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Why does Tesla have so many options?

2

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  • edited November -1
    Thanks, FLsports, Brian and Keith.
    I've thought about all those points.
    I was originally in the market for my favorite car, the older,more curvacious Jaguar vanden plas which they stopped making in 2009, I think. Of course those now cost less than 30k.
    My local Lexus dealer who had the used Jag offered me a new Lexus LS460 for 70k with some 1 or 2 % financing deal. I have always paid cash for my cars, but was tempted by this rate.
    Then I found out about the Tesla S, just by chance late last year.
    Its shape was competitive vs the Jaguar and it was ELECTRIC! - how exciting. The local Tesla showroom salesgirl told me a price below that of the Lexus (which is a VERY comfortable and luxurious car).
    Of course Tesla's California price was after the 7.5k plus 2.5k CA rebates. So her quoted price still does not give me the Lexus plush interior, moon roof, etc.
    Of course its not an apples to apples comparison - oil baron supporter or electric car development enthusiast...
    The Tesla was a joy to drive, with superb handling and acceleration. So was the jaguar, which leapt forward like the cat it is. The jag also had the English luxury inside - plush, thicker leather seats, burled walnut fascia,...
    There are also the known Tesla concerns - buying too early in a new product cycle with potentially major problems, long term viability of the company itself, etc.
    Ah well, I guess I still have a month or two to decide.
  • edited November -1
    @kkiri7

    Your thought process is exactly what I am talking about and concerned about as an investor.

    Right now, Tesla has no real competition. Of course, it won't stay that way forever. If Tesla's order rates prove strong beyond 2013, then the big guys will respond. And I predict they'll respond substantially in as little as 5 years.

    And when they do, Tesla will have to do a lot more than just sell a good EV with some range. They'll actually have to deliver a "premium" car by the conventional definition.
  • edited November -1
    Keith;
    Your 'lengthening the wait time and displacing higher margin customers concern' is entirely fallacious. A brief talk with any TM employee should disabuse you. As for the price increase, it barely tracks inflation since original reservations.
  • edited November -1
    "Your 'lengthening the wait time and displacing higher margin customers concern' is entirely fallacious. A brief talk with any TM employee should disabuse you."

    Okay. Would love to hear the counter-arguments.

    "As for the price increase, it barely tracks inflation since original reservations."

    Agreed. But in a competitive market, you don't see companies raising prices thusly. Especially not on new vehicles. Let's face it, Tesla can only do this because they have no competition. If BMW suddenly started producting EV sedans that were on par with the Model S, Tesla would probably eat lower margins and cut prices or trying and cut costs (or both) to compete.

    Inflation is an excuse to take in higher margins. I don't mind that as an investor. But let's call a spade what it is.
  • edited November -1
    @keithz
    I agree. Also sell only black cars. Black is classy.
  • edited November -1
    Yawn. Inflation is a threat to existing margins. Some companies are in a position to resist the threat, some are not. Deal.

    That should read "displacing lower for higher margin customers", of course.
    The wait times are being driven down (on average) rapidly. They're too short for many posting here, e.g.! And total margin is more responsive to volume than product mix, especially at this point. TM made as many cars as it could currently efficiently do so. That mostly meant keeping the production line sequence as simple as possible. New complexities (alternatives and options) are being phased in now that fairly high volume processes have been achieved.
  • edited November -1
    @keith, "marginal" customers?!? Really now, for a small company like Tesla, in an almost impossible to break into industry, you are going to throw away customers because you suspect the margin for their purchase is less than the purchases of other customers?
    You may be an investor, but I sure am glad you aren't running any company I am investing in.
  • edited November -1
    keithz | JANUARY 5, 2013 NEW
    @sudre

    I question your opinion. Let's face it. You're an early adopter. You would have bought the car if it was 10K more and loaded.

    The thing is hardly anybody seems to be buying the base S with no options at all. Most at least get the Tech package and Pano roof. Such customers (who only buy the base vehicle and nothing else) are marginal at best and pointless to a company with a full year's worth of production pre-sold.

    REALLY!! keithz!! All those without the desire "or ability" to plunk down $120K are marginal?? Sure glad Tesla does not think so. It is because of this that ordinary "marginal" folks can afford a Model S. To my point.. I don't like sunroofs of any kind. can live without the tech package, don't want to waste money on paint armor, don't need tri-coat paint, Fancy 20 something inch wheels, active air suspension, etc. So a Base Model S with 60KW pack and standard equipment works well for me and can be justified on my balance sheet (I'm due to replace my daily driver anyway)

    A Full years production pre-sold you say?? What about the year after that? or the next? How many zillionaires are out there that want a Model S that have not already gotten / reserved one? enough to allow Tesla to grow 4/5 or more years out? Are you prepared to continue to purchase More Model S or other Tesla cars at an accelerated rate @ current price points to allow Tesla to grow?

    While I don't begrudge your income or purchasing power "good for you" but know that there are not enough one / two percent disposable income folks out there for Tesla to gain the market share needed for Electric transportation to gain a large enough footprint in the general automobile population to advance the cause. Teslas goal is sustainable alternative transportation for the masses not just a hand full of bazzillionaires. so like it or not ordinary folks are Teslas future and It seems Elon is smart enough to see that.

    That said, Thanks for your early adoption which will allow for future economy of scale and price points that will allow marginal folks to carry the sustainable torch and Teslas prosperity forward.

    "End Rant"
  • edited November -1
    @superliner: +++1
  • edited November -1
    I agree that the Model S without the tech package hardly qualify for 'luxury' or 'premium' and therefore I think most of it should have been included in the base PRICE and the Tech Package should have really been about state of the art tech... Like this, it's one of the inconviniences you'll have to put into the 'early adopter' basked.

    But complaining about having options is kinda strange, especialy as it doesn't seem to be any different than other car companies (choose color, engine, gadgets). Options are always good, more options increases the chance that you'll get the car you like, for a price you can afford.

    I'm sure the 2nd generation and the X will be more comparable to other cars on the extras side and also more tested.
  • edited November -1
    More than enough... Tesla definitely makes happy any leader.
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  • edited November -1
    The option list for a Porsche reads like War and Peace.
  • edited November -1
    @Superliner et al

    I don't get why some think I'm being elitist. I barely cross the six figures threshold. I don't think I have the income to buy the Model S (at least not without sacrificing a lot) so I won't. I'll just wait for Gen III. I don't get the emotional reactions of some here.

    1) I am not calling you poor. If you can even afford to buy the base Model S, you are likely in the top 1% of all earners in the world and probably top 5% in the USA.

    2) I am not saying Tesla should not offer any options. It's just that there are some options that I really do think should be standard for a car of that price. The entire Tech Package to begin with. Twin chargers as well. Air suspension and Panorama roof are debatable, I suppose.

    3) All these worries about there not being enough customers. Hasn't a year long (and growing) waiting list, along with a $2400 price increase (same price as twin charges by the way), that there's a more than strong market to sustain higher-equipped models?

    My argument is not that Tesla should cut customers off. My argument is that Tesla should be working towards providing a bit more value to its customers, while also boosting margins.
  • edited November -1
    Keith, your argument is that Tesla should raise the price and make a number of options standard.
    You aren't getting emotional responses, you are getting responses based on how foolish it is to intentionally shrink your market.

    Your assumption that because Tesla has a great level of initial demand means it has sufficient ongoing demand is illogical. I do agree that demand will, IMHO, continue to remain strong.
    However, even your revised, smaller, list of options you would make standard are debatable.
    Some people don't want the tech package.
    Some people don't want the second charger. We may be buying a second Model S, but if the second charger is not something we can opt out of it may prevent that sale. We don't want it, won't use it, and definitely don't want to pay for it.
  • edited November -1
    Wow Keith, I don't think that you get it. To me Tesla doesn't have near the options it should.
    Example:
    -Only 3 interior colors
    -No rear set thermostat controls
    -No headliner options (white is the only option?)
    -The low end Tesla looks the same as the $100K Tesla, except for bigger wheels and a cheap CF tail (big whoop!)
    -No air cooled seats
    -Radar controlled cruise control
    -Seat options
    -Lane change sensors
    -Etc, etc, etc

    I am bias though -basing this on my current $100K vehicles. BMW and Porsche - I will give you that Porsche is insane on options and need more in the base. BMW though has the options down. Now if you are coming from the "mass market cars" - such as all US cars, Japanese and Korean - then the options probably seem too much. But at $100K, I better get a choice that is not off of the shelf, like every other manufacturer.

    I do agree with you on one thing that you mentioned. Gen III is what I am waiting for. Tesla is heading in the right direction - but it is not there yet. I never buy 1st generation on anything - especially electronics - which is what this car is (mostly).
  • edited November -1
    And Tesla does NOT have a full year's production presold (reserved). Net reservations are likely about 16K by now, and TM looks to be blowing through the 2K/mo. output rate. 16/2 = 8. And they intend to drive that "delivery delay" down to 3-4 mo.

    One of the many things Elon understands that many (!) do not, and refers to often, is the "economies of scale": roughly that 10X the volume cuts costs in half. THAT'S where the margin increase is going to come from, not selling a few more doodads to existing reservation holders.
  • edited November -1
    I think we need many more options. This is a luxury sedan, it must have...

    - heated rear seats
    - heated sterring wheel
    - electric overdrive
    - more color options (twice as many in and out)
    - more wheel / tire options
    - all wheel drive
    - convertible options
    - rear screens (especially for kids accessing their Facebook accounts)
    - I could go on...

    I'm sure in the coming years they will add most of these items, so I'll drive mine now and trade in to get a properly configured luxury sedan.
  • edited November -1
    What is "electric overdrive"?

    I vote for mute-button to kids. Haven't seen one in any car yet, but I think someone in Tesla can figure something out.
  • edited November -1
    Timo;
    Sound-cancelling and/or white noise generators?
  • edited November -1
    How about that it can talk to you in 125 languages? Can it play pac-man or chess with you? Ejector seats? Programmable matter exterior so you can change its looks when you get bored with it? Jump across washed out bridges like KITT? Can it generate a wormhole to your destination to get you there faster? Come on Tesla engineers! You can do it! By the way do you take Stargate trade-ins?
  • edited November -1
    only if the cloak and hyper drive still work. Other wise it's just junk
  • edited November -1
    "Just how quick will depend on the model you choose. Tesla will be offering the Model S with three different battery packs, and two motors. The base car will have a 40 kWh battery and should be good for a 160 mile range on a full charge. One step up will get you in the 60 kWh battery, and now your total range will be 230 miles. While Tesla has some performance figures for these models, they haven’t published any power ratings for these two versions, so we won’t go into much detail on these models at this moment." That alone explains a lot why they have many options.

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  • edited November -1
    @Timo
    Electric Overdrive has been around for a while. (My 76 Triumph TR6 had it).

    It was a switch in the car that changed the final drive ratio. I believe it was nothing more than a solenoid that pushed another higher-ratio gear into place.

    If something like that sat on the MS rear-axle I believe our range would increase while giving the car a much higher top speed (to match 155mph for any luxury car on the Autobahn at very least...)
  • edited November -1
    @dstiavnicky, that would include a much more complex gearing system in the car, and transmissions in general tend to break under electric motor torque. I for one don't want that in a car.

    Model S Performance has 130mph top speed with single motor. Get two-motor GenIII sport car (with enough power from battery) and you can easily beat that just by changing the initial gear ratio: when car acceleration is traction-limited instead of power-limited you can do that without losing any low speed acceleration. Closer to 200mph top speed is not out of question and if we get that then I don't need to go any faster. (two Performance motors = 800+ HP total if the battery can deliver that)
  • edited November -1
    Hi,

    Here's a recent car shopping experience - was shopping yesterday with a 23 year old for a car after grad school. The 2013 Audi A7 was her first choice. What a fabulous car. Superb quality inside and out, and all the options you'd pay extra for on a Tesla come standard on the Premium Plus model - which they offered at a tad over $60k. 0 to 60 in 5.4 seconds and passing cars at 70 on the highway was quite effortless.
    Of course there was that slight lag which the Tesla does not have (and the A7 is not electric), but I now have some sympathy for the poster who was upset that he had to pay extra for "basic luxury options".
    I personally did not get the same "Joy" I had driving the Tesla, but the A7 was truly excellent for a sedan.

    It really boils down to whether we are enthusiasts or looking for the best deal (both of which are fine)
    In fact I know a 20 something who said he plans to save rent money by also living in this beautiful machine - in the local Y's parking lot, and use the "Y"s facilities for his daily ablutions before leaving for his IT job (?!). I'll let you know if he actually does it, but he has finalized his car!

    Happy Sunday.
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