Economic Study: If Model 3 was NOT for resale, did you purchase EAP?

[MXWing]

Would like to do a quick economic study if Model 3 owners could take the time to vote.

This just covers EAP as FSD would skew the analysis.

I have a thesis going on in my head that I'd like to validate. Feel free to guess the thesis if you are inclined.

Thanks!

 

[doubleohwhat]

Feel free to guess the thesis if you are inclined.

Feel free to save me the effort if you are inclined

I added EAP on my 3. However, I doubt my wife will when she orders (waiting on white interior).

 

[run-the-joules]

Yes. I wouldn’t buy a Tesla without autopilot, it’s the single most important feature of the car to me. Without it I wouldn’t have paid 25k for the car let alone twice that.

 

[Gen3Joe]

I didn't purchase EAP because I plan to trade in my Model 3 for the performance Model 3 when it comes out. I'm betting the trade in value will be very close to a car with EAP enabled because it will cost Tesla nothing to enable it before resale.

 

[Gen3Joe]

What is your hypothesis? It seems to be the opposite of mine based on how you worded the poll question.

 

[FreeOfPge]

Yes I (we) would buy a Tesla without EAP. Our Model S does not have it. My wife will not let me replace it another Model 3.

 

[MXWing]

Thank you for the feedback. I think the sample size is conclusive enough.

Tesla sold the majority of Model 3's at $55,000. (Base + LR + PUP + Color + EAP)

My thesis is that at the $49K base, people will elect for the $5K software package.

Model 3 reservationists who were militant on the YOU PROMISED ELON AND TESLA, YOU LIARS WHERE IS MY $27,500 CAR I EARNED. I STOOD IN LINE FOR TWO HOURS.

Those who parroted $35K over and over and over I am 100% certain would not have put in the $5K for the EAP package.

How healthy would it have been for Tesla to equip all those cars with PX2 Drive Units, 8 cameras etc if those customers who wanted the rock bottom price was not going to pay for the cost of them?

Now when it comes down to it, did Tesla make a promise of a $35K car? It has been implied yes, and I believe they will produce the $35k car. Just not now, for Tesla to survive, you are just going to need to wait.

They will do it when
1 - They sell all the highest margin cars they can first.
2 - When the run rate is sufficient to leverage economy of scale driving down the cost of each Model 3.
3 - When the PX2 drive unit/GPUs get cheap enough to where a 'partial uptake' on EAP adoption isnt going to kill them.

From option adoption:

49K cars turn into 55K cars.
60K cars turn into 70K cars.
70K cars turn into 80K cars.
27.5K cars stay 27.5K cars.

It is an uncomfortable and inconvenient truth, but we should stop being self centered and recognize Tesla is doing what it needs to do to be sustainable for the long term. Handing out 35K cars from the get go when production is limited only ensures those cars won't have anyone to service them 5 years from now.

I'm sure our resident TSLA bull @ValueAnalyst would agree.

 

[ValueAnalyst]

Thank you for the feedback. I think the sample size is conclusive enough.

Tesla sold the majority of Model 3's at $55,000. (Base + LR + PUP + Color + EAP)

My thesis is that at the $49K base, people will elect for the $5K software package.

Model 3 reservationists who were militant on the YOU PROMISED ELON AND TESLA, YOU LIARS WHERE IS MY $27,500 CAR I EARNED. I STOOD IN LINE FOR TWO HOURS.

Those who parroted $35K over and over and over I am 100% certain would not have put in the $5K for the EAP package.

How healthy would it have been for Tesla to equip all those cars with PX2 Drive Units, 8 cameras etc if those customers who wanted the rock bottom price was not going to pay for the cost of them?

Now when it comes down to it, did Tesla make a promise of a $35K car? It has been implied yes, and I believe they will produce the $35k car. Just not now, for Tesla to survive, you are just going to need to wait.

They will do it when
1 - They sell all the highest margin cars they can first.
2 - When the run rate is sufficient to leverage economy of scale driving down the cost of each Model 3.
3 - When the PX2 drive unit/GPUs get cheap enough to where a 'partial uptake' on EAP adoption isnt going to kill them.

From option adoption:

49K cars turn into 55K cars.
60K cars turn into 70K cars.
70K cars turn into 80K cars.
27.5K cars stay 27.5K cars.

It is an uncomfortable and inconvenient truth, but we should stop being self centered and recognize Tesla is doing what it needs to do to be sustainable for the long term. Handing out 35K cars from the get go when production is limited only ensures those cars won't have anyone to service them 5 years from now.

I'm sure our resident TSLA bull @ValueAnalyst would agree.

Yes! Agreed. Thank you for posting this. I have long argued that Tesla should increase its ASP in the shorter term in order to capture all economic profits, because we all know Tesla will use the incremental cash flow to accelerate its mission in the longer term. I believe this is what Tesla has done with Model 3, while still remaining deeply supply-constrained. At the current Model 3 option prices, Tesla has balanced the short-term and long-term well.

Now we wait for Tesla to change the game in manufacturing, and then lower prices across the board.

Thanks again for posting this.

 

[Dan Detweiler]

So, along these lines...do you think Tesla is making any profit off these early highly optioned cars? I know they are counting on the cost of battery manufacture to come down significantly through economies of scale as the Gigafactory cranks up, but do you think there is any meat left on the bone at this point when it comes to profits? I have no doubt every Model 3 will eventually make money but until the cost of battery manufacture comes down I wonder if they can be with the current cars.

Dan

 

[MXWing]

So, along these lines...do you think Tesla is making any profit off these early highly optioned cars? I know they are counting on the cost of battery manufacture to come down significantly through economies of scale as the Gigafactory cranks up, but do you think there is any meat left on the bone at this point when it comes to profits? I have no doubt every Model 3 will eventually make money but until the cost of battery manufacture comes down I wonder if they can be with the current cars.

Dan

It would be my conjecture that yes, the 55K Model 3s show a decent gross margin per car. I'm sure that was a question or will be a question at upcoming investor calls.

35K Model 3's would not.

Across all lines, the numbers hurt. They need 5,000 run rate ASAP.

Once Tesla can make a 70K P Model 3, thats when things will look really good and people will buy them.

 

[Electroman]

Yes. I wouldn’t buy a Tesla without autopilot, it’s the single most important feature of the car to me. Without it I wouldn’t have paid 25k for the car let alone twice that.

Yes. Without AP, I might settle for a Leaf for my commute with Pro-Pilot... just saying

 

[McFlurri]

Yes. Without AP, I might settle for a Leaf for my commute with Pro-Pilot... just saying

I test drove a new leaf with Pro-Pilot. It's actually a really good system! The 60KWh Leaf will do very well.

 

[RVD98072]

BMW i3 also has traffic jam assist if you code it.

 

[AMIYY4YOU]

I'm still on the fence regarding EAP. Can someone try to sell me on the perks? From all the videos I've seen, it still seems relatively premature and very buggy (doesn't know what to do in a lot of situations like snow which is common in Boston and highway exits, etc.). Also I also haven't seen any videos of the summon feature that supposedly comes along with it?

I am also reluctant to purchase EAP given that autopilot seems to increase version every year or so.. now we're at 2.5 so I dont want to buy something that will be outdated in 5 years by the next re-spin of the M3 . People also suspect taht L4 autonomy will never be achievable withh the current hardware - it's simply not enough processing horsepower. Does anyone think they'll offer the EAP + FSD as a bundle/package deal in the future when both are actually mature?

 

[Dexterryu]

I think it really depends on your driving use case. I'm not getting it on mine because my commute is short enough and minimal freeway (about 3/4 of a mile). My trip to/from the office is~15 minutes total. If I had a longer commute and more of a freeway commute my answer would be different.

 

[xav-]

So, along these lines...do you think Tesla is making any profit off these early highly optioned cars? I know they are counting on the cost of battery manufacture to come down significantly through economies of scale as the Gigafactory cranks up, but do you think there is any meat left on the bone at this point when it comes to profits? I have no doubt every Model 3 will eventually make money but until the cost of battery manufacture comes down I wonder if they can be with the current cars.

Dan

I think they will make a substantial profit. They are going to build so many of them economy of scale will be huge.

And no stealersh.. I mean no middlemen