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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.

"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."

I'm not sure who "we" are, in view of TM's claim of gross margins up to 25%.

Sorry to post something redundant.. My apologies. This is already covered elsewhere in the forum and I had not seen it. Mods please feel free to delete if you see fit. Guess I had better bite the bullet and get in the que Monday "if I still can"

Superliner-- you can delete this thread as the author by hovering over the upper left Tesla logo & deleting.

DR;
that's the minimum EM is guaranteeing once at full production. Until a significant % of that level was reached, it is possible the margin was marginal or slightly negative. There's considerable evidence lots of units were being scrapped during the ramp-up QC tuning. That would play Hob with margins, fer shure!

Elon has some bonuses available a few years down the line conditional on, in part, hitting 30%.

Just heard on good authority that the price increase will be announced this afternoon. $2500 on top of the base price. Also, among the changes, 12 way heated seats will be standard on all models.

How can we know about the interiorheated seat change? I would like cloth power and heated as standard with original price structure.Saves 1500 bucks.

Best case scenario: Maybe TM has the inside track that the federal tax credit is going to be increased to $10k and so the 'net' price increase is zero?

Very unlikely, Nick. The budget negotiations they are going through now are aimed at CUTTING deductions, credits, and tax preferences, not increasing them.

so.....if you have a reservation but not been called to place the order the price increase does not effect you????

correct

@DouglasR - agree, but the focus on US jobs, innovation, 'all avenues of energy production', etc. might just let it squeak through. Maybe?

I don't think they will raise the price until the sunset red is in the design studio for aleast a couple days, that is what it said on the bulletin board.

@cprenzl

It says you'll be able to finalize with sunset red prior to the price increase. I read that to mean that if you have a reservation before the price increase and have not yet finalized, you will not be hit with the price increase until at least the time the sunset red becomes available. So the increase could come first, followed by the availability of the sunset red within the "fair" time frame for people to finalize.

In any case, anyone who thinks they might want to buy this car should get a reservation now if they want to avoid the increase for sure.

The catch is: once you get your "finalize" notice, you can no longer defer very long without being subject to the price increase.

Reading between the lines it is my prediction that the Model S Performance will now come standard with 19 inch tires. If you choose the 21 inch tires that will be the equivalent of a $3,500 price increase.

Speculation running wild again... ;-) Hold your breath, we'll learn soon enough!

@GoTesla +1

That would be a great way to increase prices without burdening Performance purchasers like me, who prefer the 19" wheels. However, I'll bet it wouldn't bring in much of an increase in revenues.

I predict service will be included with the price increase. Perhaps current reservationist will be grandfarthered in and get the service contract for free (excluding Telsa Ranger service). Wouldn't that be grand?

Prediction or wishful thinking?

DR;
Hopefully, the increases will suffice to fend off taking losses on individual components, rather than per se boosting overall revenues or profits as such. I assume there will be some "price elasticity" (sales lost due to price increases), so keeping revenues neutral and maintaining margins is likely the goal.

DouglasR | NOVEMBER 28, 2012
@GoTesla +1

"That would be a great way to increase prices without burdening Performance purchasers like me, who prefer the 19" wheels. However, I'll bet it wouldn't bring in much of an increase in revenues."

DouglasR,

More revenue? depends.

If for 90% of Performance purchasers, 21 inch turbine style wheels are a "must have" item, then charging $3,500 will definitely bring in more revenue. If it's only 10%, then not so much.

I think Elon is focusing in on his 30% margins. He needs to change the current price stucture to do so. 19 inch wheels are likely cheaper. Probably will see a few other options that they are losing margin from.

Price increase is coming soon. Just received this email from Tesla...

"We will be announcing a price increase for Model S in the next few days.

This is our first price increase since the introduction of Model S and it is very important that we implement this in a way that recognizes those who already have a Model S reservation. This price increase will not apply to anyone with an existing reservation... as long as they finalize their order within a reasonable, predefined timeframe after receiving their "Invitation to Configure."

You will likely receive your invitation to configure between now and the end of January depending upon when you made your reservation. 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.

Customers most often want to know if they will be invited to configure in the order in which they placed their reservation. The answer is 100% yes. However, we are finding that some customers finalize their order quickly while others take longer to complete their design and submit final paperwork. As a result, those invited later with "higher" sequence numbers are moving ahead of those with "lower" sequence numbers on a weekly basis.

To be fair, we fill all open production slots with the lowest sequence number reservations that have finalized their order. We need to do this in order to fill all production slots each week. This means the sooner you finalize your order, the sooner your Model S will be headed your way"

Yikes....

P12,893

November 28, 2012

Dear Rodrick,

We will be announcing a price increase for Model S in the next few days.

This is our first price increase since the introduction of Model S and it is very important that we implement this in a way that recognizes those who already have a Model S reservation. Thank you for completing the configuration process and finalizing your order in a timely manner.

We have everything we need to build your Model S and this price increase does not apply to you.

Sit back, relax and look forward to the arrival of your Model S!

Does this mean that delivery will still be made within a 3-4 month timeframe from configuration? For example, if I configure in February, will my Model S will be delivered by May or June? Otherwise, it would now seem like the wait time between configuration and delivery will be much lengthier than 3-4 months.

@jchangyy
I got the same generic email an hour ago.
Can't wait till I get the invitation to submit my design!

I am P12704 and suspect we will probably get the invitation around the same time :-)

I do not think it is a save assumption that if you have reserved you are immune from the price increace. A reservation just says you want a car, but with no configuration. 50K price difference almost from base model to best config.

I think what locks in your price is when you finalize your order. You've picked your config, changed to non-refundable, and have a MVPA signed by both parties. At that point, you are locked in.

That's how they handled it during the Great Supercharger Revolt of 2012.

I got my invitation to build on Aug 14th, and am still waiting to hear that my car is ready. I don't think I'll be getting it in 2012....I'm getting rather impatient as the time grows closer.

P2234

Today, Model S is the most award-winning car of the year and the base price remains at $57,400, the same price set over three and a half years ago. During this same period of time most automotive companies have had at least three price increases and general inflation (CPI) has gone up 8.75 percent. A straight 8.75 percent CPI increase would now yield a base price for Model S of $62,400, an increase of $5,000. Tesla is increasing prices only half that amount, giving Model S a new base price of $59,900 before federal tax credits.
http://finance.yahoo.com/news/tesla-motors-sets-pricing-award-131000153....

(Hat tip to Whity Whiteman for the pointer!)

And here's the link to the original press release from Tesla (which was simply copy-pasted by the Yahoo Finance news ticker):

"Tesla Motors Sets New Pricing for Award-Winning Model S"
http://ir.teslamotors.com/releasedetail.cfm?ReleaseID=723919


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