Tesla responds to Model S price questions
A quick follow-up to the post yesterday about Business Insider's Tesla Model S cost guessing game. In case you missed it, BI thinks that Tesla's sub-$50,000 price is pretty much impossible. While some of you found faults in BI's methods and logic, Tesla spokeswoman Rachel Konrad gave AutoblogGreen an official response that digs right to the heart of BI's math. Business Insight did use "a source who'd prefer to be nameless," and Konrad said that:
Wild guesstimates from ostensible experts unwilling to identify themselves have little credibility. Perhaps the biggest flaw in their alleged reasoning is the assumption that Tesla has the same cost structure as an enormous automaker; in fact it's probably the leanest and most efficient in the industry.
Gallery: Tesla Model S: LIVE REVEAL
[Source: Tesla Motors]
Reader Comments (Page 1 of 1)
jpm 3:19PM (4/30/2009)
Go Tesla! Yeah.
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tom engineer 3:29PM (4/30/2009)
With fewer employees than horsepower of a hyundai accent, Tesla may be "lean," but Tesla still needs the same resources to design/produce a vehicle as any other manufacturer: large, experienced engineering staff in EVERY area (safety, chassis, suspension, powertrain, climate, etc.), testing, a factory, tooling for that factory, workers, ability to source and pay suppliers for parts (small volumes = steep prices), and all else.
A luxury sedan is larger, more complicated, and has more features than the roadster. If tesla roadster w/o the battery costs $70K, then it's hard to visualize how a luxury sedan with half the battery (~$15K) can be built for $55K (both MSRP, with-profit prices)
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steve 3:38PM (4/30/2009)
re: "Tesla still needs the same resources "
Why?
They didnt need any of those engineers or other folks for the Roadster, they contracted it all out to Lotus.
Im assuming they would just do the exact same thing again, either with Lotus , or some other partner with the necesary industry expertise.
BlackbirdHighway 3:53PM (4/30/2009)
It's not hard for me to visualize at all. The Roadster is completely built by hand, one by one, not on an automated assembly line, so the Model S would save significant money there.
The Roadster has a body made from very expensive carbon fiber. The Model S saves big money by using an aluminum body.
The Roadster is made in such small quantities that Tesla practically pays single quantity prices on almost every part. Go to the Chevy dealer parts counter and buy all the parts to build one Aveo, then take all those parts to a mechanic and pay him put it together, and you will probably have a $100,000 Aveo. When Chevy (err, I mean Daewoo), mass produces them they have enormous economies of scale.
jake 3:53PM (4/30/2009)
They are aiming for $80k cost on the Roadster with the batteries included by this summer, they already have designed a new interior for the 2009 and also went with some less expensive wheels. I think they have already gotten it nearer to the $90k mark by now. I think the biggest cost savings in the Model S will just come simply in volume, they can buy parts in much bigger quantities to lower per unit costs. The Model S is 10-20x the volume of the Roadster (1000-2000/year vs 10k-20k/year). The partnership with Daimler might help them with sourcing parts besides from just selling battery packs.
Take $15k off the ~ $55k price and you have $40k which is enough for a mid-sized sedan (typically it is around $30k), take the rest and spend it on a little bit of luxury (probably closer to non-luxury sedans with luxury options rather an a full on luxury sedan). But this is just the base model, it'll probably have a lot of expensive options.
It is pushing it though, since most mid-size luxury sedans start at $45-50k, which is probably why a lot of people have put down deposits, its a real bargain if they can get it out at $57k.
Minny 9:08PM (4/30/2009)
They raise the price probally because the dollar is getting stronger now, and Tesla is build oversea, in Lotus factory. I can see the cost factor as follow: Union, Giant Benefits to contribute to, Incentives (for dealership), Bond holders, Overwhelming Inventory (Tesla have a waiting list, 2 actually), Expensive CEO, Subsidies, Advertisment (Tesla Vehicle advertise itself)...etc on and on.
Alfonso 3:34PM (4/30/2009)
Go Tesla! Yeah!!!
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TRL 3:33PM (4/30/2009)
"and most efficient in the industry."
Efficient at what? To be more efficient than "enormous" makers you would have to spend fewer dollars per car produced. Material cost could be higher, you don't need to sell cheap cars to be efficient. At the end of the day efficiency has to tie back to some cost/unit measurement. As long as the dividend in that equation can be counted on fingers and toes that's a real line of BS. At that they are effecient.
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Throwback 3:44PM (4/30/2009)
Time will tell if they hit the $57,500 number. As I remember the roadster went up in price from it's original number. What happens if they don't get additional financing? They still do not have a factory to build these things.
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Cellien 4:54PM (4/30/2009)
Cool, but too rich for my blood. Another step though to lower cost EVs is always good though.
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jzj 5:07PM (4/30/2009)
To generalize, Tesla contracted with Lotus to provide a glider to Tesla's specifications (which I'm sure were drawn mindful of the original Lotus so as not to require modifications that would make Lotus change more than was necessary). Tesla then installed all the powertrain-related components. Tesla is doubtful to suddenly go all-out into the tool-and-die business (although some of that stuff is probably pretty cheap right now from the idled American car plants). Therefore, it will likely continue its pattern of contracting out large portions of the S glider. Does anyone have a guess as to whom the larger contractors may be?
I believe I read that the present S is primarily based upon a Mercedes glider, but that seems like a very expensive way to go. The Roadster would of course have been cheaper if the main contractor was Asian rather than British, but I think with the Roadster cost was less an issue than really getting it right. Now that Tesla has experience with the contractor process, and particularly because it is going more mass-market and therefore the price-point issue is more pressing, I would guess that Tesla may want to look across the Pacific for its major contractors.
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Matt 5:32PM (4/30/2009)
I don't know, I don't think a Mercedes glider would be a bad idea. While they are more expensive than Honda's, they are not any more expensive than Lexus' (the main competition other than BMW and Audi). They do want to make a luxury car, so Mercedes is good there. If it's based on the C300 chassis they could probably pick up a C300 glider for something in the neighborhood of $20,000 wholesale (base model retails for ~$30,000). Toss in a motor/tranny for $10,000, a $15,000 battery pack, and a $5,000 touchscreen computer and you're there; $50,000. What's missing? Profit/overhead? Make that up on the top models (which they will probably give priority to anyway). I think it could happen.
Throwback 8:18AM (5/01/2009)
Why would Merceds sell gliders to Tesla? Edmunds mentioned Tesla designed the platform, if true it sounds like a contractor would build them for Tesla.
pinili 11:32PM (4/30/2009)
comments longer than the statement from testa itself. wow. ostensible experts, huh.
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Johannes 9:52AM (5/01/2009)
Uhh @Minny
A stronger dollar cheapens it's price tag in dollars, if it has components outsourced! Simple logic
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nickoo 1:30PM (5/01/2009)
This is hilarious. They burn though how many million(billion?) dollars to produce 300 roadsters, and they are the most efficient company? I think that Toyota might have something to say about that. Tesla shouldn't speak on efficiency until they start teaching Tesla's operational strategy in top business schools.
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NS 1:54PM (9/28/2009)
Tesla must be doing good if even ignorant business foolz start comparing it to the likes of Toyota (not worried about the negatives in the comparo as the whole damn thing is completely illogical).