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Quite price increase and more to come

I found this posted online.

Is it true that Tesla is increasing the price quietly and plans to do more of it in 2014?

Beginning in August, TESLA quietly increased the price for many of the options on the Model S by unbundling many of the features that were packaged together. Among other changes, the “Tech Package” which used to be a $3,750 was lowered to $3,500. However, this package previously included a (now unbundled) feature now dubbed “Premium Interior Lighting”, which is a separate option that cost $1,000. The Obeche Wood Gloss Décor, which was previously included, became a $650 option. These changes along with others increased the overall price of the Model S.

I’m told that TESLA increased the price of these features as it determined the true cost of parts and labor (installation) in its factory. I’m told the 2014 Model S will likely have another set of price increases which is one of the reasons I want to order a new Model S now rather than later!

Risquare: You are about 2 months behind on your news.

Use volkerize.com to read many forum threads about the price increases, and any other past topics that might interest you.

Order now to get the $7,500 tax credit for your 2013 tax return.

Yes, it's true. Yes, it likely will.

Wow. Way to be late to the party.

Wait, what are they going to do about those of us that want the parking sensors?!!!!!!

Come on guys........

Going back to the OP, Elon does not care much for focus groups to determine features so I assume he has a similar disdain for market surveys on price. It appears Tesla is doing real time price sensitivity testing judging by the Jan/13 and Aug/13 price hikes. If history is any indicator, we can expect another round at the end of the year.

I am betting after the price hikes we had in August that we won't see any more for the next 5 months. None of us of course really know and my plan is to put order in probably sometime in February for a July delivery.
The last hike increased my configuration by around $5000.00.

I'm not convinced that Tesla/Musk is changing prices to better understand price sensitivity among its targeted customers. Rather, I suspect that Tesla is getting more clarity into exactly how much different features COST (both initial installation and warranty service) and adjusting accordingly. And I get the feeling that they're unbundling some packages to better satisfy some customers (who don't want to be forced into a whole set of features) while also increasing revenue to better cover those costs. But it's just a hunch.

The price increases is what led me to buy a tesla model s.
I knew I would buy one, but I wasn't sure when.
I knew of the January 1st 2013 price increase. I knew of the 21" wheels being dropped from inclusion in the performance price leading to a $3500 price for the wheels.

Then in July of 2013 the $3500 wheels went to $4500. I figured they would just keep increasing the price every few months buy charging more for options, or perhaps even the base price.

This all led me to buy act and buy the model s.

I was happy I did when I saw the August price change. Still, I wished I bought it when the 21" wheels were included in the performance price.

If you're on the fence. History has shown that sooner is better. Unless, you're waiting for the next option..and you'll always be waiting for that next option.

I got the feeling Tesla is fine tuning the price structure according to demand. The price increase affected mostly performance models because they are selling better than what they expected.

I believe they are doing it to get to the target 25% gross profit margin. Probably they have done about as much as they expect to get out of reducing costs and they don't want to change the base price, so the way you do it is by increasing option prices.

@Kimscar - if you had a reservation, it shouldn't have increased at all for you.

when is Tesla going to officially announce pricing for Australia? Previous emails from Tesla say August 2013 ....

jat@
Absolutely.
Profit margin is key since they are still a fast growing company, and require a lot of capital to operate, especially since they are expanding production and are releasing Model X next year (new production line for that too).

Elon target is 25% gross margin by Dec 2103 and no more they can decrease their cost so what other options do they have? Hike price because people who are paying 80-110K wont mind paying extra 5K any way since Model S has become hip.

This is suckers games. But Elon should know he is driving away customers for Wall Street.

@mna123 - it doesn't appear Tesla has a shortage of customers.

Not yet, easy to sell those 100k cars in Silicon Valley, Hollywood, Miami and eager drivers all over the world in first year but when they get to sell next year and those 30K gen III cars, people will just show them finger and the market cap expects them to sell 300K Gen III in 2018. Go figure.

This is all about "now" cashing out by Tesla. Stocj will be under 120 within next 12-18 months.

Appl went from 700 top 385 when every pundit at wall st. had buy rating with 1000 price target , you think it won't happen to Tesla when highest target in 200-225.

First they screw shorts then they will screw longs. Just like nflx and cmg (check their 1-2 years chart)

Sorry for all typos, I am on iPhone sitting at SFO :)

mna123 makes good points. Great car, great company, horrible current share price. It would be better for Tesla if the stock price had not skyrocketed so fast but had gone up slower to reflect steady progress.

I know I wanted to buy the car but cannot justify the increase here in Canada. As I was researching the car and seriously considering buying, the prices changed. Bad taste in my mouth even though i can certainly afford it, i am not wasteful when it comes to money. On top of the increase, financing is double here in Canada compared to the US and all my colleagues warn me of the pending resale crisis. They believe once the novelty wears, the resale market will tank. This has to be why Musk put in the buy back guarantee in the US market. No such thing here in Canada.
I figure I'll just wait for a slightly used one. Seems like plenty of people who make far less income than I do are buying. After the novelty wears and the real cost settles in its my guess there will be plenty of unloading of the vehicle.

@jat I believe you are right that the price increases are to meet the 25 percent profit. I am hoping they are there now.
I just don't want to put the reservation down so early for a July delivery. Still I'm torn so while the plan is to lock in reservation in February I might do it sooner. I can live with another small increase but would prefer not to.

@Luclyluciano - Are you aware the base price for S60 and S85 remained the same? Only certain options have increase in prices and some packages have been un-bundled in favor of a la carte options.

You should configure the car that suit your needs. Do you really think that other manufacturer keep the pricing of their vehicle the same every year? Are you aware of the 3% - 8% increases from some of other brands between model years?

Regardless of the reason why TM raised the prices on the options, every manufacturer raises prices on their vehicle on popular lines and options on a yearly basis.

It's simple. Since Tesla is production constrained, not demand constrained, they should raise prices. Frankly, the Tesla core market isn't effected by a few thousand dollar price increase. The "value" buyers will soon move to the secondary market anyway, as used Model Ss become more generally available next year.

@jat - you're correct, they're really moving towards the 25% profit and they need to get there by end of year. It's no wonder things like the sound package increased so much and new products like the yacht floor command such pricing, they've got to reach this goal soon, by end of year. Although this is old news, I'd expect new pricing options to continually increase, my sig build was actually about $11k more when I re-priced it.

And don't forget about the buyback guarantee. If they can justify a higher price for the car, then the resale value may also be higher as it is compared to the new car. If someone buys a car for $100k and they guarantee to buy it back for $50k, their resale value will look much better if the new cars are $120k at the time.

One is crazy to buy car at this point. Let's wait 18 months for them to resolve all issues. Let's car hit 30K miles to find unknown real issues.

When the demand slow and novelty factor cools down, Tesla will be selling these cars at discount since they will be competing with used car sales.

And if there is one bad news then resale of these cars could fall down drastically.

Who wants to risk 100k? Not me. No rush, let technology mature first. Just compare iPhone 1 and iPhone 4 , 3 years apart but iPhone 4 still rocks. You can't change 100k car every year unless you are super rich and have no respect for money.

I will wait till 2016 to get real reviews and will buy used car with 30K mile since novelty factor will be off by then and lot of "show-off" money in Hollywood and Silicon valley will be going for new models.

@lucky
being in canada i had the same thoughts swirling around my head you did. To delay buying now and perhaps land better value with a second hand car...let the novelty and hype die down a bit and see if prices settle....

valid thoughts. However, the other side of the equation is this....the demand is still very strong for this car and prices could very well increase....couple that with the risk that the government rebate program could end anytime.....and the fact that you get to drive this magic carpet now instead of waiting and waiting, and paying gas while you do.

Also dont forget your existing ride depreciates as well in that time...granted, not nearly as much as a new TSLA, but if you are getting one anyways i think the initial depreciation is a sunk cost regardless, except you get to enjoy the car much sooner

@ mna123,

If it weren't for those who bought the first iPhone, there would not be a second or third or even a fifth. You could extend your argument indefinitely because something new and improved is always around the corner. Why buy iPhone 5s when there will be iPhone 8 in three years with much better specifications?

People who are buying Model S today are people who want to drive this car now. New Model S will never drop in price - when have you ever seen a subsequent year model selling for less than the prior year? Never. Model E (Gen III) will be less expensive, but that's because the product is being designed in that way. If cost to produce Model S is cut in half to Tesla, then Tesla pockets more profit - but we will not see a price reduction on Model S.

You will not be purchasing this car in 2016 oh please! Why do I say that? Because Model E (Gen III) will be only a year away at that point and you will make the same argument... wait for the better, cheaper, faster...

@AmpedRealtor - You could tell legitimate potential buyers usually have better line of questions and/or less inflammatory remarks.

How many trolls do you feed per day to fill the quota? Is it the same troll with multiple IDs or multiple trolls working for short hedgies?

Just wait till the next troll complains about the lack of cigarette lighter as standard equipment for a $100k car...

The end of the quarter really brings out the shorts, skeptics, and naysayers, doesn't it? ;-)

It must be horrible to feel so compelled to root against the success of an innovative company like Tesla, especially one that represents such profound ecological progress.

What is horrible to me is to watch the market (more aptly, the street) have ANY sway whatsoever on the way Tesla executes and yet it does appear to be happening. There will always be those with a gambling habit and pro-gamblers that make a living doing it. I just hate to see competent operations influenced by clowns.


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