Skip the 40 kwH option

Skip the 40 kwH option

I understand everyone won't agree, but hear me out:

One of the key problems with electric cars is range anxiety of ICE owners. The moment they smell "out of power"-issues, many people will run for their life.

The purpose of the Model S is two-fold: to finance Tesla (make it break-even) and establish a desirable product, that people can aspire to. That is the point of starting with the luxury high-end: to create the "ideal product", which not everyone can afford, but everyone wants. Then you let the technology and price trickle down until you reach the mass market price point. If you move down in price too quickly or too low, people will instead see it as diminishing your brand. It's well-known that some luxury products sell better when prices are raised - a bit counter-intuitive, but not if you look at the real purpose of buying a luxury car.

So my case against the 40kwH is that
1) It risks creating a product that will play into the hands of consumers' range anxiety and competitors' trash-talking, by having too low a range and no super-charging. It's a bit comparable to making a slow Ferrari, or a plastic iPhone.
2) It lowers the price point of Tesla cars, diminishing brand "exclusivity". Let's face it - people don't just buy BMWs, Lexuses, Porsches etc because they're nice cars, they buy them because not everyone else drives them.
3) It probably cannibalizes on 60kwH sales - if there were no 40kwH option, most reservation holders would move up (and probably afterwards think they made the right choice) and the others would wait until finances improved or Tesla released a lower-priced model, i.e. the "GenIII".
4) It adds to production complexity.

I'm not trying to be elitist here - if there's no 40 kwH option, I won't afford a Model S. But maybe I shouldn't.

In my perspective, Tesla should launch work on making a higher-performance option in 2013, not a lower-performance. Make an absurdly over-powered 100 kwH monster and price it at a premium, or launch an updated Roadster (as long as neither stops them from working on the Model X or GenIII).

Timo | January 16, 2013

AFAIK next Roadster will be based on GenIII platform. Smaller than Model S, but just as premium with plenty of power and speed.

Europe doesn't get 40kWh version, so what you wrote is already happening there.

alfafoxtrot1 | January 16, 2013

I suspect a large number of us were first drawn in to Tesla by the $50K price point. Its such a part of the Model S message that I don't think its possible to remove it. Besides, the ultimate success of Tesla and Musk's vision demands that evs be viewed as accessible to all. The 40kwh car is a clear stepping stone on that path.

schoendp | January 16, 2013

I understand the basis of your argument and I do think it is important for Tesla to keep a luxury/superior image in the eyes of the general public. However, we are talking about a $50k+ car here, one that costs more than the average american family makes in a year. You mention Tesla is competing withe Lexus, Mercedes, etc. - and they all have cars cheaper than this price point. As Tesla has stated numerous times, this is there competition, not Ferrari.

I do think you are correct, that a large number of reservation holders would move up to the 60kw if the 40kw went away, however, those individuals may not have done the research or learned to love the car if the price point started another $10k higher.

Ultimately, Tesla will be judged on the quality of MS and for those that purchase the 40kw version, the general public will just assume you spend twice what you actually did. Tesla has done a great job of touting their top end cars and most people only know the higher price point of the Roadster and 85kw MS. While your points are definitely valid, I think the benefits of the 40kw (increasing sales and placing cars in uppper-middle class neighborhoods for all to see) outweighs the potential brand decline.

schoendp | January 16, 2013

their, not there - we really need an edit capability.

ChristianG | January 16, 2013

The 40kw battery brings the Model S around 1/3 further than the competition. That isn't so much but with a price wich isn't very far away from the competition it has a little foot in that bracket too.

I think Tesla did a fantasic job with the looks, range and performance of this car, so i don't think another 0.3s faster to 60 mph and 50mile more range will make much difference in the descition to buy it or not.

I think what they have to do for their next version and the X is that they catch up with the feature list. The Model S is a bit Spartan. In 2 years the batterypack should be cheaper so some of those features also should make it in the base version if the price doesn't change.

fluxemag | January 16, 2013

Count me as one person who wouldn't buy the S if not for the 40kWh pack. I have no use for the extra range, supercharging option or speed (ok...the speed would be nice). I think 10k extra for things I don't need or want would be a deal breaker. And as others have said, the base model is still $60k with the actual price paid out the door, so that's not exactly a mainstream price point.

Do I think the 1 series BMW or the C class Merc degrades the quality of those badges? A little bit. Much more so than a $60k Tesla does.

scriptacus | January 16, 2013

"..if there were no 40kwH option, most reservation holders would move up..."

For this to make any sense economically, 5 out of every 6 40kw buyers would need to accept a 20% price increase. Does that sound realistic to you? Anything less means Tesla is losing money.

jat | January 16, 2013

@brent - no, they would be losing customers. However, currently they have significantly more customers than they have production capacity. That likely wouldn't remain true for more than a year, but until then they would actually gain money by selling only more expensive cars.

stevenmaifert | January 16, 2013

The 40kWh version still goes farther on a single charge than any other EV, and you still get a premium vehicle to enjoy. It's nice to have the range of the 85 & 60 in our back pocket when we need it, but I suspect very few of us have a daily driving requirement that requires the longer range. 40kWh damage the brand?...Nah!

syddent | January 16, 2013

I would not be buying this without the 40kWh option. With my other options I move into the cost of the bare bones 60kWh, but I would not be in this without that option. I am fully aware of the range limitations (not that much with my 70 mile commute) and I am a previous EV1 owner and this exceeds that range. I will try NOT to take offense that the 40kWh somehow dilutes the brand. If in the end, Tesla is trying to sell affordable cars (see Model X) then they have to make that transition sometime.

Sudre_ | January 16, 2013

I love the idea people have that Tesla needs LESS customers because they have a backlog that is three years old. If Tesla is making a profit on the 40kWh car they should keep it. I would agree to drop it if it was only like <10% of sales simpley to make the line run smoother.

stephen.kamichik | January 16, 2013

Some day TM may drop the 40 kWh and introduce a 110 kWh battery pack for the MS. At that time the Gen3 will be introduced. This is only speculation.

david_se | January 16, 2013

So just to explain, I don't mean the 40 kwH is a cheap car - it's still expensive to me, and it still looks the part!

The concern is more that people will buy the 40kwH option as a compromise, because they feel they can't or won't pay for a more expensive option. But they will still demand a full "Tesla experience", and end up being annoyed by the lack of range, the lack of fast-charging options etc. Which in the end will create unhappy customers, and brand damage to Tesla.

There seems to be people in this thread who have very exact views of their needs, and know all they need is a 40 kwh range. It sounds like you're making smart decisions. You know what you're buying.

I'm just worried not everyone does. My experience is that selling premium products to a price-sensitive group is a tough proposition. You often end-up making compromises that you know is not in the best interest of the consumer. If your vision is to sell "the world's best car", you should stick to that.

Without 40kwH, Tesla would not be getting as many reservations, but they'd still be able to fill their 20K target for this year - buying them time to introduce a better-speced top version and lowering the price of their 60KwH slightly, for example.

Chuck Lusin | January 16, 2013

My commute is 25 miles round trip, it is pointless to get anything other than a 40. If the 40 option was not there, I would not have an S, and would have to get an ICE, then I would not need to replace it for 10 more years. Having the 40 is a good option to keep. More options equals more customers. When I need to replace the battery in 8 to 10 years, then I’ll drop in the 300kHw one!

July10Models | January 16, 2013

When I first read the headline "Tesla EV to go 300 miles/charge starting at 50K." That got my attention. Had the headline read, Tesla 100K EV to go 300mi/charge, I would not have looked twice. Needless to say once I looked into it, I was hooked. Specially excited since my 300mi EV is on a truck heading East.

Big Tex | January 16, 2013

Tesla likes to be called the "Apple" of cars because their approach to sales and marketing of revolutionary devices are similar and Apple has poured a ton of money into research for their sales machine. They're whole thing is selling premium products to price sensitive audience. General marketing is you can't give your customers more than 3 general options or they get overwhelmed from the choice and won't buy anything. Apple likes to give 3 choices of a product such as the iPhone which is by far the most mass market product they manufacture. They offer the 16 gb, 32 gb, and the 64 gb. In general this has worked well for them. I don't think offering a 16 gb has hurt them, do you? You can expand this concept to Tesla. Even though its a different price point, the principles and psychology is the same.

Lou in SoCal | January 16, 2013

I think it's misconception that the higher end models are where the money is made. It may be true that Tesla has a bigger margin for the 85kWh cars but the adage of "sell to the masses not the classes" basically holds true. Over time, the 40kWh and Gen III cars will hold Tesla up.

Similar to Ford where enthusiasts look down on the 6 cylinder mustangs, it's actually these "six bangers" that is the reason 8 cylinders mustangs are still sold. Same with Porsche...their best selling cars are the Cayenne and Boxster. Some Porsche enthusiasts claim the Cayenne and Boxster are not real Porsche's or their girl cars, but it's these cars that allow Porsche to stay above water and build the 911s.

Papafox | January 16, 2013

I live on an island that's 44 miles long and I bet you can guess which battery I'm buying. Give us buyers some credit for thinking through our decisions.

Papafox | January 16, 2013

I just read your second post and appreciate the clarification.

Big Tex has a valid point about offering upgrades of the same product at significantly different price points. It's the way to not only address different consumer needs but also to maximize revenue from a product.

Mocaptain | January 16, 2013

I maximized the battery option because I will be parking my car outside in the cold for an extensive amount while at work (I live in New England). Battery temperature management over a long time in drastic climates (hot and cold weather) will put a dent in your range. Also I like to drive my car over 55 mph Lastly I plan to drive my car more than 5 years. All of our batteries will loose capacity over time so I took that loss in consideration.

So 5 years from now when I park my car at work in the winter for 10 hours, I would like to know I can still drive over 75 for 30 miles (after commuting into work 30 miles) and make it home with out destination anxiety.

Many owners are already noticing almost half the range under weather and speed factors.

olanmills | January 16, 2013

On point number two, it depends on where you live and roam.

I was never that interested in BMW or Lexus because they're both expensive and super common around here, and I really don't give a crap about what people may or may not infer by looking at what I drive or how I'm dressed. The only reason I would be interested in something like a BMW is if I thought the features, quality, and style were worth it, but not the "exclusivity" as you say.

Dwdnjck@ca | January 16, 2013

The forty kwH battery provides more than enough range to meet my needs 99 per cent of the time. For $12500 I can rent a car or buy airline tickets to more than meet my needs for the other one per cent.

Brian H | January 16, 2013

You might be able to "drop in" a bigger battery later, but at the mo', the official line is that the batteries can be replaced 1:1 only. At least for the replacement contracts. I think they hedge by saying that predictions, especially about the future, are hard.

helmut.treiber | January 17, 2013

as an European reservation holder the 40 kWh Model was the only affordable type for me. Now with the lack of this option in Europe i cancelled my reservation. Why don't they call the "the best car in the world" just i-car? ..would be appropiate for this behaviour.

david_se | January 17, 2013

Helmut - I'm sad too that I won't afford the Model S. It sucks, but it's just the way it is.

What I like though with Tesla is that the money the receive for the expensive cars, they pour into product development instead of fancy marketing. R&D that will eventually give me a great car, probably a GenIII.

It's just like with the fancy LED TVs. Been stuck with an old non-HD TV for a couple of years while other people upgraded. Now I can buy a great HDTV at a fraction of what they paid.

Brian H | January 17, 2013

It's called the "late adopter bonus".


Chuck Lusin | January 17, 2013

Thanks Brian!

Chuck Lusin | January 17, 2013

From the BB today, no battery upgrades:

Now we know for sure.

schoendp | January 17, 2013

We know for sure what they are saying right now. We have no idea what they will be saying in 10 years when the EV landscape could be radically different.

DouglasR | January 17, 2013

If the car sells well, there might be third party after market solutions in eight years. This is just a statement of TM's policy, and probably aimed mostly at the battery replacement option offered currently.

cprenzl | January 17, 2013

I can now say that studies show that most people are skipping the 40kwh battery pack,
120+ responses in less than 24 hours. Check out my thread for the numbers. Only 7% of people are getting the 40kwh pack

Ad van der Meer | January 18, 2013

I've cancelled because the 40kWh is available in Europe... :-(

Sudre_ | January 18, 2013

120 out of 20,000 is not a very accurate survey but it does look like less than 10% so the 40 looks like an option that will get dropped.

Chuck Lusin | January 18, 2013

If they want to drop the 40kWh and change me to the 60kWh (with my price grandfathered in) I’ll add the 2K for supercharging. Sounds like a nice deal. :)

PS: I’m glad I create my post in Word, because half the time it blows up on submit!

Brian H | January 18, 2013

install the Lazarus add-on, and no post is ever lost.

Ad vdM;
Do you mean NOT available? ;)

jshelton | January 18, 2013

If you will not use the 60 because you are in the city, you will get little to no utility from it. So the only reason to buy the larger pack is for resale. That approach is not likely to give you a return on your additional investment. In my view, the only reason to buy the larger packs is for their utility to you as the buyer in terms of range and performance.

ChasF | January 18, 2013

+1 @jshelton

+100 @Chuck Lusin!!

Chuck Lusin | January 19, 2013

Thanks ChasF!

davidslagle | January 19, 2013

Suggestion. Set the trip odometer of your current car. Check the current miles you drive right now for week, maybe even a month. If any day you exceed a 100- 120 mile range in one day, the Tesla 40kWh is not for you. I checked my miles for a week and they were 140. I would have 100-120 miles of driving range dailey waiting each morning after a nightime charge. If we need to take a longer trip we simply use our paid for Avalon on that trip. 10k miles a year saves $3000+ in gas cost vs my current 2003 Ford F-150 I drive to and from work. If I have a lunch meeting its within my range. When we go out for dinner with friends our Tesla S 40kWh model is still a head turner - afterall its still the car of the year. Golf? Local shopping? Groceries? Movie? etc... The best part is were not wasting money on something we would seldom need. If the Tesla S price was $10k more for something that doesn't work for me. I'm out.

Brian H | January 19, 2013

The $2K option works for the 60 only at time of original manufacture. You'd have to rip the car apart and install heavier wiring, for starters. If you upgrade a 40kWh battery, you will get more power but NEVER Supercharging. Same for a 60kWh built without the factory hardware installed.