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Tesla, please increase price of Model 3 to $38K

Tesla, please increase price of Model 3 to $38K

Rationale:
The now mediocre C300 is $39K base price.
The ridiculous Bolt is $37K.
The BMW 328i with AWD (which arguably the Model 3 traction control could probably be similar to) is approximately $38K base.

Yes at $38k we would see half the reservations we now have. But that $3k increase can give better profit margins to Tesla. In addition as I demonstrated price is competitive. I did not even mention the operational costs with fuel and maintenance, which are very high in the combustion vehicles category. Tesla could charge $38k for the base model 3 and offer even better warranty in order to attract more customers.

Respectfully,

TesMD | 08. april 2016

while I totally understand your point and agree that Tesla probably can sell the base M3 at higher price point, I highly doubt that anyone will just order a base model. So, if people just add AP and Supercharger access, those will have a great margin of profit for Tesla! AP technolgy is mostly developed, and SC are mostly built so much of the revenue from those options will be profit after deducting the price of hardware for AP

PhillyGal | 08. april 2016

The base price for any car is sort of irrelevant - just a marketing gimmick. Jeep Cherokee, for example, starts at $23xxx. I picked it because the dealership near my house has over a hundred new Cherokees on their lot - its a huge dealer. The very lowest priced model in stock is $27k. That means out of 100+, they don't have a single base model.
In other words, good luck finding a $39,000 C300.

Of course Tesla will actually allow you to buy a $35k Model 3 if you want. Chevy may decide to make one trim level and thus let you easily grab the base model as well but that remains to be seen.

jordanrichard | 08. april 2016

Not going to happen. Elon/Tesla promised a car for $35K, they are not going to change that and look like any other car company and jack up the price just because they can.

KP in NPT | 08. april 2016

Not to mention the negative PR consequences.

Chunky Jr. | 08. april 2016

I have a feeling Tesla knows what it is doing when it comes to pricing their cars. I bet less than 10% of the Model 3s will be sold with no options.

I agree with @mp1156 that the press would hammer them if they changed the price.

Not everything is about maximizing profits at any particular point in time. Sometimes there is a longer game being played and making some strategic moves now can pay off big time in the future.

adias.angel | 08. april 2016

While I understand where your coming from, it's not all about number. Elon is looking to change the face of automobiles. Being profitable yes but balancing that with making a change in the world. I applaud him for the lower price point and to continue to push the boundaries. He has done a fine balancing game so far.

damonmath | 08. april 2016

I once tried to buy a brand new base model E550 convertible from the Mercedes dealership. I was told that although there was a base price, not a single car was made in the base trim level. They were all either a pkg 1 or pkg 2 trim level car. The C300 is no exception.

MarlonBrown | 08. april 2016

In the case of the Model 3, I beg to differ that many people will order the base with no options. There are lot of people out there who are primarily looking to decrease operational costs by savings in fuel and warranty. You tell me 10% of people are in that category. I tell you it will be more like 50%. Tesla needs to profit in order to be successful guys. No utopia of "changing the world" will continue if company is not very profitable.

Tropopause | 08. april 2016

Elon already tweeted average price will be $42k.

KP in NPT | 08. april 2016

If you are following model3tracker.info, you will see that the majority of people that have thus far entered their info are choosing options - many options. While it is a small percentage of total reservations and might not be an accurate representation, I do not think half of those buying will buy the base car.

jordanrichard | 08. april 2016

Not to nit pick, but one misplaced word or turn of a phrase will cause a rumor to start. Elon said with an anticipated option mix, the average selling price would probably be $42K.

I am sure this $42K number has already been quoted as what the car WILL cost, because people/media drop the word "average".

Tropopause | 08. april 2016

Thanks for clarifying Jordan.

If average selling price with anticipated option mix is $42k, then how many Model 3 are selling at base price $35k?

j.taam710 | 08. april 2016

Personally, the lower base price just makes me feel more comfortable putting more options in. Optioned out, I think mine comes in around $50k.

jordanrichard | 08. april 2016

Tropopause, oh, that obviously remains to be seen. Nothing is selling right now anyways because no one can order their cars yet. I don't know that Tesla even knows for certain what the pricing structure/options will be. Obviously Elon has an idea or otherwise he couldn't up with that $42K price.

damonmath | 08. april 2016

If the top-of-the-line Model 3 has a low or even sub 3 sec. 0-60, I will max that puppy out with every conceivable option and it will still be a bargain next to my Model S.

MarlonBrown | 08. april 2016

I want to see Tesla operating at 20% margin for the model 3. They have done everything to deserve it. Manufacturing is a hassle and low profit margin. BMW is one if the most profitable auto makers, 7%-9%.

Morlandoemtp061383 | 08. april 2016

This will hopefully be the last car I buy so I may go a little crazy on the options, car needs to last me 20-30 years.

Bighorn | 08. april 2016

After promising a $35k car for several years, this is a silly suggestion. Probably worse than the $3k downpayment idea.

MarlonBrown | 08. april 2016

Morlando, you are crazy man :-)

staze | 08. april 2016

@ BigHorn, +1. I was looking for the thread to link here:
https://forums.teslamotors.com/forum/forums/elon-increase-fee-3k-or-2k

OP, I understand your points and respect them. A company should basically maximize margin and increase revenue for shareholders. However, that is only one approach to a successful company. It's been evident that the MS/X have been the high high margin vehicles to bring in capital for growth and shareholder value. Revisit the launch for the Model 3, the first thing Elon spoke of was change and environment. That is the company's mission imo. It's probably more important to them than profit. As time moves on and engg/overhead costs are borne by more vehicles the margin on all three models will improve.

Lets look at it another way, the low entry point on base price and deposit allowed more people to commit (temporarily) to buying the car. It also generated a ton of free press. There is value in both. I'm sure smarter people than I could calculate that number and it is probably a meaningful number which results in additional shareholder value. Thanks for the discussion.

FelixMendeldog | 08. april 2016

People, stop telling Tesla Inc. what to do—they run this show, and do a better job of it than anyone else.

staze | 08. april 2016

@FelixMendeldog, you mean Tesla's success didn't come from all the armchair CEO's on this forum?
/s

MarlonBrown | 08. april 2016

Felix, open forums are like that dude. People are supposed to express opinions.

NKYTA | 08. april 2016

It appears you opinion isn't very popular though. ;-)

I disagree as well.

eric.whang | 08. april 2016

FCK THAT

carlk | 08. april 2016

It makes total sense although it would be a tough sell for political reasons. People always forget the only thing that determines a value is the market force. This is how free market works. When demand far exceeds supply there is only one conclusion. The price is set too low.

In the end the market force will still work. When there are enough people who are willing to pay $45~50K for a well optioned 3, which is still a deal of the century, those who really want to buy a $35K car just have to wait until demand for those is exhausted. Just ask those who have ordered X70D or those who wanted S40 or even S60 before.

bernard.holbrook | 08. april 2016

Marlon Brown, feel free to open your cheque book and write a $3000.00 cheque to Mr. Elon Musk. I'm sure that Tesla will accept more than MSRP from you. I've even looked up his mailing address for you as I am helpful that way. (Found under Support, then Contact)

Elon Musk
Tesla Headquarters
3500 Deer Creek Road
Palo Alto, CA 94304

thegute | 08. april 2016

Yes let's not try to put this car out of the reach of the people it was meant for in the first place. Even $35,000 is a stretch for a lot of people but if they can see the savings in gas and maintenance, like a lot of us Model S owners, they can justify it and they get to drive one of the best cars in the world. We want everyone to drive a Tesla, let's not try to exclude people that are already mentally prepared to join the rEVolution.

carlgo | 08. april 2016

An interesting thing about the Teslas is that they are all special ordered. There are no lots full of cars with "popular options", colors, etc. You can get that $35K model, but you won't. Well, someone will...

That predicted $42K average will probably prove to be quite low.

kzodz | 08. april 2016

I'm loving the "Charge more $$$" threads, aka "How can Tesla get the 200,000 reservations ahead of me to cancel". In any case, regardless of where it should/could be priced to change the 'facts' now after so much hype would be corporate suicide. They do that, then what's to stop them in 2 years while we are still waiting for the first cars to be buillt to announce the base car only has a range of 85 miles! lol.

PhillyGuy | 08. april 2016

So far, mostly everything Tesla has done regarding the Model 3 has been brilliant. They generated enormous buzz without technically advertising. The main marketing tactic has been a well placed tweet by Elon. When was the last time a new vehicle generated this much anticipation? I can't think of a time.

Too much publicity has been generated to retreat/increase from the announced starting price. Although Tesla raised the price on the Roadster after announcing it and collecting it from its pioneers, Tesla is not in the precarious position they use to be in. Too much risk to change their starting price at this juncture.

SbMD | 08. april 2016

Good to voice the opinion but I totally disagree. I see no reason to micromanage Tesla on this.
If Tesla did things because other car manufacturers did it, then Tesla wouldn't be a cutting edge company.

SbMD | 08. april 2016

An advanced car for less money at base price than its competitors, and can still have an acceptable margin by their calculation, puts them ahead of the pack... again.
Besides, as said before and in the thread above, most likely the ASP will be higher than $35k.

Supraman | 08. april 2016

kzod - aka "How can Tesla get the 200,000 reservations ahead of me to cancel"! LOL. Nice one.

That's exactly how I interpret these threads too. It's so blatant. The original post for this thread contains the phrase "we would see half the reservations we now have" and the original post for the increased deposit thread contains the phrase "I always thought that requiring only $1k as a reservation fee would attract too many people".

Then there's a vain attempt to suggest that the motivation for the posts is to help improve Tesla's business model!

SUN 2 DRV | 08. april 2016

Jordan: " I don't know that Tesla even knows for certain what the pricing structure/options will be. Obviously Elon has an idea or otherwise he couldn't up with that $42K price."

I've wondered if one of the drivers for this number is the $7500 tax credit. People have the $35k price in mind and with the $7500 tax credit it means they could option the car up to $42k and still wind up with a net cost of $35k to tell the spouse. :-)

carlk | 08. april 2016

Knowing my wife giving the options of buying a $50K car with $7.5K refund and a $35K car for full price she will tell me to buy the $50K car. I know many probably would do the same too. People who want to buy a $35K car likely will get what they wished for too.

Bubba2000 | 08. april 2016

What matters is the average selling price. Looking the MS ASP it is closer to $100K rather than the $70K for the base model. I suspect that the initial ASP will be $50K for the M3 before any tax credits. Folks will pick supercharger option, AWD, autopilot, performance +/- ludicrous, fancy interior, seats, moonroof in available, air shocks, etc.

I get the impression that Tesla will have an attractive and functional design as well as optimized for mass production using commodity components or already developed for the Model S & X. With huge demand, Tesla will have to set-up dedicated fully automated factory. In that case, the costs could drop steeply. Meanwhile, the cost of Al, Steel, Copper, Nickel, Cobalt, etc have fallen in prices by at least 50% in the last couple of years. Only Li has gone up in price by 20%, but it is a small component of the battery cost. Tesla profit margins in MS, MX should increase with the falling cost of raw material and economies of scale. M3 costs should be lower too.

http://www.indexmundi.com/commodities/?commodity=aluminum&months=60
http://www.indexmundi.com/commodities/?commodity=copper&months=60
https://www.quandl.com/collections/markets/industrial-metals
http://www.indexmundi.com/commodities/?commodity=nickel&months=120
http://www.infomine.com/investment/metal-prices/cobalt/all/
http://www.metal.com/metals/productinfo/201102250219

Maxxer | 08. april 2016

I want 2 battery packs, 8 wheels and 2 steering wheels for 70k. period

TaoJones | 08. april 2016

Please change the thread title to "Just because you can does not mean you should".

Same applies to starting new threads that inherently will cost people money. Kinda like threads for pay per use for supercharging schemes advocated by those who don't use them. Or threads persecuting locals for problems that barely exist if they exist at all.

The base price is fine. In fact, I'd expect future Model 3s to be far better values than what roll off the line at first. So that tax credit that a few will get, relatively speaking, merely levels the field. I'd much rather a 2020 M3 than a 2018 M3. Same argument can be made for a 2016 S90 versus a 2013 S85. Same money, essentially. Much better car later on.

carlk | 08. april 2016

Shhh... don't tell Tesla the 3 is priced too low. Sorry it's too late now. 325,000 people have already told them that.

Red Sage ca us | 08. april 2016

MarlonBrown: Respectfully? NO.

warren_tran | 09. april 2016

Marlonbrown: can you stop making these stupid thread.

bb0tin | 09. april 2016

@MarlonBrown
Tesla's, and Elon Musk's, mission is to advance the change to sustainable transport. It is not to maximise profit. This has been the plan all along as detailed in the 'secret master plan'
Tesla is well aware of the costs and likely profit margins on the Model 3. They are also aware of the revenue and funds required to expand. We are not.

larrytq | 09. april 2016

These, lets increase price threads piss me off so much. So much so I can't be bothered...

jamilworm | 09. april 2016

Here's one potential problem: Maybe the car will actually only be cool enough to feel like a $35k car. Ok I can hear the boo's. But c'mon people, we know so little about this car. Everyone is basing their judgments off of Tesla's past cars, aka a $120k roadster and an $80k luxury sedan. The model 3 will not be as good as those cars, period. Sure there are a ton of people expressing an intent to buy it, including myself. And yes, a lot of people would still reserve it at $40k base price, but that is because then they would assume it is a $40K car. Heck, Tesla could set the base price at $65k and people would still reserve it because they would just assume it was a new comparable version of the Model S. But then they would be sorely disappointed when they got delivery, because they would get a car worth $35k that they overpaid for. Then the car would get horrible reviews and the Tesla brand would be hurt.

Ok, I really do hope that I will get a super bargain and get a $50k car for $35k. But realistically I can not expect anything more than a car worth the selling price of $35k.

Plus a higher base price gives more fuel to critics who say that electric cars are either not practical because of range or no accessible to average people.

Chunky Jr. | 09. april 2016

In terms of performance lot of people compare a $100K model S with $200K+ cars, so it is very possible a $35K model 3 will be comparable to $50K cars, and $45K model 3 will similarly be comparable to $70K+ cars.

Badbot | 09. april 2016

I hope to be able to buy a base model. I also hope to get the tax credits for Cal and fed. I also hope to get the low income extra credit from Cal. I have been disabled for years and only have SS income. this will be the last car I ever buy!. My current car is 11 years old now and will likely be 13 or 14 when My reservation pops to the top. I will only be able to get it with the rebates and to even get them I will need to cash out most of my 401K to bump my income into the taxable range. Elon said that AP and Supercharging are standard for the 3. The AP I hope will keep me and you safe as I enter the old fart descending curve of driver ability.

Bighorn | 09. april 2016

@ed
The hardware is standard--plan to factor in cost for activation/usage.

Ross1 | 09. april 2016

A big portion of the market surely will be fleets and rentals.

Why would they option up?

And they are likely not on the forums to comment.

alisole1013 | 09. april 2016

Supercharger for the Model 3 would probably be an extra charge. As well as the autopilot.....so maybe that is where Elon is getting that average price of $42k. I can't wait for my car and if they ask me to put down another $5k deposit if I am serious. I've been waiting for this car for 2 years....what's another 2 to have it delivered. Luckily I live in Northern California.

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