Forums

Model X price with a GigaFactory (30% less) battery?

Model X price with a GigaFactory (30% less) battery?

Ok, we've been told that the Model X price will be similar if not a tad more than Model S. This price is with the expensive Panasonic batteries. With GigaFactory batteries expected to bring down battery pack pricing by 30% ( if not more), what should we expect pricing to be for an 85 X with the reduced price of a battery pack out of the GigaFactory?

ian t.wa.us | February 18, 2015

I doubt the X will get Gigafactory batteries. I expect them all to go into the 3.

Tâm | February 18, 2015

@David N

It's an old question!

Why should I pay dearly for a radio now?

Why should I pay so much for a black and white TV now?

Why should I pay much more for a color TV now?

Why should I pay big bucks for HDTV?

Why should I pay so much for a Commodore 64 computer?

Why should I pay an arm and a leg for Palm cell phone?

Why should I pay for an Iphone 1 when I could buy it dirt cheap when the next version come out?

Early adopters pay dearly.

Later generations could afford thanks to early adopters.

If you can wait, then good for you.

I can't tell the future of whether I'll be alive by then.

I can't tell if I can wait and go without the Model X and then I might regret if I'll get into an accident without Model X's safety features.

It's your call.

georgehawley.fl.us | February 19, 2015

If and when the MX gets cheaper batteries, the price will be the same. The profit will be bigger. So says a shareholder...

Brian H | February 19, 2015

No, EM is projecting the day when battery storage reaches $100/kWh. Within the decade, at which point it will be "game over".

dguisinger | February 19, 2015

That is one thing that makes me hesitant to buy a Tesla until 2017... The fact that the MSRP of the 2nd or 3rd model year of a Model X could drop significantly due to a decrease in battery pack costs.

While I'm willing to pay extra for cutting edge and technology I believe in, I still have a hard time with making a monthly payment as large as my mortgage for something that could be $10,000-15,000 less the next year once the Gigafactory is online. That would destroy resale value overnight.

Its not like Tesla needs my order in the meantime, they've got all of 2015's production on the Model X pre-sold.

vandacca | February 19, 2015

@dguisinger, the current Tesla line-up, including the soon-to-be released Model-X is definitely for people who happen to have a lot of spare cash lying around. I don't think it would be feasible for most people to take out a loan to pick one up, unless they absolutely had to have one.

However, I don't see the price of the Model-X going down drastically in the next few years. It will take time for the Giga Factory to ramp up (plus, you also need to add in the Tesla delay factor) so it will take even longer for the price to begin to drop. I don't see the price dropping immediately after the first battery is made, but rather gradually over the course of a few years. The price of the Model-X will take even longer to drop (if at all) since it takes time for cheaper batteries to trickle into production lines.

Tesla will also be making improvements during this period of time, which may compensate for the price drop, so in the end, customers may not see any price drops at all (but maybe more included features).

I just don't want you to be disappointed when the price of a modestly loaded Model-X is still ~$100,000 by 2020.

dguisinger | February 19, 2015

I understand that, but it is the one part of the vehicle subject to rapid depreciation if they come out with a better or cheaper version of that part.

I honestly would rather buy the vehicle but lease the battery pack.

jjs | February 19, 2015

The price of the X or the S will not come down. However new models, the 3, as an example will be added to the TM offerings. It will be much cheaper and will be a compelling car. It will not be in the same class as the X or S.

So if you want to wait for cheaper then I think you are really waiting for a 3.

dguisinger | February 19, 2015

Again, for a second time, I'm not talking about the purchase price of when I purchase the vehicle. I'm talking about if they vastly improve the battery or drop the price of the battery, resale value of the existing vehicles will plunge. Its nothing about "waiting for cheaper". I swear you guys sometimes fire off a near-canned response of if you can't afford it, don't buy it without actually looking at or caring what was written...

I for one care about the fact that in 3 years do I want the vehicle value to drop 50% or 70% of what I paid. Buying a Model 3 doesn't solve that, the quickly changing world of electric vehicles and battery technology can cause the exact same problem a year or two down the road for that vehicle as well.

That said, I have the feeling the price of the Model S and probably the X will come down. The initial price range started at something like $57,000 but that battery was cancelled before it hit the market due to no one wanting a 100 mile range vehicle (some sarcasm, I don't remember the original range spec). Once Tesla gets their production up, if they can decrease their battery costs, I would assume they would try to shoot for that lower price range for an entry level S. If they increase their margins by lowering the battery cost, it doesn't hurt them at all if at the same time they decrease the vehicle price. If they can do that while maintaining same or better margins on the vehicle sale, and they sell more vehicles, all the better for them... but again, terrible for the used value of existing vehicles...

The Model 3 is in a totally different class. I'm not going to buy a compact sedan when I definitely need an SUV as my next vehicle.

vandacca | February 19, 2015

@dguisinger wrote:
I for one care about the fact that in 3 years do I want the vehicle value to drop 50% or 70% of what I paid

You don't understand, the price of the Model-X will never have any significant drop, so why are you worrying about it? Tesla will never break out the individual costs of components, so any drops in individual parts will never be exposed to customers.

Tesla may decide to throw in currently paid-for options at no charge as time goes on to partially compensate for price drops in manufacturing costs. Therefore, I don't see the price of a Model-X being any different 5 years from now.

A customer buying a Model-X 5 years from now, will pay the same price as today, but may have a battery pack with a 5%-10% improved range and maybe a few extra features at no charge.

Keep in mind that Tesla has increased the base price of the Model-S once and it may do so again in the future, which is the opposite of your concern.

georgehawley.fl.us | February 19, 2015

+1 for Dan.

People don't seem to understand that price and cost are two almost independent quantities connected only by the requirement that price must be enough greater than cost to guarantee a profit.

In a competitive marketplace price is heavily influenced by the competition. The design and manufacturing folks have the task of continuous cost reduction to give the company as much pricing flexibility as possible while maintaining profitability. The lower the battery costs the better but don't look for a price reduction unless the company is pushed there by competitors.

Svenssons | February 19, 2015

The price for Model S have not changed since January 2013. Price for Model X will not change in years either. Tesla will not make much profit if any on the first hundred cars but profit will increase because manufacturing cost will go down.

dguisinger | February 19, 2015

Thanks George, I didn't think it was a difficult concept. I think in some ways its become a club, and people expect everyone elses cost of entry to match theirs forever into the future.

Svenssons, the price change wasn't due to a decision to hike the price of the Model S, the price change was the dropping of the 3rd and smallest battery pack size because there weren't enough customers wanting it to make it worth manufacturing. Tesla never envisioned the Model S as an almost exclusively $100k+ car,

I respectfully disagree with you 110% when you say they will not lower the price. Musk stated the car was to compete with european cars in the 45k-60k range.... you will always pay a premium for battery packs over a hollow fuel tank, but that said, I don't believe his goal was to ever limit the S and X to people who make over 100k a year. The initial rounds of cars were to fund projects to bring down the price of EVs by economy of scale. The first major step is the Gigafactory. The scale of economies on battery cells impact the production of the 3 just as much as it would the S and X.

Tesla has their 3-year resale price guarantee at the moment, which I think backs up my suspicion. A lot of people are worried about changing technology and the ability for new models to vastly impact the resale value of old cars via price drops or selling larger battery packs at lower prices which is effectively a base price drop for the 85. Just look at the way Tesla has handled the Model S... they don't even stick to model years, they upgrade the design and options several times a year. I'm not saying thats bad, but it does indicate their product isn't fully designed and they are learning and improving at a rapid speed.

My expectation after the Gigafactory is up and running is that the 85 batt gets priced where the 60 is now, and the 60 transitions the car back to the mid-50s where it was originally announced. They will likely also introduce a newer 100kWh pack to meet CA's ZEV rules for range. The only question in my mind is does this happen for 2017 after the gigafactory opens at the end of 2016 or will it be another year or two.

Tesla would never preannounce such a move, it would immediately kill sales as people wait it out.

vandacca | February 20, 2015

@dguisinger, I think a lot of people think that as soon as the Giga Factory comes online, the price of batteries will drop the next day. Maybe I'm skeptical, but I think it will take a few years for the price to drop. I also don't expect the Giga Factory to start the first day at 100% capacity, but rather a ramp-up over the course of a year.

After the end of the year, I expect the Giga Factory to purposely be producing at a level significantly less than 100% for a while and further upgrade as they see fit. If I were building a Giga Factory, I would want room to grow depending on the demand. And if demand isn't as high as I predicted, I wouldn't have wasted my investment. And if demand is greater than I expected, I easily have the room to add more capacity.

Elon is also building these batteries for other uses like home/business storage and perhaps even to sell to other EV makers. If demand isn't as great as expected, he can easily divert batteries to these other areas.

Finally, the first batteries that come out will not be any cheaper than existing batteries, because they will need to pay for the Giga Factory investment, but as time goes on, they will become cheaper.

Therefore, as I stated earlier, the price of batteries will take a number of years before they see any significant price drop. Tesla may factor that when pricing the Model ⚂ and sell them close to cost and defer their profit till when the price of batteries drops.

georgehawley.fl.us | February 20, 2015

Dan: I like your "if I were" thinking. My thoughts about battery packs continue as follows: 1. Battery packs aren't yet for sale. Therefore, they have no price except as an option when purchasing the car. 2. A Model S costs $10,000 more with an 85 kwh pack than a 60 kWh pack, $400/kWh added. Tesla battery pack is rumored to cost them $200-$250/kwh. Their goal is to reach a cost of $100/kwh. If they offer the MX with a third option of, say 110 kwh, then wouldn't it make sense for them to charge $10K more than for the 85kwh option? That's what I would do, if I were them. But I'm not so it is just some more idle speculation. I don't see any way that this devalues an older MS.

krissu | February 20, 2015

Why should Tesla drop the price if costs go down? They need money for Model 3, Gigafactory etc. The only thing which might bring the price down is competition. I more see getting a better car and bigger pack rather than cut in price. S and X will be premium products with premium price. Cheaper you get with different model, also you get it smaller.

Brian H | February 20, 2015

The battle of the imaginary larger batteries! A winner will be announced in 2017. Earliest.

carlgo2 | February 21, 2015

Cheaper batteries will mean more profit on existing and projected models. Don't look for clearance sale P85Ds for awhile!

They might allow for truly entry level models at some point.

A highly profitable Tesla, with access to vast numbers of affordable batteries, would be more likely to branch out to trucking and other applications.

It will also mean that solar storage solutions will be feasible and that is a big part of the gigafactory story.

Svenssons | February 21, 2015

Shareholders want to increase the price but Elon is reluctant and hope to be able to increase production to meet demand. Then production do meet demand, it would be better to start with some marketing and new model. It would take many years before Tesla will be able to meet demand and I do not see any lower prices before production is at par with demand.

ian t.wa.us | February 21, 2015

+1 cmcnestt.

Brian H | February 22, 2015

Agree with all the above; value driving volume is the key.

brian | February 22, 2015

@dguisinger Stated "Musk stated the car was to compete with european cars in the 45k-60k range...." It already does Most cars require fuel, lets suppose the average cost of gas is $3 over the life on the car, it gets on average 22 MPG, it has a useful life of 150K miles. Pretty real life assumptions. This car will use 6,818 gallons of gas over the life, that will cost an estimated $20.5K in gas, add in the other costs and you are in safely in the range of $23K over it's life.

That takes the 45-60K car to a 68K-85K car. electricity is not free, but my electric bill has only gone up $20 a month, lets call it $40 for the 2500 miles I have so far, that equates to about $2400 in electricity for a useful life of 150K miles.

TCO is one of the hardest things to convey, people always think its more expensive, when they have to put the money up front, and are quite fine with the monthly. The Model S is 100% in competition with 45-65K cars, and its actually cheaper than the $60K cars for the TCO. BTW - this is without calculating external costs, e.g. what does carbon cost society, what do ethanol subsidies cost taxpayers?

Brian H | February 23, 2015

Every day a commuter can spend his last $10 on bagels rather than hold it back for a few gallons of gas every day.

vandacca | February 23, 2015

Another thing consumers have a hard time wrapping their heads around is that Tesla vehicles (Model-S and Model-X) have replaced many moving parts with one extremely reliable electric motor. Also, the bottom of the vehicle is a single slab of protected steel, so there are no extremely hot tubes carrying exhaust with tons of nooks and crannies to collect salt and rust.

A Tesla should outlast any ICE (Internal Combustion Engine) car by an extremely large factor. I'm expecting to be able to drive my vehicle for (at minimal) the life expectancy of 2 ICE cars. That would further decrease the TCO (Total Cost of Ownership) by half when compared to ICE vehicles.

georgehawley.fl.us | February 23, 2015

Yes, the S85 has been added to the family trust as it will probably be a viable car for generations to come. Can't say the same for the 2012 MB coupe that is already beginning to show signs of fatigue.

jjs | February 23, 2015

vandacca
Isn't the bottom aluminum?

vandacca | February 24, 2015

@jjs, the Tesla Battery Pack is a very complex construction. I think the actual battery pack may be made of plastic-wrapped aluminum, plus a hollow aluminum protector bar, a titanium shield and additional solid aluminum deflectors. There is also a steel + ceramic firewall protecting the passenger compartment. Many of these enhancements were made after the first piercing of the battery pack by crazy road debris (e.g. trailer hitch).

So, I guess technically your right, and my previous post was inaccurate.

JeffreyR | February 25, 2015

@vandacca

Elon has stated that he is very confident they will achieve at least a 30% cost savings w/ the Gigafactory. The first 15% comes from shipping and import tariffs they will not have to spend. The next 15% comes from economies of scale and increased efficiencies. The first 15% they get as soon as battery packs start rolling off the line. The next 15% and beyond will happen (and improve) over time.

The Gigafactory will not only cut cost directly w/ these savings, but also through better visibility and predictability of battery pack production and delivery. Also the GF will make the rest of production scale up and get cheaper.

vandacca | February 26, 2015

Thanks @JeffreyR for the breakdown of savings. I wasn't aware of that first 15% savings and I am excited about that news. I would be a lot more excited if my Model-X could qualify for that 15% cost savings (and of course make it cheaper for me to purchase). ;)

PMadFlyer | February 26, 2015

I thought the goal was originally to bring the cell cost to at, or below $100 per kWh.

Red Sage ca us | February 26, 2015

dguisinger "I'm talking about if they vastly improve the battery or drop the price of the battery, resale value of the existing vehicles will plunge."

No, they won't. You get what you pay for, and you pay for what you get. A Model S with a 60 kWh battery pack is still a Model S. If someone buys a used one, they will still have the option of upgrading to a higher capacity battery pack. The Model S is a platform, not a typical car.

"I for one care about the fact that in 3 years do I want the vehicle value to drop 50% or 70% of what I paid."

OK. Suggestion: Whatever you do, don't buy an AUDI, BMW, or Mercedes-Benz vehicle. Yeah.

"That said, I have the feeling the price of the Model S and probably the X will come down."

Nope. As I'm sure others have already pointed out, the Model S and Model X occupy a specific product range. The content, features, and technology may improve, meaning more is included at the price point, but no -- the Tesla Generation II vehicles will not go down-range. Tesla has no need of an analog to an A6, 5-Series, or E-Class vehicle. The car is all aluminum, frame and body panels, that warrants a premium and is justly deserved, especially combined with its performance.

georgehawley.fl.us | February 26, 2015

+1 @Red

Red Sage ca us | February 26, 2015

dguisinger said, "...I don't believe his goal was to ever limit the S and X to people who make over 100k a year."

The Generation II vehicles exist to raise funds for Generation III, first and foremost. It does not matter who buys them, as long as they sell. Plenty of people who get AUDI A8, BMW 7-Series, or Mercedes-Benz S-Class do not earn over $100,000 per year. As soon as their credit rating allows them to 'make the payments' they acquire their trophy of choice, regardless of affordability. Strange that no one has a problem with those marques, but Tesla Motors is labeled 'a niche player that sells toys for the rich'. Hogwash.

In terms of intent, Tesla Motors simply underestimated their potential market. They thought their early adopters would primarily seek to save money, and that the majority of buyers would choose the Model S 40 or Model S 60. They were genuinely surprised to find that the grand majority instead opted for the Model S 85. They thought a small handful of buyers would choose the Performance edition. Instead, they were able to move far more of the top-of-the-line version, by leaps and bounds, than anyone showed interest in the Model S 40. With their projections turned completely Topsy-Turvy, it became obvious that the low end version should be dropped in favor of what Customers wanted, so that Tesla could take advantage of the improved profit margin that yielded.

dguisinger said, "My expectation after the Gigafactory is up and running is that the 85 batt gets priced where the 60 is now, and the 60 transitions the car back to the mid-50s where it was originally announced."

Interesting theory. Not gonna happen. I once thought much the same. But then I realized that Tesla Model≡would almost certainly debut with no less than a 60 kWh battery pack for $34,900. That, in order to both allow a 200 mile EPA rated range, and make for reasonable performance with a 300+ HP rating. So, the Model S 60 would probably go away before the launch of Model≡, I think. With about $15,000 in options, the Model≡60 will knock on the door of $50,000. And a fully loaded Performance version with a higher capacity battery pack might well climb to just shy of $70,000.

dguisinger said, "Tesla would never preannounce such a move, it would immediately kill sales as people wait it out."

Precisely why people here kindly suggest that you should wait if you are not satisfied with what Tesla Motors offers today. You have the option to buy today and enjoy what you can to the fullest... Or waiting. Choose.