Forums

Join The Community
RegisterLogin

"Included" Supercharger Costs $2K Extra

Whoops! Turns out the “included” 60kWh pack supercharger costs $2K “extra”.

Ouch. Something of a train wreck, this is.

Irate customers? Oh yeah. And for good cause.

George’s explanation? Well, one might try to follow his backstory and understand the temporary blindness to how this would look. Just barely.

So why such loud boos over a 1 or 2K price adjustment? Is that all this is about? Nope.

The elephant in the room is something much bigger, and much deeper.

It is that this company represents something much more to those who follow and support it with their wallets, their words. and their goodwill.

To them, this company represents a break with the past. Technologically, ecologically, and yes, morally.

The world we’ve been living in is doing wrong on so many levels, and this company and its spirit carry the promise of turning some of that around.

These guys are our champions to help stop wrecking the Earth, stop eviscerating our economy, and stop cheating the common man.

But this episode reminds people of what they are so desperately trying to leave behind. It threatens to shatter the emotional equity we’ve invested in our champion. With that mantle comes a responsibility, a fidelity to principle. Ergo the unusually strong reaction.

I do believe this was an honest mistake. Stuff happens. There’s a lot of moving parts, all changing in real time and executives are actually, you know, human. But boy, was this seriously tone-deaf. Jeez, you don’t change the price after the deal is signed! What were ya think'n?

But that’s over, which brings us to now. Now ... it could go down in the history books as a marketing blunder that is truly epic - right up there with turning gold into lead. You so had them with the SC announcement, and then this? Talk about a major buzz-kill.

Or … instead it may become yet another compelling proof that faith in this company is totally merited.

And that, depends on what Elon and George do now.

So guys, here’s a suggestion for how to turn it around:

Acknowledge it. Fix it. Build on it. Like this -

1. Apologize for mishandling it.

2. If you had already signed a contract, it’s free.

3. If you finalize by December, it’s half price.

4. Website changes now to say it’s a $2,000 option.

5. New reservations can choose the option at the new published price.

This will cost something in the short term, but do the math, it’s not so bad. It would have been cheaper to do perfectly from the start, but now it is what it is. And for heaven’s sake, stop listing it as “included” when you now know you’ve got to charge more. Fill that box with an honest 2K number. This reaffirms that your ethics are still what we ascribe to you.

With this construct, people who trusted you early are rewarded with a price advantage. That turns grousing into gratitude. And you’ll be able to say with conviction that no one who committed money to you did so under a misimpression. Collectively, I think these actions are sufficient to turn things around and quell the discontent. And yet it protects the steady-state margins you need to succeed.

You can’t let a single screw-up dictate your margins, trash your price discipline, or define the strategy for positioning your models. You have to run a solid business. But neither can you cede your most precious asset.

How you administer price changes matters a lot. It telegraphs who you are: Either the new champions for our time … or just a retread of brain-dead cynicism.

Your reputation is irreplaceable. You got it with brilliance and earnest hard work, and it’s in the spotlight now because we're at a unique and fortuitous moment in history. Technologically - and ethically, you happen to be exactly what we need, right when we realize we need it. This moment won’t happen again. How much is that worth?

Right now, you own something so precious that few will ever attain it. You’re the heroes whom we all love. You wear the champion’s crown, and it’s yours to lose. But how you handle trouble defines whether you keep it.

A smart friend once said “Don’t trouble trouble, unless trouble troubles you”. Well, a hiccup has unintentionally invited trouble to your door, so it’s your time to stand up and define yourselves. You can shine if you choose.

This is not a money-thing. It’s a trust-thing.

Personally, I believe in you. I think you’re equal to this test.

And w Mush chairman at SolarCity and major shareholder it's really just moving money from one pocket to other with SolarCity doing all SC installations for him.

So this SEC filing where Musk is buying $1M of shares or 36,000 shares in new round of equity is a joke.

@h8tow8 | SEPTEMBER 30, 2012: So this SEC filing where Musk is buying $1M of shares or 36,000 shares in new round of equity is a joke.

Elon Musk could have bought $1M of shares at any time - before or after the secondary offering. I think this $1M purchase is just to show his confidence in the company. If he were to sell $1M worth of shares, everyone would be up in arms, suggesting that he has no confidence in the company.

@AlexK buying at least $10M would maybe get me to think that not $1M. $1M equals only 0.4% of the new equity offering nothing to get excited about.

The SEC filing said Elon was required to hold a certain number of shares. This is a bit gobbledy-gook to me, but it could have something to do with why he purchased more shares.

"In addition, our DOE Loan Facility requires Mr. Musk and certain of his affiliates, until one year after we complete the project relating to the Model S Facility, to own at least 65% of the Tesla capital stock held by them as of the date of the DOE Loan Facility, and a failure to comply would be an event of default that could result in an acceleration of all obligations under the DOE Loan Facility documents and the exercise of other remedies by the DOE."

I could not agree more with Mark K's initial comment above, nor the previous comment he made in the associated thread concerning the huge benefit of moving up from the 40 to 60 battery pack if the Supercharger were indeed included at no additional charge. If this remained as it was a few days ago, what Tesla may have seen would be a substantial upgrade from the 40 to 60 KW h battery pack by customers who would have originally opted for the 40. Resulting in much fewer 40's having to be constructed, IF ANY. Plus the $10,000 upgrade dollars otherwise not realized (I am sure there is additional margin here; maybe more than $2,000). The 40 kw pack is the red haired stepchild of the entire family (it is not even included in the X as an option). The opportunity cost of not having to purchase cells for the 40 more than likely would result in a net positive benefit to Tesla, while at the same time increasing the volumes and therefore discounts for the newer chemistry. The deal last week WAS THE incentive to get $10,000 in upgrades without even trying. It is not too late to realize this, don't blow it...

Until we see the lifetime Supercharging fine print, I will be skeptical that it really is lifetime. 10 years from now there will be different technology and different software which will result in different "access" fees. In my opinion "lifetime" really means <10 years.

@jefftex - That's a novel way to look at it. Maybe many would in fact upgrade and the marginal revenues would be significant.

Still, what constrains TM is that SC-ready does cost money for the car hardware, and their financial model must allow for that and the unlimited charging benefit as well, with no further downstream revenue.

To be a business that keeps growing, they must design for sufficient margin on each product in the line in order to justify building it.

People would be much more focused on the upside right now if the communications had been handled more carefully.

Mark -- People would be much more focused on the upside right now if the communications had been handled more carefully.

No doubt about that. Communication is not Tesla's strong point.


Jhall118 | September 30, 2012 new
.
You could buy the hardware and wait to pay for the software. I don't understand how there could be any other solution. Just give the hardware for free? Have you looked at their financial situation?

Here is my reading of the situation. IT IS NOT JUST 'SOFTWARE'. After the heavy internal SC cables are installed, the cables must be tuned to the car's specific micrometric geometry to avoid 100A disaster. (Arcing, etc.) Then the software is tweaked to match the adjustments, with the cables exposed verify the results. Then the rest of the car is finished. It all must be done up front, while the car is being built, in a single operation.

It is not an add-on.

The software is not a standard package, it's a delicate tuning job.

@brian

And with all the excuses you came up for tesla, apparently software and tuning is not an issue since they just made it free and included again.
They've screwed up, they've fixed it. This is how it should be.
I wish they didn't make that mistake in the first place but what's done is done.

sergiyz;
You should really learn to read and think. That applies to those who had confirmed that option for the 60s by the end of last week. New confirmations are priced at $2K. Pretty much exactly as I described.

Brian, I don't think sergiyz is buying your delicate DC tuning example. We're not talking high frequency RF here. The cars dimensions are accurate down to the milimeter. And the DC cable lengths and specifications are accurate to parts in one thousand. Insulation is insulation.

Tesla stated that the hardware and software was already installed in the 60's exactly the same as the 85's. It's not a question about IF the system can be retrofitted. It's already hard cabled in.

Regarding calibration, do you think there is someone with cable cutters and a file taking a millimeter off the cables to get the resistance correct? Or the car contains some giant 100 Amp reostat that needs to be turned with a wrench? Not.

I've installed three 40 Amp direct current (DC) resistive heating sytems in homes. Two for myself and one for a friend. In these cases the resistive mesh varries in lenght by 50 or more feet. Gross adjustments are made by selecting the correct one of 5 taps on the DC transformers. And that can be read off a table, but we are talking about many feet, not millimeters. Ballancing is done with a small hardware board, just like one that fits into a computer. And the adjustment is made with a tiny screwdriver like you'd use to fix eyeglasses. And it takes 5 mins to balance. And you can redo it at anytime if need be. Software takes care of the rest.

So, no. High amperage DC is NOT that sensitive to cable length, geometry, ect, ect, ect and does not require complicated tuning.

As sergiyz notes, they realized that changing terms on a signed contract was not a good business decision. And they have corrected it.

I feel very good about the way they resolved this on Sunday, and like most of us will more than make up in free evangalism.

And yes, if you walked into the dealer today, you'd pay 2K for the supercharger option. And that's completly fair. But that's not the issue. The issue is about the company treats people with existing contract holders, and allways has been.

I think we'll all be a bit less cranky when we get our cars. I know I will. It's put me in a bit of a bad mood, but it's not because I'm unhappy. It's just that I don't do waiting well, and I really think Tesla has a spectacular product. Waiting is hard. Lecturing someone about needing to learn how to think perhaps wasn't the best choice of words given all that has transpired in the last three days. Just sayin...

The point is that even if the car does require some additional tweaking during production in order to deliver functional SC hardware, those purchasers who had contracted for the hardware were entitled to have it delivered in working order, the same as the 85kwh purchasers. I'm glad TM figured this out and promptly fixed the problem.

Why build the supercharger network if not everyone can use it? Big outlay for just the highest end cars! How many 85 kw cars will be sold?

Why build the supercharger network if not everyone can use it? Big outlay for just the highest end cars! How many 85 kw cars will be sold?

AnnK the SC network is so Tesla can say the car is truly highway capable. There would be no point in building a highway capable BEV if there was nothing near the highway to charge it with. A 4 hour wait at an RV camp-sight is not reasonable.
It's more about marketing than the need for every car to use it. With it being optional people can save money that feel they don't need it. If it wasn't optional I would guess the base model car would be around $65000 before the rebate.

@Jbunn

You're right on the money, thank you.

@brian
You should learn critical thinking before trying to sell bs to someone who has a masters degree in electrical engineering.
You're also extremely defensive and rude for whatever reason, so I'm gonna ignore you altogether from now on.

Like many on these forums, I have been a staunch supporter of Tesla and probably an annoying cheerleader at times. I have endured the initial pricing of options and the service package pricing with a stiff upper lip. Others may have understood the plans for supercharger capability differently than I did, but I was taken by surprise. It was the first time I was truly disappointed and had serious doubts about my planned purchase. Now Tesla has reversed their decision and my 60kWh car will be able to utilize the network of chargers, if and when they are installed. My view of Tesla is somewhat more realistic than before, but I think it is worth noting that they have had a decent track record of responding to their reservation holders. For that, I commend them. As long as this remains an open dialogue between us and Tesla, I can hold on to my optimism.

First, I must apologize about the fact that I have not read this whole thread, but here are my thoughts.

As I understand it, the cost for the supercharger capability + free access to the supercharger is $2000 for the 60kWh car. However, Tesla is giving a $1000 price break on this feature for current reservation holders.

Tesla's presentation of the reasoning behind the charge (half for hardware and half for "configuration/activation" nonsense) really doesn't matter.

With the supercharger, Tesla basically bears these generalized costs:

hardware onboard each car
"design" of everything related to it
expected warranty service related to it
cost of installing the supercharger stations*
cost of maintaining the supercharger stations*
the "design" of everything related to the supercharger stations

If SolarCity is handling some or all of this, Tesla's cost could be zero for these items.

So regardless of how Tesla justifies the breakdown, Tesla has valued a 60kWh owner's share of this supercharger capability at $2000. Now that may or may not include a profit or loss for Tesla on the feature, and certainly there's some marketing value as well, but it really doesn't matter; $2000 is the number they arrived at.

Now with that said, I think the price is reasonable.

The real problem is that at one point Tesla listed the availability for the 60kWh car as "TBA" and then they later implied that it was included in the cost, and now they're saying that it's it's an extra $2000.

It is understandable that some people are upset about this because at some point, they implied* that it would be free (* or at least they allowed people to misinterpret without correcting them, I don't know because I don't remember the exact text that appeared before).

Tesla probably new that some would find this upsetting, and so they decided to give those people a discount of 50% on it.

Now, I certainly think that it would be a much better solution to just give it for free to all current reservation holders, but I'm assuming Tesla has figured that they can't afford that, otherwise they probably would have done that.

Speaking more generally, I still think of the Model S as an "early adopter" product. Future Tesla customers will be paying less, getting more, and there will be less uncertainty about it. I'm not saying that you "don't deserve" to be upset about things like this, but I kind of think situations like this are somewhat unsurprising.

PS the asterisks(*) were meant to be tied to the line about SolarCity

Some of the info is in the FAQ email, some in an early-week post by George B which I can't now locate (removed?), saying that the "activation" was much more involved than throwing a switch. It would be interesting to get his (or a product engineer's) summary of the process.

It's also interesting to look at this from a financial point of view; that is, the margin on the 85s is adequate to absorb the SC hardware, etc., but pushes the 60s' down below acceptable levels. That's, IMO, a result of the original concept of the SC network -- essentially an extender for the highway / LD version of the car, the 85. I gather that half or more of current reservations are for 85s; if that were to continue, the focus on them as the bulk of the users of the network would be even more, probably.

@olanmills,

You are aware, aren't you, that Tesla has reversed itself and agreed to give free SC access to those with SC hardware "included" in their signed MVPA? Because your post reads as if Tesla had not changed its policy. There is now no more 50% discount. See http://www.teslamotors.com/forum/forums/update-supercharging-and-60-kwh-...

Hi Olan,

Nah, you missed the mutiny.

The issue was 60 pack folk with signed MVPA's had a zero price for supercharing, and Tesla approached us Friday asking us to sign new MVPA's with a higher price. It was pitched as half off, but in reality was 1,000 in a price bump. That more or less lit the fuse.

Tesla on Sunday reversed course and went back to the origional MVPA's we 60's signed over the last month or so. As far as I'm concerned, I'm chalking this up to a misunderstanding (as one of the affected), and I consider the matter closed.

What turned out odd however is that free charging is now included. None of the 60's ever expected that, I don't think. Seriously, who buys a car and assumes it comes with free gas for life?

Anyway, Tesla made good on their origional word, and we got something quite valuable and unexpected.

I have been a huge fanboy for years. And a really cranky MVPA holder for one long weekend. But it ended well, and there are lots of folk on the forum, myself include that were allways impressed, but we've been taken to the next level.

Hope this helps.

Thanks for the corrections. Yeah, I haven't visited the forums for a few days, and I'm thinking I should make that a more common practice, given the amount of time I've just "wasted" tonight.

Yeah, I didn't really think about that, with MVPA's signed, it definitely feels like Tesla needs to stick to that in those cases.

@BrianH, yeah I understand that enabling and installing the supercharger must add some cost to Tesla, but I highly doubt that the costs break down to $1000 + $1000 exactly as described in some email that I read in some thread. And I also highly doubt that the total cost is exactly $2000. Tesla is either making a profit or taking a loss on this feature. And who knows, maybe this profit or loss may be better or worse with the 85 kWh battery. The upgrade price is $10,000, but I'm assuming the difference in battery costs over the 60 kWh is significantly less than $10k.

olan;
Yeah, there are other differences, but as someone has now figgered out, it means the "bump" from a 60 with SC to an 85 is now just $8K. Which should result in a higher % of 85s on the road.

@Brian H,

Of course the "bump" drops to $8k only if you plan to order the SC option. When I was ordering, I struggled with a similar choice when thinking about getting the Performance model. At first glance, the difference in price appeared to be $10k. But I wanted Active Air, which dropped the difference down to $8,500. Had I wanted the 21" wheels (I didn't), it would have dropped the bump to only $5k.

As you "predicted," I ended up getting the Performance model, but the choice would have been even easier if I had wanted those wheels.


X Deutschland Site Besuchen