TSLA Investor Discussions

[Mile Erlic]

How relevant is the price of gas to the success of Tesla? Is a de-coupling about to occur?

[Citizen-T]

How relevant is the price of gas to the success of Tesla? Is a de-coupling about to occur?

It is relevant only to those who for some reason think that people that buy $100k cars care about spending $4 vs $3.75 for gas. That said, there seems to be a lot of those people, so I guess the answer is it is very relevant.

I think we've got a long way to go before we decouple ourselves from the inverse oil trade.

[Robert.Boston]

In round numbers, a $0.10/gal increase in the price of gas improves the LCOE of the Model S vs. typical-ICE by about $500. This savings can either have the effect of increasing market share (and, yes, at the margin, car buyers do care about cost) or increasing Tesla's margin, or some combination thereof.

For those who doubt that gas prices matter about car selection, take a look at how sales of small cars vs. big cars reacts to gasoline price swings. People do react.

[ckessel]

care about spending $4 vs $3.75 for gas

Not sure what $4 has to do with $3.75 for gas. The useful comparison is gas versus electricity.

Where I'm at, premium is about $4.30. The equivalent in kWh for the same distance in a Model S is about 30-35 cents, or about $15000 over the course of 100,000 miles. $15000 is a significant amount, even for people that can afford a luxury car.

[Teslawisher]

I think what Citizen was trying to say was that the people who can afford a Model S and X react less to gass price fluctuations than most. To those that can afford the S, gas going from $3.75 to $4.00 probably won't be the main reason for purchasing the S. it will probably be one of many reasons, but probably not one of the most compelling.

However, the majority of the public buying "big cars" (I assume big engines) vs. small cars ranging from $20,000 to even $40,000 are going to be more susceptible to react to gas price fluctuations. I'd be interested if the study of big vs small cars in the $40,000 and up range show the same degree of swing as the $20,000 - $40,000 cars. I would doubt it, though.

And while the $15,000 is significant for those affording S and X's, it is not an immediate savings, rather 100,000 miles by 15,000 miles/year on average, you are talking $2250/year, or $190'ish/month. Again, for those affording S and X's, it's a factor, yes, but not one of the main one's.

[AnOutsider]

And while the $15,000 is significant for those affording S and X's, it is not an immediate savings, rather 100,000 miles by 15,000 miles/year on average, you are talking $2250/year, or $190'ish/month. Again, for those affording S and X's, it's a factor, yes, but not one of the main one's.

That's what I was thinking. It's like cell phones: carriers subsidize the big upfront cost of phones by locking you into a 2-3 year contract. The value of the contract is worth more to them in the long term, and the customer doesn't see it as a huge amount because it's paid over time.

[ckessel]

And while the $15,000 is significant for those affording S and X's, it is not an immediate savings, rather 100,000 miles by 15,000 miles/year on average, you are talking $2250/year, or $190'ish/month. Again, for those affording S and X's, it's a factor, yes, but not one of the main one's.

True, it'll matter a lot more to the Gen3 buyers a few years from now. Especially if Tesla can create a little "equivalent monthly expenses" app that shows the Gen3 versus an ICE. Something like:

Lease/payment = EV $X1, ICE X2
Fuel = $Y1, Y2
Total = $Z1, Z2

People will be able to quickly see the monthly expense for an EV is at least on par. They could do that now, but as you said, it's perhaps not as big a factor right now, particularly for the early adopters buying the more expensive 85kWh Model S.

[dsm363]

$4 gas may not matter to some people but all it takes is one oil crisis with gas shooting up to maybe $6 a gallon and the Model S would make a lot more sense to many people.

[Teslawisher]

Exactly. Because while I (and my family) REALLY want or could use the X, and I'm hoping to have myself in a position to get one down the line, if that doesn't happen, me and practically everyone I know will be really comparing monthly cost of ownership for the Gen3.

Back to main topic... TSLA dipping back to under $30 today. Is this the "newness" of the delivery announcements wearing off? Am going to be very interested in how prices react after those June and into July deliveries take place.

[vfx]

Originally Posted by Mile Erlic
How relevant is the price of gas to the success of Tesla? Is a de-coupling about to occur?

It is relevant only to those who for some reason think that people that buy $100k cars care about spending $4 vs $3.75 for gas.....

This is just wrong.

• Many people who buy expensive things are cheap.
  
• The car is $49,000 if desired. It's not a Roadster.
  
• Driving by a gas station is wonderful. When the price goes up it's even better.
  
• These cars have a high percentage of people buying way out of their normal pricing comfort zone and they are very aware of the price of gas and how it influences their decision to make the jump to electric.
  
• Regular gasoline in So Cal is $4.40