While established plug-in car makers such as Nissan and Chevrolet have either permanently or temporarily marked down their Leaf and Volt respectively, the purveyor of America’s other top-three best-seller – Tesla Motors – quietly updated its Model S pricing last Friday resulting in as much as a 10-percent increase, or higher.
While base prices are only marginally higher, and some things may actually be the same or cheaper, expenses rapidly accelerate if one adds in options, a common practice. For a $100,000 car this can mean up to another $10,000 or more, and this is at least the second time Tesla has changed pricing details for its Model S without notice or press announcement. In doing so, it has effectively scrubbed the record in a quasi-Orwellian gesture of erasing history and obfuscating choices, whether this result was intended to be so perceived or not.
The first time we took note of recently was when Tesla saved itself a $1,000 per-month depreciation benefit offered in April this year for those who buy existing demo cars instead of waiting in line for a new order. Tesla announced the depreciation benefit in a blog post, then edited the post later so as to remove any history that the offer was ever on the table. Tesla’s media rep expressed regrets to us for that incident when we brought it frontally to her attention. But now barely a week later, Tesla is doing something similar but more far-reaching again.
This time, Tesla shut down its Web site for maintenance on Friday night last week, and when the site came back up, Tesla had changed and muddied the way options are configured to make apples-to-apples comparisons difficult.
On the Tesla Web site, buyers are encouraged to “design” their own Model S with a long list of menu options from powertrain to paint choices to wheels to charger options to interior accoutrements, bells and whistles, and so forth.
In several cases, those who already own Model S sedans or who have one on order are discovering price increases from a few thousand to as much as $10,000-$12,000 more than the Model S they already have or have on order.
“I ordered a P85 under the December 2012 pricing with all but a couple of options. The best I can tell, today my car would cost $14,550 more,” wrote DonS on the Tesla owners forum. “Of course, my car would have cost $3,500 more in January 2013 because the 21″ wheels became an extra cost option. So this latest price increase looks to be $11,050 for my car, or about 10%.”
According to one Model S owner who priced out his limited-edition Signature Performance, changes are substantial for a car as close as possible to his – though his is not an exact comparison, but merely close because Tesla only sold 1,000 Signatures which were largely cosmetically different, then it stopped offering them:
My original Signature Red P85 Model S with all 2012 options except Multicoat white and rear facing seats was $109,050,” wrote the Model S owner. “Today, a Model S P85 with those identical options and the new Multicoat Red would be $122,020. With all the latest 2013 options: $$133,070. [prices do not include $7,500 tax credit Tesla likes to subtract.]
Actually, some buyers are also finding particular configurations they wanted may have gone down in price, and many prices are the same but the base price has gone up.
Tesla’s site has a base price (adding the $7,500 back in that Tesla automatically subtracts): 60-kwh base model: $71,070 (formerly it was $69,900); 85-kwh middle-level model: $81,070; 85-kwh P85 Performance: $91,070.
On top of these starting points, buyers may check boxes and run the tally up to as much as one-third or more over the base price.
Tesla is also rewarding those who order the most expensive models with a shorter wait. P85s are quoted with an approximately “one month” wait in line, regular 85-kwh models are about two months, and a 60-kwh model stipulates about a three-month wait.
Another less than fully crystal clear up charge for new Model S buyers is a substantial price increase for the premium stereo option noted on the independently run Tesla Motors Club. Previously Tesla’s Web site listed “Studio Sound” for $950. The top sound package is now called “Ultra High Fidelity Sound” and it commands $2,500. Unclear is whether there are differences if any, except one costs $1,550 more and has a more jazzy name.
In order to discover “before” and “after” prices – given that Tesla removed the record – some members of the Tesla owners forum have resorted to consulting Waybackmachine.org which is a Web service that archives previous Web pages.
Following is a screen shot from a thread that opened up the topic and discussion, which you can access here for some enlightening and frank back and forth opinions on the subject of Tesla’s latest move.
Reactions have varied among Tesla owners and those with cars on order.
Included in the responses has been the assertion that early adopters of the Model S may actually have done financially better than those who are now purchasing the popular electric car.
This is a reversal of the norm in which those who pay up for the first example of a new product usually expect to pay more, but Tesla has made it so some buyers coming after will pay much more.
Others expressed approval for the upcharges saying certain options were too low to begin with and now their prices seem more like where they should be.
Other saying they own stock have alternately wondered whether this is a positive sign that Tesla is so strong it can afford to raise prices – or is it a warning flag indicating Tesla is in need of the money?
Another owner said a $6,000 price increase for his car on order is now making him take pause whether he wants to buy a Model S:
One more potentially positive aspect – out of other aspects we have not covered – is Model S resale value may go up as a result of price increases.
According to Tesla’s True Cost of Ownership page, Elon Musk and Tesla guarantee the value of the Model S.
“If you do your financing with Tesla, we guarantee that the Model S will have the top residual value of any high volume premium sedan brand (Audi, BMW, Mercedes or Lexus) after three years of ownership. This means you will receive cash back in three years that exceeds the principal remaining on your loan,” says Tesla. “Not only is Tesla guaranteeing that resale value, but Tesla CEO Elon Musk is personally standing behind that guarantee to give customers absolute peace of mind about the value of the asset they are purchasing.”
Aside from this, we contacted Tesla to ask its perspective on the changes but thus far have not heard back.
Tesla’s Business Model Questioned
In an open letter dated Aug. 3 to Tesla VP George Blankenship, issues of concern are spelled out. On the seventh comment down, a Tesla fan expressed doubts about Tesla’s store model.
As followers of this space know, Tesla has had a protracted series of battles with the national and state auto dealers associations around the country. It says is free to pass along savings to customers if it owns the entire distribution channel of its products. Tesla vigorously refutes dealer association concerns, one of which is Tesla is alleged to be establishing a monopoly in bypassing the dealer franchising model.
With no oversight, and no competition within a franchised dealer network, Tesla may operate with impunity, according to the president of the Texas Auto Dealers Association, Bill Wolters.
Usually, Tesla fans vigorously refute auto dealers, and some even demonize them, castigating them like a fox guarding a hen house, but Tesla’s latest move has prompted at least one fan to have second thoughts.
And On We Go
At this juncture there are varied opinions from those who think the change in price structure is a positive event, to negative, to in between.
On Wednesday this week, Tesla will announce second quarter earnings. Like everything else Tesla, there is speculation on whether this will bring a positive or negative surprise, or be on target with previous estimates.
If we learn more about the pricing changes, we can update this.