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lpickup
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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 8:03 pm

LeftieBiker wrote: I'm not trying to discredit Tesla, affect stock prices, or even just take pot shots at them. I really wanted them to succeed. But if one of the main points of their mission statement turns out to be hogwash (and yes, it DOES matter if they produce an affordable Tesla soon, since that has been one of their selling points to investors, the government, the public...) then their image loses some of its sheen. I'm not satisfied with choosing to believe that someday, maybe far in the future, they will make affordable mass market cars.
I think we're more or less on the same page here. I agree that if they renege on their mission of producing an affordable EV themselves, that they have failed, and have "sold out".

I don't think they promised an affordable car to investors on a particular schedule though. On the contrary, investors should be pleased that they are taking a relatively fiscally mature approach of building up to the affordable model, rather than releasing the car before it's time and at a loss which might be devastating to the company's financials (I define investors as LONG investors, of course!) The only way the delay would be unattractive to investors is if there was reasonable competition in the $35K price range. And there really isn't (although as I said, the Kona EV might actually be such a car).

And they definitely didn't promise the government anything, unless I'm missing something (you'll have to expound on what you mean here).

The public? Maybe. Certainly those that put a deposit down expecting a $35K car by this time. Personally, I didn't expect a $45K car by this time. I had timed my wife's lease to end around the time I expected ANY Model 3 to be delivered to me (much less the base model), and "unfortunately" they far exceeded that, switching up my plans. Sure, Elon did make set some bold goals, which unsurprisingly were not met (Elon time, after all). I do feel for those who honestly thought they would see a $35K car by now.
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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 8:09 pm

I seem to recall, during the Obama era, Tesla getting massive sensibilities, while Musk was talking about their ultimate goal being a car line that anyone could afford - at least at the low end. My memory has gotten too fuzzy to remember more than that, though. Maybe they never put it in writing. :-)
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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 8:14 pm

SageBrush wrote:Other leaked news/rumor this week was that Tesla has decided on a non-upgraded interior. If true then a less expensive Tesla will show up soon, although one cannot be sure whether it will be the $35k model. I'll guess under $40k for sure.
Yes, and I wondered the same. De-cost the car in ways other than batteries. Cloth seats. Fewer USB plugs, and so on. Then remove batteries. Tesla might be trying to get close to $35k. Tesla doesn't need to make money on the $35k version, as long as Tesla can sell enough higher priced and profitable versions. So the profit margin goes as well. Number sold would be limited, of course.

This wouldn't be the end of Tesla trying to move down market, of course.
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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 8:36 pm

LeftieBiker wrote:I seem to recall, during the Obama era, Tesla getting massive sensibilities, while Musk was talking about their ultimate goal being a car line that anyone could afford - at least at the low end. My memory has gotten too fuzzy to remember more than that, though. Maybe they never put it in writing. :-)
Tesla's government subsidies and financial packages included government loans (which all the automakers got), which were paid back in full early; and even though it doesn't go to Tesla directly (although it does benefit them), the $7500 US federal tax credit; and various tax credits from states like Nevada in exchange for building their Gigafactory there, for which Nevada has seen a generous return on investment in the form of jobs created, which is the whole point of such tax incentives (even though I am not really a fan of that kind of incentive). Other than the EV tax credit "subsidy", I think all other government packages were really about jobs, not creating an EV per se.
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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 8:48 pm

WetEV wrote:
SageBrush wrote:Other leaked news/rumor this week was that Tesla has decided on a non-upgraded interior. If true then a less expensive Tesla will show up soon, although one cannot be sure whether it will be the $35k model. I'll guess under $40k for sure.
Yes, and I wondered the same. De-cost the car in ways other than batteries. Cloth seats. Fewer USB plugs, and so on. Then remove batteries. Tesla might be trying to get close to $35k. Tesla doesn't need to make money on the $35k version, as long as Tesla can sell enough higher priced and profitable versions. So the profit margin goes as well. Number sold would be limited, of course.

This wouldn't be the end of Tesla trying to move down market, of course.
Well yes, a good portion of the cost savings involved in getting to that base model is to eliminate the $5K PUP package. Deleting batteries will help of course, but with the price of batteries naturally dropping each year, it wouldn't surprise me that eventually they wouldn't even need to necessarily delete batteries.

If the MR model is at $42,900 today, being able to build the non-PUP version for $5K less gets us to $37,900. And even though I don't necessarily think it's fair to play this game, I will point out that $35,000 in 2016 dollars is $36,706 in 2019 dollars. So if they can pull off eliminating the PUP, they should be able to get darn close to an inflation adjusted $35K just by deleting $1200 worth of cells (about 12kWh). That would probably just about get them to 220 miles of range, so they still have the additional $1,706 to achieve the true $35K price point, which is why they're not quite there yet.
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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 8:59 pm

lpickup wrote: I don't think they promised an affordable car to investors on a particular schedule though.
...
The public? Maybe. Certainly those that put a deposit down expecting a $35K car by this time. Personally, I didn't expect a $45K car by this time.
Investors? Well, at least to the public there's this:
http://mynissanleaf.com/viewtopic.php?p=545205#p545205, skip to ~17:10 to hear the price of $35,000, which Elon said in 2016.
http://mynissanleaf.com/viewtopic.php?p=545201#p545201 said November 2017 for the $35K car. There's a lot more in that FAQ that I pointed to.

For investors. here's an example: http://ir.tesla.com/static-files/967ca2 ... 19c184331b which was the Q2 2017 update
The standard Model 3, starting at $35,000 with 220 miles of range and a 0-60 mph time of 5.6 seconds, should be available in the U.S. in November
Q1 2016 letter: http://ir.tesla.com/static-files/041a22 ... 8965cc6ad9
Our objective with Model 3 is to create the world’s best car with a base price of $35,000, before any incentives, with a range of at least 215 miles on a single charge, and with stronggross margins. We planto incorporate our best technology into Model 3, yet keep it relatively simple to build at high volume and with high quality
As for govt, I'll have to see if I can find the terms of the loan but https://www.tesla.com/blog/tesla-gets-l ... ent-energy says
Tesla Motors has received approval for about $465 million in low-interest loans from the US Department of Energy to accelerate the production of affordable, fuel-efficient electric vehicles.
lpickup wrote:[And even though I don't necessarily think it's fair to play this game, I will point out that $35,000 in 2016 dollars is $36,706 in 2019 dollars.
I don't think it's fair either. Tesla raised prices on the S years ago and tried to cite CPI: https://www.tesla.com/blog/2013-model-s-price-increase. Notice the 40 kWh S is there? This is before any of those ever shipped. And those that ordered those eventually got a 60 kWh car software limited to 40.

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Re: Official Tesla Model 3 thread

Wed Feb 20, 2019 11:49 pm

lpickup wrote:
Even that doesn't really matter. What really matters (to me, and others) is whether or not Tesla continues on its path to achieve affordable, mass market sustainable transportation, or do they decide to just become another luxury automaker and be content with high profit margin vehicles sold in relatively low volume.

What really matters to shareholders is simply whether or not Tesla achieves profits to justify its market cap/stock price.
As a shareholder since the IPO, what matters to me is that Tesla keeps producing BEVs that displace ICE vehicles. They quickly went from 50k/yr to 100k to 240k to now a projected 400k this year. This is the mission and this growth is what I want more than large profits. They don't need large profits and shareholders shouldn't expect it. Tesla needs free cash flow (almost $1B.qtr now) and to plow that into growth a la AMZN.
Selling a $35k Model 3 is useless if it's at a loss because that will just slow down the mission. However, it's evident they will need to offer something in that price range (certainly in China) in order to grow. It will happen.
lpickup wrote:At the end of the day, complaining about the fact that the $35,000 Tesla is not yet available is usually nothing more than an attempt to discredit Tesla. Yes, there are people that are legitimately waiting for that price point to jump into the EV market. Well guess what...it's simply not economical yet, but we are getting there, and will get there. You'll just have to settle for a slightly lesser vehicle for the time being. Hey, I think the Hyundai Kona EV could be an amazing vehicle if they commit to making enough of them.
Agreed.

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Re: Official Tesla Model 3 thread

Thu Feb 21, 2019 1:34 am

EVDRIVER wrote:
Regurgitated FUD. "Quietly deletes" What a joke of a headline, as if companies announce ever website update. I can't believe how pathetic blog titles are. So now Tesla is never making a lower priced EV because they changed their webpage "quietly" I have never seen a more pathetic attempt to influence stock prices as I have with Tesla.
:roll:

The headline is perfect. It exactly reflects what happened. The verbiage about standard range 3 being 4-6 months away (or whatever period) was present on https://3.tesla.com/model3/design#battery and it's nowhere to be found starting that day and even now if you try going thru the "order" process. At least as of earlier today, I'm not aware of Tesla answering why the verbiage went away nor clarifying the status of the SR 3 or "$35K" 3. It's not like it disappeared for a few hours or a day then came back (e.g. https://www.engadget.com/2018/06/02/goo ... t-section/).

Companies quietly unveil or discontinue or change things all the time (e.g. Apple quietly discontinuing something or quietly introducing something (e.g. new iPads w/o any event, just a press release)).

Examples:
https://www.cnet.com/news/apple-ipad-re ... t-tablets/ -- I remember this happening since I work on iOS software for a living.
https://www.eweek.com/mobile/quiet-rele ... g-approach
https://www.thurrott.com/mobile/ios/795 ... dates-ipad

Sometimes, they actually announce it via some means (e.g. press release or telling the press) ahead of time.

Google for these:
apple quietly introduces
apple quietly discontinues
apple quietly price
microsoft quietly discontinues
microsoft quietly introduces

And so on. Replace the above w/other leading names in tech like Google or Amazon.

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Re: Official Tesla Model 3 thread

Thu Feb 21, 2019 4:39 am

sparky wrote: As a shareholder since the IPO, what matters to me is that Tesla keeps producing BEVs that displace ICE vehicles. They quickly went from 50k/yr to 100k to 240k to now a projected 400k this year. This is the mission and this growth is what I want more than large profits. They don't need large profits and shareholders shouldn't expect it.
Exactly
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Re: Official Tesla Model 3 thread

Thu Feb 21, 2019 4:58 am

lpickup wrote: Well yes, a good portion of the cost savings involved in getting to that base model is to eliminate the $5K PUP package. Deleting batteries will help of course, but with the price of batteries naturally dropping each year, it wouldn't surprise me that eventually they wouldn't even need to necessarily delete batteries.

If the MR model is at $42,900 today, being able to build the non-PUP version for $5K less gets us to $37,900. And even though I don't necessarily think it's fair to play this game, I will point out that $35,000 in 2016 dollars is $36,706 in 2019 dollars. So if they can pull off eliminating the PUP, they should be able to get darn close to an inflation adjusted $35K just by deleting $1200 worth of cells (about 12kWh). That would probably just about get them to 220 miles of range, so they still have the additional $1,706 to achieve the true $35K price point, which is why they're not quite there yet.
Your analysis is not quite right because in general Tesla has to sell cars at a profit. They shoot for ~ 15% profit per car at 10k cars per week, compared to 20% at 5k production per week currently. Reducing consumer price is mostly an exercise in cutting costs, not cutting profit. The PUP is mostly profit so cutting it out has some but not a lot of benefit. Battery is about 50:50.

Put another way, think about the cost to Tesla to include something like extra battery or 'nice' plastic, not the retail price.

As an example:
A Model 3 MR is $43k with a 20% profit margin = $8600
Goal is a Model 3 SR at $35k with a 15% margin = $5,200

They have to cut costs = (43k - 35k) - (8600-5200) = $4,600

Current Tesla pack costs are ~ $150 a kWh. Cutting out 40 miles of range saves them $1,500
Say that PUP cost is 1/3 of retail, then cutting it out saves 5000/3 = $1,667

They are about $1,500 away from goal. I cannot think of any more places to cut costs by excluding content so further price reductions will await drops in cost of battery production.
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