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Canadian Pricing and Delivery

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Doug_G

Lead Moderator
Global Moderator
Apr 2, 2010
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Ottawa, Canada
As mnx pointed out on the prototype tour thread, Canadian pricing is due out soon. I've heard that they are indeed working on it.

I'm concerned that Tesla is going to overprice the car. A fellow I know was told they were thinking of averaging the last 5 years exchange rate. But that would be highly biased as it includes the turbulence around the 2008 financial crisis. For the last couple of years the dollar has been within two cents of parity, and we're often above parity. The Canadian buck is now considered a "petrodollar".

I can also point out that Tesla was excessively conservative on the exchange rate for my Roadster. They priced in a possible worsening exchange rate, and it went entirely the other way.

Canadians don't like getting screwed on the exchange rate, and overpricing the Model S could cause a backlash. Surely if the margins on this car are as good as planned they can afford to take a tiny risk on exchange fluctuations.

I'm also wondering how soon the cars will launch here. They said "three months after the US introduction", which makes it early October? I'd sure want to have the car before the snow flies! But I was also noticing that the owner of US Sig Special #114 said on these forums that he was told his delivery would be mid-August. This suggests that the early production rate will be at best 200 cars a month.
 
I share your concern re. Canadian pricing. There would be no reason (other than gouging) for CDN pricing to be higher than US pricing, given the strength of our dollar. The S is a stretch for us, regarding price. I'd hate to see TM boost the Canadian price beyond the US price. I'd asked a sales rep about the Canadian price for a 370 km pack several months ago. His response was that he estimated it would cost in the mid sixty range. Ignoring options, this would be very comparable to US pricing, unless he was factoring in the UF Fed $7500 credit (?).

If Tesla is concerned about the risk of currency fluctuation, is it an option for Canadians to purchase with US funds for the US price?

Rob
 
Canadians don't like getting screwed on the exchange rate, and overpricing the Model S could cause a backlash. Surely if the margins on this car are as good as planned they can afford to take a tiny risk on exchange fluctuations.

+1 to that.

The US / Canada price differences on cars have traditionally been "explained" by (1) the relative strength of the currencies, which are not currently an issue, as pointed out by Doug, and (2) the radically different market sizes between the two countries.

Because of the latter, I was able to import a new Toyota Sienna in 2008 for a whopping 25% saving on the final price of the vehicle, compared to what I would have paid at a local dealership. The potential savings only increase with more luxurious vehicles, but since you have to purchase the car (i.e. no leasing), not everyone can afford the lump-sum expense.

Since then consumer backlash about perceived gouging in Canada forced most manufacturers to adjust their prices to be more comparable to those in the US, especially for mainstream vehicles (but even Porsche added rebates!). The differences are now generally smaller, but still persist.

The market for Tesla is much smaller, and I agree that any price substantially greater than that in the US would be a major turn-off for many, including myself, especially when considering the much higher tax rates we have to contend with on such a purchase (current combined sales tax in Quebec are over 15%).

This is one of the few things that would make me seriously think about cancelling my reservation.
 
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I'm going to be pissed if they hose us on exchange rates. I'm more than willing to pay in USD if they're concerned about currency fluctuations.

If the Canadian price is much higher than the US price, I'll be downgrading my Sig reservation in a heartbeat to make up for the difference.

Also agree with your comments on having the car before the snow flies.... If not, hopefully they can deliver it with a set of winter tires installed!

(oh and btw thanks for starting a new thread Doug, I should know better. :)


As mnx pointed out on the prototype tour thread, Canadian pricing is due out soon. I've heard that they are indeed working on it.

I'm concerned that Tesla is going to overprice the car. A fellow I know was told they were thinking of averaging the last 5 years exchange rate. But that would be highly biased as it includes the turbulence around the 2008 financial crisis. For the last couple of years the dollar has been within two cents of parity, and we're often above parity. The Canadian buck is now considered a "petrodollar".

I can also point out that Tesla was excessively conservative on the exchange rate for my Roadster. They priced in a possible worsening exchange rate, and it went entirely the other way.

Canadians don't like getting screwed on the exchange rate, and overpricing the Model S could cause a backlash. Surely if the margins on this car are as good as planned they can afford to take a tiny risk on exchange fluctuations.

I'm also wondering how soon the cars will launch here. They said "three months after the US introduction", which makes it early October? I'd sure want to have the car before the snow flies! But I was also noticing that the owner of US Sig Special #114 said on these forums that he was told his delivery would be mid-August. This suggests that the early production rate will be at best 200 cars a month.
 
As mnx pointed out on the prototype tour thread, Canadian pricing is due out soon. I've heard that they are indeed working on it.

I'm concerned that Tesla is going to overprice the car.

A very valid concern. Tesla's been making a habit of overpricing in certain ways. I understand that this is understandable financial conservatism from a startup, but it's dangerous.

What I'd suggest Tesla do is to hedge against currency fluctuations: I believe Tesla has a planned number of Canadian models to be produced per year, and I assume they can sell them all. So sell Canadian dollar futures and buy American for the appropriate amount of money. They'll have to incorporate a small premium for the cost of the hedging, but that shouldn't be large. They only lose if they fail to sell the cars.
 
A very valid concern. Tesla's been making a habit of overpricing in certain ways. I understand that this is understandable financial conservatism from a startup, but it's dangerous.

What I'd suggest Tesla do is to hedge against currency fluctuations: I believe Tesla has a planned number of Canadian models to be produced per year, and I assume they can sell them all. So sell Canadian dollar futures and buy American for the appropriate amount of money. They'll have to incorporate a small premium for the cost of the hedging, but that shouldn't be large. They only lose if they fail to sell the cars.

Excellent suggestion.

They many not even lose on the currency forward (hedge) if they fail to sell cars, it could work out in their favour...
 
+1 to that.

The market for Tesla is much smaller, and I agree that any price substantially greater than that in the US would be a major turn-off for many, including myself, especially when considering the much higher tax rates we have to contend with on such a purchase (current combined sales tax in Quebec are over 15%).

This is one of the few things that would make me seriously think about cancelling my reservation.

Totally agree. Could be a deal breaker for me too!
 
...What I'd suggest Tesla do is to hedge against currency fluctuations: I believe Tesla has a planned number of Canadian models to be produced per year, and I assume they can sell them all. So sell Canadian dollar futures and buy American for the appropriate amount of money. They'll have to incorporate a small premium for the cost of the hedging, but that shouldn't be large. They only lose if they fail to sell the cars.
+1. I would think this would be standard practice rather than overpricing.

About 10 or 15 years ago a friend of mine loaned me his Chevy Suburban for a day. I noticed the speedometer was in km and asked why. He said he saved almost $10,000 by buying the car in Ontario and bringing it to the States. Neither of us could think of a good reason why the car was so much cheaper in Canada. He said other dealers in Ontario were charging about the same price. Apparently things have changed.
 
About 10 or 15 years ago a friend of mine loaned me his Chevy Suburban for a day. I noticed the speedometer was in km and asked why. He said he saved almost $10,000 by buying the car in Ontario and bringing it to the States. Neither of us could think of a good reason why the car was so much cheaper in Canada. He said other dealers in Ontario were charging about the same price. Apparently things have changed.

Well one can always hope that they return to the good old days :wink:
 
I'm a Model X reservation holder -- if the S comes out overpriced I will probably cancel my reservation. Man it would be nice if a company just decided to actually appeal to the Canadian market and priced it fairly. Hell make it lower (not saying it has to be 40% lower -- just a couple of points) and you could probably get a whole ton of publicity purely out of the idea of being pretty much the one company in the US that doesn't feel the need to screw us over. We've had two-three years of par or above now I think -- it's not a huge risk and would create a lot of goodwill. I'm in a province with no rebates so if they over-price (plus add in higher Canadian taxes) I could easily be looking at paying $15k-$20k more than the publicized (with rebate) price (and the actual price I would pay if I lived in the US). That's a pretty big pill to swallow. Oh well ... fingers crossed.
 
I'm a Model X reservation holder -- if the S comes out overpriced I will probably cancel my reservation.
This is exactly what Tesla faces - they stand to lose twice their reservations if Canadians see price gouging on the S. There isn't just Canada to worry about, Europeans will potentially be affected similarly.

I for one am not too concerned, Tesla to this point has proven to be fairly far-sighted in its actions and I would be quite surprised if the S comes in substantially higher than the US price. They learned a lesson on the Roadster pricing, I don't see the S or the X, which will be substantially higher-production-volume cars, having the same issue.
 
They may have learned the lesson on Roadster pricing, or perhaps more likely they figure the Canadian market is insignificant, leading to a self-fulfilling prophesy... If they make that mistake it would really be too bad, because I think the X especially could be a big hit here.

On the other hand, at least the S should qualify for NAFTA. A good chunk of the Roadster price difference was import duty.
 
Canadian pricing for me is definitely a major factor in whether I downgrade to production or not. I'm hopeful Elon Musk's time in Canada has given him an understanding of this US-Cdn pricing issue, and now that they have an American factory we should see par. If they don't understand the issue, their short-term money-grab will backfire, and they'll lose at least $10k from me!

I really wish I knew even a ballpark figure regarding time difference between Canadian Sigs and Production - Tesla wouldn't give me an answer, although the term "a few months" was mentioned in passing. The entire Canadian Sig run will probably take one-two weeks max to complete, but I'm concerned that there will be a LOT of US "P's" done before Canadian ones. And I'd love to drive my car before winter!
 
Not sure if you guys saw this but an article came up on La Presse concerning the Fisker Karma

http://auto.lapresse.ca/auto-ecolo/201205/11/01-4524568-fisker-arrive-a-montreal.php

Whats interesting is that they discuss the Canadian pricing of the car.

US = 106 00$
CAN = 115 000$

So a premium of 8.5% over the US price. Lets see if Tesla goes that deep on the Canadian premium...

Alex

I hope not; unless they have a very good explanation for why it is so much more expensive to have daytime running lights, that is simply gouging.