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Signature S pricing

Hello,

I got off a call from the rep few weeks back with an unsure answer. What is the approx pricing of the Signature S? He said it is going to be 'comparable' to a BMW 5-series. Well, that could be anywhere between 60k-85k....

Anybody has any insight?

Regards,
Sharad

I think Elon is shooting for finalization of the options and pricing by the end of the year, but they're leaving themselves some elbowroom in case they don't meet that deadline.

I have a hard time getting a handle on the process. The first step is to make a final decision on the option. Then they have to source the components (hopefully from multiple vendors). Next they have to figure the full amount of materials cost including consumables for the option and the amount of labor/energy involved. Once all that's done, they have to figure pricing/markup. That's not even figuring in the development and setup costs.

Personally, I wouldn't want to start up a car company from scratch. Too much work! Thank goodness for guys like those running Tesla who are capable of it.

Mycroft;
Indeed! So many variables, so few constants. It arithmatically moggles the bind. I bet their industrial accountants are burning a lot of midnight oil!

Not to mention the market research that should be going on alongside the engineering. It's one thing to conclude that option X is going to cost you $Y to install (accounting for all relevant costs); it's another thing to figure out what multiplier (> 1.0) that you're going to put on that option. To do that wisely, you have to understand consumer preferences, demands, expectations, and value perceptions. That makes the engineering look almost easy....

There's the snob factor to consider, too. The story goes that Chevy market-researched cutting Caddy prices, as it only costs 20% more than a standard Chev to make. The upshot was that it would reduce profits and sales, as the existing and target markets wanted the price high enough to keep it "exclusive".

Just ran across this link, and I'm not sure it's been cited in the forum:

http://www.trefis.com/company?hm=TSLA.trefis#

The reason I mention it is that it provided a rather detailed outlook for TSLA stock and addresses some of the factors that should be considered in projecting short and mid term price. Indirectly, it provides insight into Sig pricing. The authors note:

The Trefis price estimate for Tesla Motors is extremely sensitive to the gross margin forecast. Management is targeting a long-term gross margin of 25% on electric vehicles and we have taken that figure in our forecasts. However, if Tesla is unable to deliver on its gross margin target, there could be a significant downside to the stock. For example, if gross margins decline by 2.5 percentage points (to 22.5%), the Trefis price estimate for Tesla's stock falls nearly 30% to $28. Conversely, if management exceeds its target and is able to maintain a 27.5% gross margin, there could be a 30% upside to the Trefis price estimate. The main factors impacting gross margin include a) retail price of Tesla vehicles, b) materials and manufacturing costs, and c) economies of scale in production. Retail price depends on Tesla's ability to sell high margin options and accessories to customers, as well as the percentage of international sales, which command higher retail prices.

There's really no news in any of this, except the projection that a small variation in gross margin (2.5%) has a disproportionate impact of TSLA price (~30%). If TM management is looking at the stock ticker (and they are), it's likely that Model S optional equipment will be priced to ensure a gross margin that will impress the market. I suspect that those posters who think that TM will reward Sig list dwellers with discounted optional equipment prices are going to be disappointed.

Sigh. Sorry.

doesn't indent!!

The paragraph beginning "The Trefis price ..." is a direct quote. The rest is mine.

Damn this editor! Let's try this one more time.

The HTML tag blockquote doesn't indent!!

The paragraph beginning "The Trefis price ..." is a direct quote. The rest is mine.

"those posters who think that TM will reward Sig list dwellers with discounted optional equipment prices are going to be disappointed."

Yep, not news to me.

An alternate view could be that the Sigs are only 1,200 cars for North America, so the gross margin isn't as great a requirement for them. It's when they're rolling 20,000 per year that it's important.

When the Roadster was first introduced, it's cost of manufacturing exceeded revenues from sales (negative gross margin). While not specifically anticipating a negative gross margin for the Model S, management has mentioned this possibility in the risk factors in the 10-K filing. Hence we believe Model S margins will be low in the first year of launch, and gradually pick up towards 25%.
http://www.trefis.com/company?hm=TSLA.trefis#/TSLA/n-1661/1694?c=top&fro...

This is another paragraph from the same source. When taken together, to me they do not suggest anything substantial with regard to Signature price/options. Thanks for the link, anyway!

sofl;
Yeah, the editor is retarded. Try italics for quotes, but not that each paragraph break automatically closes all tags, so you have to re-enter then each para. HTML for and by dummies.

Arg. Edit typo: "but note that"...

A webmaster is being grossly overpaid.

And I've been getting persistent typekit javascript errors and hangs. (Prev sentence took 35 seconds to display, e.g.)

"A script on this page may be busy, or it may have stopped responding. You can stop the script now, or you can continue to see if the script will complete.

Script: http://use.typekit.com/nkf3plp.js:19"

Rep at Santana Row said they had the final pricing sheet but didn't elaborate for me. Going back in the morning to have a look at the "Engineering Build" S.

@Brian H
How do you know the webmaster is getting paid, and how much? Cos this would work better if it was done as a hobby?

I wonder if the price list will be made public before or after the last Signature slot is taken.

The relationship (in time) could make it interesting if the Signature pricing is anything lower than expected. If higher - well, the Signature holders can always switch to a lower version.

I'm betting that, once the Sig list is nominally full, Tesla will create a waiting list for Signature reservations to replace abandoned reservations. They want to deliver 1,200 Signature cars in North America.

Everything suddenly cleared up! Even the spam in General has stopped.

What a relief ...

Tesla has options besides a waiting list. They could use unclaimed Signatures in their showrooms, both as show cars and as instant purchases.

@Mycroft - The showrooms will already have cars on display by the end of the first quarter 2012. Tesla will want to sell every Sig that comes off the line.

True, but if they screw up the pricing, they may end up with extras.

I'll bet you dinner, Mycroft, that Tesla will have no problem selling all 1,200 North American Sigs.

The announcement of pricing will be the key. Either they'll sell out (if they haven't already), or they'll have a rash of returns.

So, Mycroft, are you taking me up on my bet? :-) I buy you a great dinner if they can't sell the Sigs?

Heck no, that's a sucker's bet! No, I believe they'll sell out and I also don't think they'll screw up badly on the pricing. I'm just pointing out the obvious that it could go sideways.

I agree they will sellout of the 1200 Sigs as well, but the question is when? As early as January given the price list comes out in December or as late as July/August when buyers will be able to ride in a production vehicle?

I'd bet it's somewhere in between closer to Jan since more will need to drive the car but options pricing will show Tesla beats the competition dollar for dollar.

With their nationwide show & tell going on, I think they'll sell out the Sigs in December before pricing is announced.

Agreed, Mycroft; they've been getting Sig reservations at a rate of 4/day pretty consistently since the Fremont event, based on the spotty data we have on the Tally thread. That implies hitting S+SSL=1000 before Dec. 20. What we don't know is how many drop-outs they've already had on the S and SSL lists; presumably they will keep taking reservations until they have 1,000 active reservations.

And then, when the drop-outs realize what a horrible mistake they've made, they'll be urgently calling, emailing, writing, on bended knees, "Can I re-change my mind? Please? I'll pay extra!!"

;DD

For me there's a lot of new information in this video about the pricing and the options of the Signature.

http://www.youtube.com/watch?v=5CjnL573Tcc&feature=related


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