Tesla Increases Prices for Existing 2008 Orders - Page 11

TEG · 01-20-2009, 05:21 PM

Tesla nears profitability; Musk explains '07 ouster of CEO

Quote:

An audit by one of the Series D investors in the summer of 2007 found that the true cost was closer to $140k, which was obviously an extremely alarming discovery and ultimately led to a near complete change in the makeup of the senior management team. Over the past 18 months, observers will note that Tesla has transformed from having a senior team with very little automotive experience to one with deep automotive bench strength.

So is this suggesting that old Detroit has more experience keeping costs under control and being realistic? Doesn't the current situation for the "big 3" suggest that this premise is flawed?

Hasn't the Tesla story included the idea that Silicon Valley is the right place to rebirth the auto industry using fresh eyes?

Tesla: A Carmaker With Silicon Valley Spark

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So what makes Tesla think it has a chance? The very fact that it has been built by outsiders. After all, Detroit is hardly a model of corporate efficiency. Tesla bills itself as Silicon Valley's version of a car company. ... "Silicon Valley is the best in the world at everything it does," boasts Elon Musk

Elon Musk - Entrepreneur of the Year - Tesla Motors -SpaceX

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"I'm a Silicon Valley guy," Musk said at the time. "I just think people from Silicon Valley can do anything." Musk's comment was hardly surprising: Tesla Motors, and, indeed, everything about Musk, has been consistently packaged, presented, and explained as Silicon Valley come calling on old-line industries.

Opinion: Funds for clean car tech should not be diverted to Big 3 bailout - By Elon Musk

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The Detroit Three say they need cash to avoid firing millions of workers. But mortgaging the future to cover up the auto industry's mistakes would have dire consequences for the next generation.

Why shut down the Michigan office if you think more auto industry experience is what is needed?

Obviously this is a difficult business to grow in a terrible climate, but to say that more auto industry experience is the answer seems out of step with what I thought was part of the company message.

doug · 01-20-2009, 05:57 PM

This article finally includes some comment from Rachel Konrad. I do not envy her position right now.

Greentech Media: Green Light Blog Archive Tesla Jacks Price on Roadster Options

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“We need to improve the margins on the car for the next round of investors,” Tesla spokeswoman Rachel Konrad said Tuesday. “They could be venture capitalists, they could be public shareholders after an IPO, or it could be the federal government.”
...
Because all the 2008 Roadsters to be produced from now until October are sold already, adding charges for newer customers only wasn’t an option for immediately improving the company’s margins, Konrad said. About 150 Roasters have been delivered so far, she said.

“We did not do this lightly,” Konrad said. “But it’s a decision we think helps ensure the viability of the company going forward.”

Again, some better communication would have made this less of a fiasco.

stopcrazypp · 01-20-2009, 06:24 PM

Quote:

Originally Posted by doug

This article finally includes some comment from Rachel Konrad. I do not envy her position right now.

Greentech Media: Green Light Blog Archive Tesla Jacks Price on Roadster Options

Again, some better communication would have made this less of a fiasco.

Gizmodo picked it up:
Tesla Motors: Tesla Jacks Up Prices On Customers Who Already Ordered a Roadster

So did Wired:
Tesla Raises Prices To 'Guarantee Viability' | Autopia from Wired.com

As mentioned, if they had the explaination BEFORE they moved to increase the prices, this wouldn't have been as huge an issue. I'm sure most of the customers would understand (even though there are still questions if this move is a breach of contract). Now it's all over the blogosphere and might reach some mainstream news soon.

Tdave · 01-20-2009, 06:42 PM

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Originally Posted by doug

This article finally includes some comment from Rachel Konrad. I do not envy her position right now.

Where was she when the wording of this price increase was vetted BEFORE it was disseminated?

doug · 01-20-2009, 07:26 PM

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Originally Posted by Tesla Dave

Where was she when the wording of this price increase was vetted BEFORE it was disseminated?

Yeah. good question.

The Wired quotes appear identical to the those in the Greentech Media article. Likely she's sending out emails trying to get ahead of the story. The Tesla message at this point appears to be, "this was a really tough decision, but we felt we had to do it to keep the company viable." Of course the real issue is that customers feel disrespected, and Wired seems to get that:

Quote:

Tesla risks angering 400 people for the sake of a few million dollars, and the announcement has brought lively discussion over at the Tesla Motors Club website. Although those customers have only placed deposits on their cars, in their mind they've already bought them, so Tesla's move amounts to a retroactive price hike, says Eric Noble, president of the auto-industry consulting firm The Car Lab.

"That's ill-advised," says Noble. "Your first buyers are your emissaries. Treat them wrong and all the advertising in the world won't cure it. It's just bad marketing."

TEG · 01-20-2009, 07:42 PM

Quote:

Originally Posted by SteveF (quoting letter to customers)

..."There is one additional point that relates to the government loans that Tesla is seeking for the Model S program, a much more affordable sedan that we are trying to bring to market as soon as possible. A key requirement is that any company applying be able to show that it is viable without the loans. If we allow ourselves to lose money on the cars we are shipping today, we place those loans at risk. Mass market electric cars have been my goal from the beginning of Tesla. I don't want and I don't think the vast majority of Tesla customers want us to do anything to jeopardize that objective."

It seems that this "additional point" is actually a very key point. The need to get to some level of profitability ASAP or else the loan guarantee falls apart and their plans for 'Model S' could dry up as well. I gather an IPO was supposed to fund 'Model S', but this is not a good time for any kind of IPO. I think there is a lot of sympathy for why they want (and need) to do this, but the 'how' is what has been brought into question.

So, this isn't just about funneling more investor money into the company - it is about showing that their current business model is viable, and that the government will back them up for the next step.

Apparently the immediate time-line made this awkward - it would have been more sensible if they could have left the 2008 pre-orders alone and made a more logical changeover starting with the 2009 model year changes.

James · 01-20-2009, 08:36 PM

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Originally Posted by shark2k

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.

It was $950, it has now been raised to $1,950.

My company transports cars half way across the USA all the time. It costs about $400 to $500 to ship a car via open transport exposed. Shipping via enclosed transport, the way Tesla is doing it, costs about $1,000.

shark2k · 01-20-2009, 10:10 PM

Thanks for the response James.

-Shark2k

TDA · 01-20-2009, 10:40 PM

Quote:

Originally Posted by James

It was $950, it has now been raised to $1,950.

My company transports cars half way across the USA all the time. It costs about $400 to $500 to ship a car via open transport exposed. Shipping via enclosed transport, the way Tesla is doing it, costs about $1,000.

I believe the $1,950 Destination Fee is to ship your car to your nearest Tesla Store and then to you if you live within 200 miles of it. If you live more than 200 miles from a Tesla Store then you're on the hook for picking up the car yourself or having someone pick it up for you. At one point Tesla was charging something like a flat $5,000 to ship your car to you from California but then later dropped that.

James · 01-20-2009, 10:55 PM

Quote:

Originally Posted by TDA

I believe the $1,950 Destination Fee is to ship your car to your nearest Tesla Store and then to you if you live within 200 miles of it. If you live more than 200 miles from a Tesla Store then you're on the hook for picking up the car yourself or having someone pick it up for you. At one point Tesla was charging something like a flat $5,000 to ship your car to you from California but then later dropped that.

That might be what Tesla Motors is charging. But that is not the cost Tesla Motors is paying to the shipping company.

Shipping pristine collector cars in an enclosed transport is quite common. It costs about $1,000 for shipping a top quality car with fully protected enclosed transportation. I just today asked my general manager of our store what she typically pays.

If you don't mind the car arriving dirty, it can be via open transport for $500. 99% of the time they arrive needing a good wash, but no exterior damage at all.