Tesla: Always late, but worth the wait.
Hang in there.
Tesla: Always late, but worth the wait.
Hang in there.
Late word that the $69,500 base Model S 75 will be discontinued as early as tomorrow. This would make the $74,500 Model S 75D the new base model, right? No. As we saw last time when Tesla discontinued the base Model S 60, they simultaneously lowered the price of the Model S 75. So we can expect some similar pricing and trim adjustments. See prior post here.
Half of my prediction of the interior refresh came true. See prior post here. The Model S now has re-designed rear seats. But where’s the dash redesign? My guess is tomorrow.
Some commentary and speculation…
Admittedly wild speculation, but here goes…
Tesla’s upgraded sound option has had a few minor hardware revisions over the years but is essentially the same system as it was when Model S began production in 2012. However, the name of the upgraded sound system has gone through some major changes:
Unfortunately, all of these names are uninspiring especially in the sea of branded luxury car sound systems. Really, they couldn’t even come up with something like “Tesla Audio”? In fact, the newest name “Custom Audio System” wins the award for worst sound system name of all time and conveys a picture of this…
Tesla’s competitors partner with brands like Krell, Logic 7, Harman/Kardon, Bose, Bang & Olufsen, Burmester, Mark Levinson, Bowers & Wilkins, Lexicon, and Meridian. Tesla’s current upgraded sound system is probably better than some of these, but there’s certainly room for significant improvement. Luckily there are still dozens of high end audio brands that haven’t yet produced automotive sound systems and would probably be interested in a mutually beneficial partnership with Tesla.
While there may be tradition for Tesla to keep the audio system design completely in house or at least the supplier’s identity opaque, there is some precedent for Tesla calling out branded parts. For example the performance Model S and X are advertised to include Brembo brake calipers. And Recaro seats were a highlight of the very earliest P85D’s. More recently Tesla has openly identified MobilEye, Bosch, and nVidia as key suppliers of autopilot components.
Ultimately, Tesla buyers wouldn’t mind spending several thousand dollars for any audiophile grade sound system. But having a branded sound system would likely earn Tesla several thousand dollars more.
The following audio companies can afford full page advertisements in recent issues of Sound and Vision, suggesting they might have the resources to immediately partner with Tesla:
Here are some additional high end audio companies that made the Best of 2016 list in Stereophile:
What does life with a Level 5 self-driving car look like?
Tesla recently confirmed that they will eliminate the base, rear wheel drive Model S 75 by the end of the year. And over the last few days, people have spotted software-locked 85 kWh battery packs in Model X 75D vehicles in Norway suggesting a battery lineup change is imminent. Many are viewing this as a sign that Tesla wants to further widen the price, performance, and feature gap between Model 3 and Model S. But that makes no sense from a business point of view. More likely, Tesla is about to surprise us with a couple of additional configuration and pricing changes.
The 2017 Tesla Model S 75 is already an amazing value at $69,500 compared to other cars in the “Grand Coupe” segment (see prior post). But long term, Tesla needs to bring the base price of Model S down to around $50,000 in order to ease the upgrade or upsell path for Model 3 owners or prospective buyers, and to strike the fatal blow on legacy automakers’ entire compact and mid-size luxury lineups. Tesla Model S is a unique car that can fight competitors above segment, below segment, and even side-to-side (e.g. sedans, coupes, grand coupes, sport wagons, roadsters, hybrids, plug-ins, CUVs, and even small SUVs). Tesla wins each segment when they can offer a significantly better car for significantly less money. $50,000 is the magic price where Tesla can win every segment especially when factoring in total cost of ownership (i.e. gas and maintenance savings make a $50,000 Tesla less expensive than a $40,000 gas car).
While Model S is a “better” car than Model 3, it may be hard for Tesla to convince prospective buyers that Model S is worth twice the price of Model 3. However, a 50% differential is much more reasonable and consistent with how other automakers price their different product lines (e.g. BMW 3 series vs 5 series). Incidentally, “under $50k” was the starting price Tesla initially advertised for Model S though it was for a stripped down 40 kWh version and factored in the $7,500 federal tax credit to achieve that price point. One could argue that Tesla has already broken through that magic $50,000 price point for a theoretical stripped down Model S since the new $69,500, 2017 Model S 75 includes $36,400 in free upgrades compared to the 2013 Model S 60 (see prior post). A new well-equipped base Model S at the around the $50,000 price point is both reasonable and follows Tesla’s regular pattern of battery capacity and price adjustments.
Again, we already know that the $69,500 Model S 75 is about to be removed from the lineup. The first surprise is that the $74,500 Model S 75D will, at the same time, be replaced by a new $77,500 Model S 85D with 280 mile range. This creates a larger price gap with the Model 3, one which Tesla can easily fill by… wait for it… re-introducing the Model S 60D for $57,500. This new Model S 60D (with an actual 60 kWh pack, not a software locked higher capacity pack) will have a range of 225 miles. We end up with an easy to understand pricing structure; each $20,000 upgrade adds 55 miles range and 0.5 second quicker 0-60 mph acceleration. (Note: Model S 100D performance is currently software limited. An acceleration improvement to 3.6 seconds will help differentiate it from the new 85D and put it on par with ~$100k competitors like the Audi RS7 and BMW M6 GC.)
So, expect the lineup to look like this by the end of 2017:
At a price of $57,500, Tesla would be able to advertise the well equipped Model S 60D for “$50,000 after $7,500 federal tax credit” at least until the credit starts to phase out (about 6 months or so). At that point, we could see a $5,000 price drop, reintroduction of the rear wheel drive Model S 60 for $52,500, or some additional free upgrades (e.g. perhaps most or all of the $5,000 Premium Upgrades Package becomes standard). Many people on the Model 3 waitlist would immediately switch to Model S given an opportunity like this. And more importantly, legacy automakers’ entire lineup of compact and mid-size luxury gasoline vehicles (all segments) won’t stand a chance against a $50,000 Tesla Model S.
TSLA stock has had a rollercoaster ride the last few years and especially the last few months. While a few analysts are quite supportive of the stock, most are not. “Big Analysts” (i.e. those with ties to or a bias favoring “Big Oil”, “Big Auto”, “Big Banks”, etc.,) love to point out the quarterly losses, overly optimistic production and sales expectations, limited market and demand, and reliance on government subsidies and green friendly environmental regulations as reasons to avoid or short TSLA stock. Yet the true believers see past the market manipulation and focus on the bigger picture.
There has been a constant barrage of negative political, environmental, economic, and social news and people feel manipulated by the establishment and powerless to affect change. Perhaps Tesla has become part of the anti-establishment (and anti-Trump?) movement. Small investors are buying and holding the stock (and buying even more every time there’s a dip) as protest against “Big Oil”, “Big Auto”, “Big Investor”, “Big Analyst”, and Wall Street in general. Small investors are also buying and holding Tesla as action against air pollution and climate change, both of which disproportionately affect the world’s poor.
Tesla as a company is a brilliant business contradiction, only a stones throw away from “taking money from the rich and giving it to the poor”. Tesla Roadster, Model S, and Model X are unashamedly cars for the “1%”. Yet, Tesla is using the revenue from those cars to produce the Model 3, its first affordable mass market EV designed for the “99%”. In fact, Elon Musk has on numerous occasions thanked buyers of the Roadster, Model S, and Model X for funding the development and production of the Model 3. The press release for P100D Ludicrous variants literally says so:
“While the P100D Ludicrous is obviously an expensive vehicle, we want to emphasize that every sale helps pay for the smaller and much more affordable Tesla Model 3 that is in development. Without customers willing to buy the expensive Model S and X, we would be unable to fund the smaller, more affordable Model 3 development.”
After Model 3 is the Model Y, another mass market EV. Tesla’s expanding vehicle lineup, increasing production, and increasing market share has no doubt spurred other automakers into producing EVs, some with even lower starting prices than Tesla. VW for example has promised a 200 mile range EV priced $8,000 less than the Tesla Model 3. One might think that Tesla would be fearful of such competition, but Elon Musk has on many occasions stated that’s the actual goal. Tesla wants and encourages other automakers to make EVs. Tesla has even opened up all of its battery and electric powertrain patents for competitors to use for free. Imagine if Apple opened up its patent portfolio to the world and encouraged all its rivals to build cheap iPhone clones so that everyone in the world could have an iPhone! The steady production of affordable new EVs by Tesla and its competitors ensures a growing supply of even more affordable used EVs, all of which last longer and cost less to operate than gasoline cars. The direct and indirect benefits of world’s automotive fleet transitioning from gasoline to electric cannot be understated.
Beyond the development of mass market electric vehicles, the buyers of the expensive Roadster, Model S, and Model X have also funded the development and deployment of the Tesla Supercharger Network which is critical to the success of Tesla. Availability of inexpensive, reliable fast charging is as important or more important to the success of EVs than the range or price of the EVs. Tesla is currently in active discussions with competitors and has stated on multiple occasions that they want their competitors to have access to the Supercharger network as long as they meet the technical requirements and help pay for the hardware and electricity. This kind of cooperation is rare in the technology and automotive industries.
Tesla’s mission statement is “To accelerate the world’s transition to sustainable energy”. No other automaker or tech company (or any multi-billion dollar company for that matter) has such an ambitious “save the world” mission, “we can’t do it alone” intellectual property sharing philosophy, or blatant “redistribution of wealth” product development plan. The ludicrously accelerating $170k cars, self-driving technology, Model 3 ramp, stock prices, and Elon Musk will dominate the media coverage. But all the while, Tesla’s vehicles, solar panels, and battery storage systems continue to decrease greenhouse gas emissions and particulate air pollution, and Tesla creates tens of thousands of jobs in the United States to the benefit of the lower and middle class. That’s as beautiful an Occupy Wall Street story as one could ever come up with for a 50 billion dollar market cap company.
Beyond the creation of sustainable energy and transportation products, Tesla could actually help the world’s poor in a more direct sense:
Overnight, Tesla quietly adjusted some of the standard features and options of the Model S and X. Leather seat options have been replaced by vegan Premium Seats. Extended nappa leather has been eliminated. This is a big deal on several fronts.
1. It shows that Tesla listens to its owners and shareholders. At the 2015 shareholder meeting, there were two Pro-Vegan proposals that were voted down but Elon Musk at least agreed to explore the possibility. The board members probably all watched Cowspiracy and Leilani Munter probably lobbied Elon and the board as well, but the voice of the owners and shareholders was critical.
2. It shows Tesla’s ability to innovate and manufacture quickly. Tesla was able to create the vegan white seats in house within 6 months, and the vegan black and vegan cream seats within 2 years. While there were some durability issues at the beginning, it seems Tesla is now ready for mass production of these seats which are regarded as the softest and most comfortable seats ever offered.
3. It shows Tesla is committed to fighting climate change in domains beyond transportation and energy. When Tesla is producing millions of cars per year, their choice to only offer vegan interiors will make a significant impact on carbon emissions especially as EV competitors are likely to follow suit.
4. It shows Tesla is ready to expand to the modern mass market where the prospective buyers are tech savvy, environmentally conscious, and social media aware. A Tesla Model 3 is cool. But a Tesla Model 3 with a premium interior NOT made up of the skins of slaughtered calves is even cooler. This becomes a part of the Tesla story and the Tesla movement.
Note: Updated to reflect inclusion of the Performance Inverter for cars ordered after 7/1/2017. Updated to reflect inclusion of Premium Interior Lighting, Fog Lamps, and Smart Air Suspension for cars ordered after 7/22/2017.
It can be hard to keep track of all the changes Tesla has made to standard features, options, and pricing over the years, so let’s looks at how the new base 2017 Tesla Model S 75 compares to the old base 2013 Tesla Model S 60. First, the 2017 Model S priced at $69,500 is $400 less expensive than the 2013 Model S which was priced at $69,900. Then there are numerous improvements and refinements to the car:
But wait… There’s more! *The following items are now standard but were previously paid upgrades:
Total value of upgrades – $36,400
In other words, not only is the base 2017 Model S $400 less expensive than the base 2013 Model S, it also comes with numerous improvements and refinements, plus $36,400 in free upgrades!
But wait… There’s still more! Order your Model S (or Model X) before December 31st, 2017 using the following owner referral link and receive an additional $1000 off plus lifetime unlimited free supercharging for your new Tesla:
Order Now. Operators are standing by!