Tesla Increases Prices for Existing 2008 Orders - Page 10

Bradleybang · 01-20-2009, 01:09 PM

removed. Steve posted at same time as me.

doug · 01-20-2009, 01:51 PM

Quote:

A much fuller account of the history of Tesla is worth telling at some point, but for now I will just talk about the essentials of why we needed to raise prices on options.

Translation: This was the fault of previous management.
I don't think that's a good way to start such a letter. Customers are pissed, it's better to take responsibility for mistakes (as a company) instead of trying to place blame on particular individuals.

Quote:

Obviously, this still creates a serious problem for Tesla in the first half of 2009, given the $92k to $98k price of most cars delivered over this time period. The board and I did not want to do a retroactive increase of the base vehicle price, as that would create an unavoidable hardship for customers. Instead, apart from a $1k destination charge increase to match our true cost of logistics, we only raised the price of the optional elements and provided new options and a new model (Roadster Sport) to help improve the average margin per car.

As could be expected, this ignores the fact that they've effectively changed the base price by removing value.

From two days ago:

Quote:

Originally Posted by doug

Quote:

Originally Posted by James

But the base price of the Roadster is still being honored. Those people that paid $92,000 or $98,000 or $109,000 are still only being charged that amount.

I suppose some might attempt to make that claim, but changing what's included as standard is effectively the same as changing the base price.

I think the main problem here is that the explanation should have come before the action, not the other way around. I have to say that this really was a huge mistake. I think many of the upset customers would have understood if this had been handled with a bit more humility and less hubris. Instead they feel disrespected and that their trust has been violated.
I really hope that Tesla can bounce back from this.

donauker · 01-20-2009, 02:10 PM

I must say I do wonder if this is the difference of opinion that caused Darryl Siry to leave? This is a PR disaster of monumental proportions. At this point they can be viewed as either so desperate for cash that they are going for a last ditch money grab or else so untrustworthy that now that the rich and famous have their cars they can just stick it to everyone else.

Kevin Harney · 01-20-2009, 02:26 PM

Donaker,

That is what I said from the beginning. I am sure that DS will not weigh in on this subject but I sure wish he would. Best of luck to them in straighteiing out this fine mess they have created. I am sure that it will be forgotten sometime but certainly not any time soon. Hopefully they can survive until it blows over.

dpeilow · 01-20-2009, 02:38 PM

Well, I'm glad an explanation is out there, but it sure should have come first.

With a slowdown in new orders upon which they could have increased margins, it seems to me they had two options:

1) Lose money on every car, at least until they can get costs down to $80k, but potentially on all 1200 on the waiting list if this takes longer than expected. Thus putting in doubt the ability of the company to raise new money and ultimately its survival.
2) At least try to break even on existing orders, knowing full-well the PR storm that would follow. Ensure Tesla is around in 5+ years' time.

Given the above, it was probably the lesser of two evils. I know that is no comfort if you are involved directly and as I said, it probably could have been handled better (but then hindsight is a wonderful thing). At least the company has a better chance of being there to provide aftersales when you need it and hopefully at some point a Model S for the rest of us. With a bit of luck, some minor event going on in Washington DC will keep this out of the mainstream press...

donauker · 01-20-2009, 02:43 PM

Quote:

Originally Posted by doug

As could be expected, this ignores the fact that they've effectively changed the base price by removing value

Exactly! This just adds additional insult to the entire situation. He didn't even acknowledge the fact that the base vehicle I agreed to buy has been increased by $5,700 plus the $1,000 added to the destination charge as well as the option increases.

Quote:

Originally Posted by doug

I have to say that this really was a huge mistake. I think many of the upset customers would have understood if this had been handled with a bit more humility and less hubris. Instead they feel disrespected and that their trust has been violated.

Yes most definitely. This is the group that has been clamoring for the opportunity to put deposits down on the Model S and also to invest in the company. Now even those who already have their car and are not directly affected by this have indicated that they would be far less inclined to do either.

shark2k · 01-20-2009, 02:55 PM

Since I'm more of an outsider looking in, i.e., not actually buying or know anyone personally buying a Tesla Roadster, I got a quick question. Was the destination charge increased to $1,000 or was there an extra $1,000 added? If I recall, I saw the destination charge was $950. Is it now $1,950 or $1,000? Just wanted some clarification.

As to the price increase, I'm not gonna say much on it besides that I think they definitely did this the wrong way. But I'm also hoping they can some how redeem themselves because I was very interested in possibly buying a Model S, but after this little fiasco, I am a little bit more skeptical.

-Shark2k

Chris H. · 01-20-2009, 03:19 PM

This is a re-post of a comment that I made on Tesla Founders Blog:

"One suggestion:

How about giving a voucher, or certificate, equal in value to the price difference between the pre-options increase Roadster and the post-options increase Roadster, that is redeemable against the future purchase of a Model S, or a 2010MY Roadster? The voucher should be transferable so that the current Roadster customers can gift it or sell it, if they so choose.

It would allow TM to show the DOE that they are profitable on the Roadster, without customers feeling like they are being mistreated too badly in the short term. It might also result in additional Model S customers in the future."

Any thoughts as to other possible solutions?

Roadster customers: What would make you feel better about this price increase situation?

Tdave · 01-20-2009, 04:02 PM

Most of the talk is about the price increase for locked-in buyers. But what about non locked-in buyers like me? I'm a middle of the pack 2009 "owner" who has $60k on deposit. The first $5k deposit locked in price. The next $55k locked in a production slot. I have the 2009 price list on file that they sent me with my welcome package, and also saved from the website at the time I gave my deposit. That price list includes items on it that have now increased in price.

I fully expect Tesla to honor the prices on the price list that I locked in over 6 months ago. That's the whole point of the first $5k deposit that LOCKED IN PRICE. I'll repeat. The whole point of the first $5k deposit is to lock in the prices on that price list.

What would be smart of Tesla would be to offer an extended options list at new prices to help them increase profits. I thought that's what they were doing -- entice me to spend more on performance and luxury options, above and beyond what I was already planning to spend.

But instead they're increasing prices on items already on the price list back when I made my deposit. To me that seems like breach of contract. I'm not a lawyer, so I don't know for sure, but it sure doesn't pass the smell test.

When I first got the notice of new options, I was excited about the new choices I had available. Now I'm pissed after learning what has really happened.

Way to go Tesla, turning a great positive into a huge negative.

JRP3 · 01-20-2009, 04:12 PM

I'm not telling Elon how to spend his money but isn't he capable of propping up HIS company himself, and not counting on his locked in customers to do so?