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Price Increase

Any other high-number (10,000+) reservation holders or those that deferred (e.g., holding out for red!) out there a bit concerned that with the "time to build" emails coming out quickly now and delivery dates that either start to look too early (more like Q1 and Q2; planned for Q3 or Q4) or too late (say Q2 or Q3 for red) and may not be able to finalize in a "fair, predefined timeframe" to avoid the now officially announced price increase? This concerns me because when I made my reservation, I was told August would be the earliest I should expect a car as my lease ends in November 2013. If I need to make a decision in December/January and take delivery in, say, May or else face a price increase, that will be hugely annoying. I'm stretching the budget to make the 60 kWH work, and really don't want the car without at least the 60 kWH battery and the tech package...I'm already planning to skimp and pass on the air suspension which I'm not thrilled about, but won't give up anything else to accommodate a price increase!

How are others feeling about this?

Oh, and in case anyone missed the price increase info:

http://www.teslamotors.com/forum/forums/it-true-there-will-be-model-s-pr...

If they need to increase the price of Model S, why not add $2K, $3K, or whatever, to the base price of the car?

Well, if you have a reservation, you should be ok...right? The air suspension rocks! Maybe you should invest a little in Tesla stock and let them help you buy a couple options!

@Suegie: That's my question...am I ok? It seems as though that depends on what a "fair and predefined timeframe" is!

@riceuguy-

I think you may have a problem - from what I've read, they are planning to add sunset red to the design page in a month or so, anticipating implementing it in the mid spring. So if you get your time to build email in Jan with at June delivery window, I don't know that you will have a good reason to request that they push it back. Based on my interactions with Tesla though, you may be able to work something out - they are more reasonable than a typical car company.

Fingers crossed...

Perhaps the Tech Package will become unbundled! Many of us asked for HID headlights without Audio, etc. Even if the sum total of individual items is more expensive than the current package it could make people happy if they aren't buying items they don't want.

Could also apply to some wheel/tire combos that will give better options to choose from.

And sure some things will cost more. Tesla is (a) creating value for early innovators and (b) watching out for shareholders by starting to focus on profit.

Not sure until we see what they announce but I am tentatively encouraged by this.

@pilotSteve, I wish I could be that optimistic, but generally if you're going to do something that's a net positive for customers, you don't start with calling it a price increase, you'd call it "improved choices" or something like that. I'm not turning anti-Tesla or anything, I'm just concerned that my maximum price point and minimum car configuration may cross paths...

riceuguy, same thoughts here...

suegle;

No, only a reservation with finalized purchase. So if you don't get and respond to the "finalize" email by ~mid-Dec and respond within a "fair and predefined timeframe" (30 days?), you will have to pay the new prices.

Or SLT.

Not too crazy about this one.

I think it's good they are calling a spade a spade though. Calling it "improved choices" would be an insult to people's intelligence.

I'm not too crazy about it because the car is not cheap as things stand. Also, new reservation numbers will dry up immediately after the increase takes effect, for a month or two.

On the other hand, effectively it is an increase for Q3, maybe even Q4 2014. Tesla needs to lock in inflation adjustment three quarters in advance due to the long reservation queue. This is probably what is prompting the timing of the increase announcement, assuming the increase stays in the 2 to 3% range.

Also on the other hand, reservations should spike during the next few weeks. Tesla may even come close to selling out all of 2013's production. If so, then this is an increase for 2014.

It will be interesting to see how this plays out.

WHY???

Tesla produced roughly 1,000 Model S and it's already determined the price needs to go up, really???

If the car got better (like Volt which got Clean Air Certified and a few more electric miles or Leaf w added range for 2013 the price actually went down) then MAYBE... but Tesla is essentially jacking up the price without even producing a single 60/40kWh units...

I cannot imagine the cost of TSLA's batteries per kWh going up next year, if anything it'll go down further.

Not the direction I expected, especially since they predicted 25% Gross Profit for 2013 (listen to conference calls), they want to go to 30% GP now?

I understand this is a for-profit / publicly traded company, I get it. But there GB was crying at MT COTY award explaining how we're doing this for our children yadayadayada... please. I'm better off cancelling my reservation and waiting for next gen prius (65+MPG) at this rate.

Brian H.

I think you misinterpreted the post:

We are starting to hear rumors about "a price increase coming soon" and want to assure current reservation holders that the price increase will not affect them as long as they configure and finalize their order within a fair, predefined time frame after being invited to configure their Model S.

The "after being invited" part suggests the current prices will stay in effect long after mid December provided you reserved a car before the announcement. At least that's how I read it.

@danielccc

Also, new reservation numbers will dry up immediately after the increase takes effect, for a month or two.

I don't know why that would happen. A price increase will only prevent someone from making a reservation if it puts them over their max price point. Ditto for causing existing reservation holders to cancel.

Thinking out loud, I imagine there would be more outright cancellations or decisions not to reserve at all among those who would have ordered a 40kwh or 60kwh battery. Some who've ordered the 85kwh model might downgrade to the 60kwh, and some who were looking at Performance might go with the standard.

But I'm assuming that a large % of those ordering 85kwh cars are not that close to their budget limits and won't reconsider ordering unless the price increase is huge.

The Model S is worth it's cost if even it went up another $15k IMHO.

@h8tow8

WHY???

I'd imagine that when the increase is announced they will explain why.

Tesla produced roughly 1,000 Model S and it's already determined the price needs to go up, really???

Well, that should be enough to determine what their actual margins are. And if they have already determined that they won't hit their margin target without a price increase then it doesn't make sense to wait until more units are produced. (Speculating here that margins are the reason.)

If the car got better (like Volt which got Clean Air Certified and a few more electric miles or Leaf w added range for 2013 the price actually went down) then MAYBE... but Tesla is essentially jacking up the price without even producing a single 60/40kWh units...

Chevy and Nissan produce huge volumes of many models and so they can afford to take a loss (or at least, lower margins) on some of them. Tesla, not so much.

I cannot imagine the cost of TSLA's batteries per kWh going up next year, if anything it'll go down further.

Maybe, but they have to pay the bills right now. If the price comes down in the future they can factor that in later.

Not the direction I expected, especially since they predicted 25% Gross Profit for 2013 (listen to conference calls), they want to go to 30% GP now?

You're assuming they're on track to hit that number. If they're not, they'd be irresponsible not to do something about it.

I understand this is a for-profit / publicly traded company, I get it. But there GB was crying at MT COTY award explaining how we're doing this for our children yadayadayada... please. I'm better off cancelling my reservation and waiting for next gen prius (65+MPG) at this rate.

Let me point out that we don't even know how much of an increase this is going to be or how it's going to affect the bottom line of different configurations. It's a little premature to start burning Elon Musk effigies at this point.

@BYT
I'll take does 15k I'm already struggling to get the 40KWh, I can use the 60KWh upgrade :)

I know its not cheap, and I am not rich either, but when you break the car down and price it on it's features, tech, innovation, quality, service and so on, it's worth it. Like the ~$50M Tesla Motors spent to get the Fremont NUMMI plant but not that great of a value. :)

I still dont get it. I am reservation holder #13860 (just reserved last week). -> I know that sucks ;(
Am I going to pay now a higher price or not?

Maychi,

As a reservation holder your price will not increase.

sunnysailor,

I hope that is the case. On the other hand I probably would get it anyways. ;) thanks for the answer.

As I said in the other thread, TM may just sit on this for a while. Prices will go up for non-North American cars because those prices haven't even been set yet. But the prospect of an increase in the future may help to insure robust reservations throughout 2013.

A few comments:

The way I read it, current reservation holders don't have anything to worry about with regard to the price increase. Further, there is a timeframe between now and when they announce the new pricing that new reservation holders will have the old pricing. Once the official announcement is out, new reservation holders will have to pay the new pricing.

As it's been stated earlier, Tesla has to make these decisions now since there is such a backlog of cars (high number of reservations). They will not benefit from the new pricing for at least 6 months (if not 8 to 10 months - depending on production rate and how many new reservations they get between now and the official announcement).

Certainly, they could expect a slightly higher reservations in the short term - people trying to rush their reservations in before the announcement. Then I'd expect a slight drop off in reservations immediately following. But the steady state average reservation rate should remain relative constant, perhap a downtick of a percent or two. But I imagine the bean counters have analyzed this to death and determined that there enough elasticity in the model where they will net a higher profit overall - demand will drop slightly but not drop so much as to outweigh the increase in profit per vehicle.

All in all, IMO, this is good for us as stock holders and Tesla vehicle owners.

Two reasons why they let it filter a few weeks before the official price increase:

1) There was a leak and tried to kill the rumors (we know how it can go sideways when you don't have all the facts)

2) Tesla leaked it themselves to increase reservation rate in order to achieve the 3k + 20k = 23k reservations and fill their entire 2013 capacity.

Personnally, I'm on the fence as I reserved Model S a way back (P179 Can, Aug'11) but I still didn't get a chance to drive the car + the fact that many questions are unanswered yet on the 60kWh pack. While I am protected from the price increase, I might still be forced to finalize my order without knowing all about it.

pbrulott...I am Canadian P157, also did not have a test drive. Maybe we should go to Toronto to test drive the model S.

please. I'm better off cancelling my reservation and waiting for next gen prius (65+MPG) at this rate.

I’m surprise people still bother to think the Tesla is comparable to a Prius. While I’m sure the Prius is a fine car it is not close to the Tesla in style, comfort, features, luxury, environmental benefit and more! I guess they think a Mercedes S-Class ($100K) is just a gussied up Kio Rio ($14K) with an extra feature or two. They both have 4 wheels and can get you around town.

As a reservation holder for 3.5 years, Tesla hasn’t increased the price since I signed up. Since they are holding the price for reservation holders, and deliveries out to June or later, that means the price will be the same for more than 4 years. That’s rather impressive, as I can’t think of any other car that’s kept the same price for 4 years unless they drop off features and/or quality.

I’m surprised no one has pointed out the benefit of a price increase. For owners and all us reservation holders, it means the resale value will jumped up! I have no plans to sell my Model-S when it arrives, but it’s nice to know I got a good deal. Helping the bottom line is also good for Tesla, but also great for all Tesla car owners, as a stronger company helps us all.

So I say raise the price – Tesla has a year’s backlog and all the car magazines are saying it’s the best car you can buy. Seems like a smart move to me.

That first line in my prior post was supposed to be marked as quote from a prior poster. I guess the HTML quote tags don't actually work :(.

Stephen,

I am planning on doing a business trip in the next 2-3 weeks to Toronto and will absolutely pass by Yorkdale and reserve a test drive.

If ever that doesn't work, I'm in. thanks for offering. will let you know

forgot to put my email address: pbrulott1@gmail.com

@tesla.mrspaghetti,

It's obvious that the reservation rate will spike before the cutoff period and then drop afterwards. Who is going to order one day or one week after the price increase cutoff date? Nobody with a pulse.

I don't mean that sales will suffer on average. But the numbers will gyrate and I can already picture the naysayers claiming that Tesla is losing sales by doing sequential month comparisons.

As for the reason? I'm guessing their financial model needs to keep ASP to a certain point and the average configuration so far results in a lower ASP than that. Meanwhile demand is strong and a second objective is for their backlog to decrease rather than grow.

This also tells me that they are not going to use this demand to push quantity significantly above 20,000 cars in 2013. They are opting for revenue from price, not volume.

And that makes sense in the short run. It lowers the risk that they would overshoot volume and start accumulating inventory. Tesla cannot afford that, and discounts to move product would be a big negative to their premium image.


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