Idea for options when ordering Tesla: install HW lower price, SW activation later

Ulmo · Jan 22, 2016

I have an idea for those of us who want to buy now and upgrade later via software: a checkbox in the ordering screen that says "install this hardware option without software activation; $x for HW and $x for later SW activation".

For instance, for the following options, I see this happening:

Ludicrous Speed Upgrade (LSU): $10,000, or $2,500 to install HW now, and $8,000 for SW activation (it doesn't perform at Ludicrous levels until SW activation bought).

Carbon Fiber Spoiler (CFS): $1,000, or $800 to install HW now and $250 for SW activation (it stays down until SW activation bought).

Premium Interior and Lighting (PIL): $3,000, or $1,500 to install HW now and $1,650 for SW activation later (power liftgate, lighting, fog and cornering lights, door handle lights all don't turn on or operate until SW activation bought; the leather and headliners of course would be installed without needing to be activated).

Smart Air Suspension (SAS): $2,500, or $2,000 to install HW now and $625 to fully activate all its software features (such as raise and lower, location awareness, etc.). On Model X, it would be mandatory to get fully SW activated SAS to get the tow hitch turned on (see below), but just tow hitch ability or both tow hitch ability and SAS could be ordered in the inactive state (for optional later activation).

Ultra High Fidelity Sound (UHFS): $2,500, or $1,000 to install HW now and $1,625 to fully activate via SW later. The held-back items would be sound coming from the additional speakers and any other items that can easily be software disabled that are present on UHFS that aren't on standard sound. (Please, no graphic resampling to make it sound worse: the $1,000 HW should pay for something.) This would help people who want aftermarket sound, since this would allow more of the speakers and cables to be put in that are needed.

Subzero Weather Package (SWP): $1,000, or $250 to install HW now and $800 to activate via software later. Literally none of it would work until activated.

Rear Facing Seats (RFS): $3,000, or $250 for the factory to install the necessary HW for them to be retrofitted later, with the seats costing $3,000 to retrofit in later.

Range Upgrade (RU): $3,000, or $1,500 for HW and $1,650 for SW activation later. The battery window of use would be artificially limited to the non-upgraded portion. Those who found later on that that 6% more range (15 EPA miles) actually makes a worthwhile difference in their life would go ahead and order the activation.

Dual Motors: $5,000, or $500 for HW necessary to install later by Service Center and $4,750 for the rest of the HW and installation by the service center.

On Model X:

Option to go from 5 seats to 6 or 7 seats later: $500
Option to go from 6 seats to 7 seats later: $250

Go to 6 seats with above option from 5 seats: $2,650

Go to 7 seats with above option from 5 seats: $3,650

Go to 7 seats with any of above 6 seat installations that had additional seats option: $800

Premium Upgrades Package (PUP): $4,500, or $2,500 to install HW and $2,500 to software activate later; the following would be working if you get the $2,500 option: HEPA air filter system with dual activated carbon filters; leather; headliners. Self presenting door, ventilated seats, premium lighting (including fog lights) would all be installed but NOT WORKING until activated by software. Believe me, a lot of people would dive into this to get the air filter, then later think $2,500 for everything else would be pretty good. This whole option package can be rejiggled by Tesla to come up with better options pricing with later activation.

Towing: $750, or $200 to install HW in factory and $600 for the hitch and software activation later.

High Amperage Charger (HAC): $1,000, or $300 for the HW and $750 for activation later. What this means is that without SW activation, it would only charge at the 48A rate or lower.

I think almost all the options should be installed close to cost for Tesla, so that they can both avoid losing money on this and make the lower capital costs as useful as possible for buyers making use of this activation later idea.

Ivo-G · Jan 22, 2016

Idea for options when ordering Tesla: install HW lower price, SW activation ...

Personally I think if you can't afford a feature don't get it. If you can't afford a Model S or X, don't try to buy one with everything and expect to pay less because "I'm not using it anyway".

Most of the money is in the hardware anyways, why would they put thousands of dollars worth of hardware in a car where the owner(s) may never spend the extra money later on to activate the features? Nobody* does that, in any field really. Sometimes it may be cheaper to outfit every model sold with a certain feature and select or deactivate it programmatically, but that's usually only when there are no other alternatives. Like the 40kW option they used to offer for the Model S, which was achieved by not fully using a 60kW pack. But at least the pack was being used.
The autopilot sensors are part of Tesla 's vision, and therefore are installed in all the cars, and are also used for the safety features if not for the comfort features.
But nobody puts some hardware in a device that isn't used at all unless paid for afterwards*.

(* there may be a few examples I'm not aware of where this could be the case, but I'm guessing they're very limited in quantity)

Rockster · Jan 22, 2016

I like the idea. Tesla could price the hardware at break even cost so they lose nothing if a customer chooses no never activate a feature. Having the potential to activate the features would increase the car's resale value as a CPO because Tesla could just flip the software switch and activate the features. Presumably, more customers choosing this option would mean better margins for Tesla because they would be buying components in higher volume.

Ulmo · Jan 22, 2016

I think a case can be made either way. With the Apple ][+, you could add stuff in later with expansion slots. This also existed with many other open-bus architecture computers. Now, with the iPhone, you cannot do that. But some people still go out and get an iMac or Mac Pro and use the expansion abilities to add on to it later. All of those items have a life expectancy, but many of them are expandable. Many computers used to have their RAM upgraded in order to extend their useful life. I used to do that all the time with every computer I owned in order to make it last longer, and it often doubled the usable life of the computer.

I see software controllable cars in a similar way. When a person buys a car, they are younger and less rich and have less demands of luxury than when they are older. As they age, they not only make more money, but they also have an interest in making the car they're using better than it was. Additionally, the money they might save before on a cheaper car can be invested or spent on things they need to develop their life. As they get older, they can afford a better car.

I'm just trying to look ahead and see if there is such a thing as a non-disposable Tesla, one that lasts long enough that that "better car" can be the same car with some abilities unlocked.

Let's look at the economy. You know that there's a 50% chance you will be able to and want to afford certain optional features in the following year, and a 50% chance that you will not. Some people would rather spend 100% of that optional money in other areas such as investing in one's education, home, savings, etc., but what if at some point in the following year you would rather upgrade vehicles? Is the economics of trading in an older vehicle to get a less old vehicle the right path every time? Is offering this more granular options idea simply a way to more accurately take the wealth away from people that ought to be saving their money for more pressing needs like putting it into the stock market or paying down student loans, home loans, or other retirement investments? Or is it increasing the value of the goods they receive?

I think the answer to that last set of questions has a lot to do with the hardware vs. non-hardware costs of the particular items considered. E.g., the unactivated hardware costs of an item installed at-install-cost doesn't have to include its (entire) development cost and marketing cost; those can be paid for at software activation purchase time. That could confer a great deal of savings.

The problem arises when the options are put in a car that are a waste of money and resources because they are not getting used, or if the money spent on those resources is a lack of investment in the future that could have more efficiently been postponed to the next replacement car purchased. It depends how much this is precognated by the option selection of the purchaser of each individual unactivated option, since there is a cost component with the unactivated option (including more weight and environmental damage) that the purchaser must contemplate. Hopefully that would cause them to consider whether or not they'll ever value that option.

Yes of course it increases potential resale value. Is that enough? CPO cars could be sold at a range depending on what options are activated at time of sale, thus making a wider range of cars available to more people. Options that were previously available could be software disabled to make the car cheaper, for instance, in times of over-luxurious cars compared to the marketplace.

I think it would be something of an experiment. If Tesla were to do this, it could be done by clicking a special link that says "add in future upgrade options selections", since it may confuse many folk to have to calculate all of that. But those willing to take the plunge might really make some good decisions with that flexibility.

There are so many unknowns. Like, what's the average life of a Tesla? Fender benders and annoying rattles might doom this prospect by making the longevity too little; even those two items would mean that if Tesla did this, they'd have to work harder on dealing with rattles and how to recycle parts better in fender benders.

- - - Updated - - -

In a way, a lot of these ideas are similar to the "modular cars" idea of being able to rebuild a car whenever you want to change/upgrade features.

Ivo-G · Jan 23, 2016

Idea for options when ordering Tesla: install HW lower price, SW activation ...

In principle the idea isn't that bad, but think of the following situation:

You've bought a completely Standard Tesla, all extras deactivated. You happen to have a crash or some other event that renders a sensor damaged, or some other component which you're not using. When time comes for repairs and checkups, the unused components have to all be tested and fixed. As you're not using the features you won't know if they're in a proper working order or not.

A modular car, where upgrades are easily added, like in the PC's with expansion slots would be great. But unlike a PC which just sits on your desk, a car needs to be able to cope and withstand a lot more stresses and safety situations, making upgrading after the fact a not so easy proposition. Tesla could in fact already put in a P motor in a non P car, sell you a bigger battery, make an insane P ludicrous, install extra lighting, etc. But all of these will cost extra, and are only put in after the fact. To put them in from the start would be unwise IMO.

richkae · Jan 29, 2016

Ulmo said:
I have an idea for those of us who want to buy now and upgrade later via software: a checkbox in the ordering screen that says "install this hardware option without software activation; $x for HW and $x for later SW activation".

For instance, for the following options, I see this happening:

Ludicrous Speed Upgrade (LSU): $10,000, or $2,500 to install HW now, and $8,000 for SW activation (it doesn't perform at Ludicrous levels until SW activation bought).

Carbon Fiber Spoiler (CFS): $1,000, or $800 to install HW now and $250 for SW activation (it stays down until SW activation bought).

Premium Interior and Lighting (PIL): $3,000, or $1,500 to install HW now and $1,650 for SW activation later (power liftgate, lighting, fog and cornering lights, door handle lights all don't turn on or operate until SW activation bought; the leather and headliners of course would be installed without needing to be activated).

Smart Air Suspension (SAS): $2,500, or $2,000 to install HW now and $625 to fully activate all its software features (such as raise and lower, location awareness, etc.). On Model X, it would be mandatory to get fully SW activated SAS to get the tow hitch turned on (see below), but just tow hitch ability or both tow hitch ability and SAS could be ordered in the inactive state (for optional later activation).

Ultra High Fidelity Sound (UHFS): $2,500, or $1,000 to install HW now and $1,625 to fully activate via SW later. The held-back items would be sound coming from the additional speakers and any other items that can easily be software disabled that are present on UHFS that aren't on standard sound. (Please, no graphic resampling to make it sound worse: the $1,000 HW should pay for something.) This would help people who want aftermarket sound, since this would allow more of the speakers and cables to be put in that are needed.

Subzero Weather Package (SWP): $1,000, or $250 to install HW now and $800 to activate via software later. Literally none of it would work until activated.

Rear Facing Seats (RFS): $3,000, or $250 for the factory to install the necessary HW for them to be retrofitted later, with the seats costing $3,000 to retrofit in later.

Range Upgrade (RU): $3,000, or $1,500 for HW and $1,650 for SW activation later. The battery window of use would be artificially limited to the non-upgraded portion. Those who found later on that that 6% more range (15 EPA miles) actually makes a worthwhile difference in their life would go ahead and order the activation.

Dual Motors: $5,000, or $500 for HW necessary to install later by Service Center and $4,750 for the rest of the HW and installation by the service center.

On Model X:

Option to go from 5 seats to 6 or 7 seats later: $500
Option to go from 6 seats to 7 seats later: $250

Go to 6 seats with above option from 5 seats: $2,650

Go to 7 seats with above option from 5 seats: $3,650

Go to 7 seats with any of above 6 seat installations that had additional seats option: $800

Premium Upgrades Package (PUP): $4,500, or $2,500 to install HW and $2,500 to software activate later; the following would be working if you get the $2,500 option: HEPA air filter system with dual activated carbon filters; leather; headliners. Self presenting door, ventilated seats, premium lighting (including fog lights) would all be installed but NOT WORKING until activated by software. Believe me, a lot of people would dive into this to get the air filter, then later think $2,500 for everything else would be pretty good. This whole option package can be rejiggled by Tesla to come up with better options pricing with later activation.

Towing: $750, or $200 to install HW in factory and $600 for the hitch and software activation later.

High Amperage Charger (HAC): $1,000, or $300 for the HW and $750 for activation later. What this means is that without SW activation, it would only charge at the 48A rate or lower.

I think almost all the options should be installed close to cost for Tesla, so that they can both avoid losing money on this and make the lower capital costs as useful as possible for buyers making use of this activation later idea.

Most of these just don't work because Tesla will lose money.
High markup on options is how Tesla makes money, I want them to make more money, not less. They need to succeed, not scrape by.

The initial install prices you listed for the subzero weather package, dual motors, towing package, and high amperage charger are almost certainly below their cost. If the buyer never pays for activation they lose money.

Why would Tesla want to put in the speakers in the UFHS package at or below cost just so people can install different aftermarket sound?

Every seating change option in the Model X except from 5 to 7 would likely require the removal of old seats to add new different ones. I doubt the outside 2nd row seats are the same in the 5 and 6 seat configuration. Then they may have used seats they are stuck with.

The ludicrous speed upgrade is probably their single biggest profit option, if I were them I wouldn't change that unless I was absolutely sure that more people would activate later, and I really really doubt it.
I've met a lot of Tesla owners and I've never heard anyone say "It's not fast enough, I wish I had spent more for the performance options."
Almost everyone who cares about it will get it up front.

Ivo-G · Jan 29, 2016

richkae said:
Most of these just don't work because Tesla will lose money.
High markup on options is how Tesla makes money, I want them to make more money, not less. They need to succeed, not scrape by.

The initial install prices you listed for the subzero weather package, dual motors, towing package, and high amperage charger are almost certainly below their cost. If the buyer never pays for activation they lose money.

Why would Tesla want to put in the speakers in the UFHS package at or below cost just so people can install different aftermarket sound?

Every seating change option in the Model X except from 5 to 7 would likely require the removal of old seats to add new different ones. I doubt the outside 2nd row seats are the same in the 5 and 6 seat configuration. Then they may have used seats they are stuck with.

The ludicrous speed upgrade is probably their single biggest profit option, if I were them I wouldn't change that unless I was absolutely sure that more people would activate later, and I really really doubt it.
I've met a lot of Tesla owners and I've never heard anyone say "It's not fast enough, I wish I had spent more for the performance options."
Almost everyone who cares about it will get it up front.

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Idea for options when ordering Tesla: install HW lower price, SW activation later

Ulmo

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Rockster

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Ulmo

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Ivo-G

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richkae

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Ivo-G

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