Model S can sprint from 0 to 60 mph in in 4.5 seconds and can hit a top speed of 126 mph.

Full details on the price increase will be announced in the next two to three weeks.

See new blog post from George B today for details including info on extended warranty and service. Very reasonable IMHO.

Ah, there it hides! I was looking at the Options & Pricing page and could not see a difference... Will sure be updated soon, but not yet. Here's the link to the blog post:
http://www.teslamotors.com/blog/2013-model-s-price-increase

Very well written. Very open. Truly fair as they give until Dec 31st to get your reservation in before the new prices apply.

And good move for Europe with the 1700E deduction and also responded to those who wanted to have the after 4 years maintenance and warranty. They covered all angles IMO.

We plan to announce European pricing very soon, which will include this recent price increase. We have many reservation holders around the world who have faithfully supported us throughout the years and we want to make sure they are recognized for their support. Therefore, we will automatically deduct €1,700 (or the local equivalent in other countries) from the base price for everyone who has or makes a reservation by end of day on December 31, 2012…as long as they finalize their order within a reasonable, predefined timeframe after being invited to configure their Model S.
http://www.teslamotors.com/blog/2013-model-s-price-increase

Wow! They really learned their lesson well from the riots that ensued the original pricing announcement a year ago. I must say I'm positively impressed -- with the form, the timing, and the message of their announcements!

Leaves a lot of open questions:

  • "This price increase will not apply to anyone who has or makes a reservation by end of day on December 31, 2012…as long as they finalize their order within a reasonable, predefined timeframe after being invited to configure their Model S" <--- what timeframe?
  • "An additional Four Year, 50,000 mile Extended Warranty will now be available for $2,500." <-- do we have to buy it in advance? Can we wait until the end of the first four years to buy it? Is it transferrable?
  • "You will now be able to purchase an additional Four Years and 50,000 miles of Prepaid Maintenance for an additional $1,900, or $2,400 with unlimited Tesla Ranger visits. " <-- do we have to buy it in advance? Can we wait until the end of the first four years to buy it? Is it transferrable?
  • "We have received many requests for a Battery Replacement Option. We are happy to now offer this option for all three battery variants. This option will provide you a new battery anytime after the end of the eighth year at a fixed price." <-- do we have to buy it in advance? Can we wait until the end of eight years to buy it? Is it transferrable?

Interesting that it says "This option will provide you a new battery anytime after the end of the eighth year at a fixed price".

I guess they anticipated someone might buy a 40kwh and try to immediately purchase an 85kwh battery to install for only $12k (vs. $20k price difference, though they would miss out on supercharging).

Interesting that the batteries cost only $2k more per level while the cars cost $10k more - suggests there is a lot of margin in the higher batteries (as many have suspected).

Interesting that the batteries cost only $2k more per level while the cars cost $10k more - suggests there is a lot of margin in the higher batteries (as many have suspected). (markapeterman)

It may also suggest that there is hardly any margin in the lower batteries, as I have suspected all along... :-)

I guess they anticipated someone might buy a 40kwh and try to immediately purchase an 85kwh battery to install for only $12k (vs. $20k price difference, though they would miss out on supercharging). (markapeterman)

I guess they would sell the batteries at a loss for that price today, and they are banking on batteries becoming significantly cheaper over the course of the next eight years. They offer to take the downside risk from you, in exchange for the upside risk (that batteries purchased in 8 years will be even cheaper than that). Fair deal IMO and up to everybody's own to take it or not.

I for one will probably not take this option and rather wait until Tesla directly sells batteries for less than that, whether that's in 6 or in 12 years' time.

That's not as bad as I was expecting. I'm not happy that the price has gone up, but it could easily have been a lot worse. What say the rest of yas?

@Vawlkus

I'm good with it.

I'm a little irritated that the Red is $1,500 rather than $750 (yes, I know it's multi-coat) as that's why I had deferred my reservation. Guess it's time to add red to my configuration and hit the finalize button. The timing is actually quite good for me as March is bonus time. P1,491.

For my part It is a very reasonable and acceptable price increase.

GB's summary is excellent. The issue still open I'm most curious about is if that's the full range of changes to the options and packages.

I think this is all good information, and very fair. There is, however, one additional ambiguity. GB states:

"Maintenance for an additional $1,900, or $2,400 with unlimited Tesla Ranger visits. With this additional program you can now cover everything on your Model S, except tires, for eight years and up to 100,000 miles for $3,800, or $4,800 with unlimited Tesla Ranger visits."

I suspect this isn't precisely true. In order to cover everything, you will also need to purchase the extended warranty for $2,500. The maintenance charge of $1,900 or $2,400 will be in addition to the extended warranty.

I may be wrong, but I'll bet I'm not.

As far as the reasonable timeframe, from the email I received this morning:

"If you configure your car and finalize your order within four weeks after receiving your invitation, you will not be subject to the price increase."

@DouglasR | NOVEMBER 29, 2012: In order to cover everything, you will also need to purchase the extended warranty for $2,500. The maintenance charge of $1,900 or $2,400 will be in addition to the extended warranty.

Yes, that is how I read this also. Currently Tesla requires that to keep in initial warranty in force, you need to do the yearly maintenance. I'm sure to keep the extended warranty in force, you also need to do the yearly maintenance. Ideally, they should make the extended warranty available at any time during the first 4 years (assuming you have been paying for the yearly maintenance) rather than forcing you to buy it ahead of time.

Edit: keep in the initial warranty in force

There is a new(ish) post in the Bulletin Board explaining the timing.

http://www.teslamotors.com/forum/forums/how-will-new-model-s-pricing-rol...

I agree with most of you that the price increase and extended warranties seems fair.

Only thing that irks me is the battery replacement cost. As Volker mentioned earlier, the price difference of 20K now between the batteries vs. 4K difference 8 years from now bothers me. I'm sure it takes into account the change in technology, etc, but t think that I'm gonna pay 20K extra now when I know the price difference will be lot smaller makes me think twice about going through with purchasing the vehicle now.

your opinions would be very appreciated it.

I'm P12,893 and this would be a big purchase for me--most expensive car so far has been Acura MDX for my wife (I drive a camry hybrid). I guess I'ms a middle-middle class, so 20K is a good chunk of change for me. I also think that highest capacity is the way to go since I do drive >150-200 miles enough times in a day.

thanks everyone.

Jchanggy, batteries are going to get cheaper, that is a reality you have to decide if you can stomach. My computer cost me $2,500 a few years ago, the same specs now can be had for ~$600, all new technology alls in price, that is the surcharge for being an early adopter. You need to decide if all the benefits of the car justify its cost. For me its a yes.

While price increases must happen, doesn't anyone find it sort of "sneaky" that Tesla is saying "first increase in 3 years"? No one bought the car 3 years ago! Heck, most people didn't even buy it 3 months ago. When they compare a price increase to other companies, you could buy those cars 3 years ago.

When they set this price 3 years ago, it was for today. Either they estimated wrong, or it was a bait and switch sort of plan.

Maybe I'm just a bit irritated because my delivery date keeps getting pushed back. I've had my reservation for 2.5 years and I sooooo tired of waiting.

P2234

@trydesky, that is an interesting point. And I agree with you.

~ Prash.

According to the bulletin board, "As long as you finalize your order within that 3 week timeframe, the price increase will not apply to you."

jchangyy;
There are other differences between 40 and 85. The Supercharger wiring is in every 85, and in no 40, e.g.

No, it's not sneaky. They announced the price 3 1/2 years ago. If it seemed like a good price then, that was in relation to prices as they were then. Nobody thought, "Great! The car will cost $50k in 2012, when the dollar will be worth 12% less!"

As for the difference in battery cost, a 2004 Lincoln cost twice as much as a 2004 Ford; today, there is not such a big difference. The cost difference between any two high tech items will decrease over time.

@Brian,

That's my concern as well. If I purchase a 40 or 60 w no supercharger, there is no way to upgrade to larger battery with supercharge capability in the future, even if they have 120 available in 8 years--just speculating.

I guess it's too far in the future to think about at this point.

@DouglasR, what trydesky is mentioning is that the comparison, not the actual increase, is sneaky. Of course, Tesla has the right to increase prices, and rightly so. What is not completely true is the "comparison" to a non-existent car.

Tesla could have said, "Of well, our estimates are incorrect and hence, we are increasing the price." (or some version of it) without bringing up any comparison.

I think we are nitpicking here. I do feel that the increase is justified (and not necessarily because I will not be influenced by it).

~ Prash.

I'm very happy about the modest price increase and the €1700 credit for us europeans. Also the service & warranty charges are very reasonable.

However I'm not too happy about the huge possibility that I now have to fork over $3500 for the grey 21" wheels :(

prash.saka, trydesky, DouglasR,

I agree with DouglasR on this one. It's true that you could not buy the car in 2009, however they have announced the price then, and it was received by the public in relation to the cars and prices that existed at the time. Then they made major efforts (and used some minor "tweaks" like turning a few features into paid options that were widely expected to come standard) to meet their announced price point -- three years later! It would have been fair (but probably bad publicity) to raise the target price point year after year while they were still developing. But they didn't. Have you ever seen a project of this scale that came to market at the very price that was announced three years earlier? I cannot think of any.

Now they made it into the business, and they have reservations queued for six months in advance. It's about time that they adjust their prices to today's reality.

Besides, Tesla couldn't predict the economy going downhill in the interim. Realistically, then should have been adjusting the price to match as they went along, but they KNEW that would cause issues with people that already had reservations if the price started fluctuating. If for no other reason, the price HAD to remain constant for people to reserve cars years in advance. Now that they can see the light at the end of the reservation tunnel, they can start taking the economy into account.


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