First, the federal tax credit is only available to US customers, and it says very little of Tesla if the only way it can make a compelling $65k car is through government assistance. Does anyone believe the S60 is a great value for the price of $71000? I have argued that it would be a great value at $61000. If Tesla were to lower the price of the S60 (without appeal to special government incentives) to $65000, then that would give me the proof I am calling for.
Second, if the destiny of the Model 3 is to fill the $50k to $80k space through loading on of all sorts of pricey options, then we really should dispense with all this talk of it being an affordable car for the mass market. Consider what happened with the S40. IIRC, it was originally priced at $59k. It was supposed to show that Tesla could deliver something with a degree of affordability. But buyers were not convinced that it was a really great value for the price, and of course supply for the whole line was quite constrained for many understandable reasons. It was right for Tesla to pull the S40 because at that time Tesla truly did not have the capability to deliver a compeling and profitable Model S for under $60k. They needed to build both capacity and cash flow before that could be a reality. So let's suppose that in 2017 Tesla starts to take orders for the Model 3 at three major price points with the base model starting at the magic price of $34,950. How many customers will order that when the larger batter versions look like a much better value for the money? How profitable will the base version be considering the opportunity cost of capacity and supply constraints? Will history repeat itself? Will the base vesion of Model 3 be dropped just as fast as the S40? The question is not whether Tesla can make a profitable business of selling fully loaded Model 3s in the $50k to $80k range. The question is whether they really be capable of delivering a compelling and profitable car in the $35k to $50k range. The problem as I see it is not that batteries will be too expensive. I'm satisfied that the Gigafactory will handle that. The problems is whether they have the automotive manufacturing capability.
My theory is that only the high end Model 3 versions will really work out at first, just as only the S85 and P85 have worked for the Model S. To get to lower cost versions will take more time to develop the capability. So it make sense to think of launching a model in stages. In the first stage the high end version is released. A year or two later the midlevel version is introduced. Finally another year or two out the low end version is brought to market. So I am advocating the Tesla may well be at a place to make something truly compelling out of the S60. While launching high end Model X versions, Tesla could be proving its chops and gaining customers by building out affordable version of the Model S.
My theory may be tested somewhat with the Model X. Let's suppose that introduce three or more versions, say X70, X90 and X110. My hypothesis is that uptake of the X70 will be questionably low if it is even introduced. Supply will be constrained so that it will make business sense to privilege X110 orders over the others. In particular, the wait time for a X90 will be longer than for the X110, and the X70 will be discontinued. If this theory is correct, then the simpler path may well be to introduce only the X110 at first. Work out the kinks and ramp up capacity. Then roll out the X90. At any rate, that's my theory, and it has testable hypotheses. So let's see how this plays out.
) but it initially looked like this was going to be AWD S/DA only so I have not altered/made plans to attend. In DaveT terms I put the chance of a model X reveal at 10-20%........now I am thinking there is a 50% chance.......Decisions...Decisions......
