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the elusive $35K Tesla

Discussion in 'Reserving, Ordering, Production, Delivery' started by ModFather, Jun 22, 2017.

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  1. ModFather

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    #1 ModFather, Jun 22, 2017
    Last edited: Jun 22, 2017
    I hope this post is controversial and will generate some robust and thoughtful discussion in a good way.

    Here is my theory. I believe that the initial TM3 offering will retail at around $42.5K with included options of upgraded interior, premium paint, and whatever else. EM did say he expects the average TM3 to retail for about $42K. After rebate that brings the price of the car to $35K. So far so good.

    The $7,500 rebate will expire eventually with over 400K reservations and not everyone will have access to that rebate. So the late reservationists will have to pay retail for the car and options they order with no rebate. Fair enough.

    Here is where it gets sticky. I don't think there will ever be any $35K base price cars that will be available to qualify for the rebate. Those folks who think they are going to get a $35K base car, get the rebate, and pay a resultant $27.5K are going to be sorely disappointed. EM said the best $35K for the money. He didn't say the best $27.5K car for the money. I believe a $35K base car will be available through the configurator, if not day 1 then soon after, but that car will not be delivered until after the rebates have expired. There will never be a $27.5K Tesla (at this time). Yes, some reservationists are going to be disappointed and walk but they will be replaced by those who will see and drive the TM3 in person and realize that they are buying a car that is almost as good as an MS, and in someways even better, for about half the price.

    I think this is sheer marketing genius by EM! He is, in effect, getting the US government to fund his high margin options on the initial TM3s, he kept his promise about a $35K car, and the initial reservationist placeholders get a heck of a package for $35K after rebate!

    Okay amigos, have at it. Please don't give me a "disagree". State your disagreement in a well reasoned post. I am truly interested in your opinion and what YOU think.
     
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  2. SoFlaModel3

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    So he has been very adamant at saying the car starts at $35k without rebates unlike the S and X which showcase the price with rebates and fuel savings estimates.

    I believe there is a $35k car down the road, but if there isn't a "free paint color" then you pick your color and the price jumps. Aside from paint, I do think eventually someone somewhere is getting a $35k car. At best it's with a $3,750 or $1,875 credit.

    As far as launch... yeah my guess is the car is $42k. I add 19's and autopilot and get to ~$50k.
     
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  3. ModFather

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    And that would be a true statement because when the $35K car is delivered, ALL rebates will have expired. My theory is that there will never be a TM3 for $27.5K, or $31K, or $33K after rebate. All TM3s that will qualify for any rebate of any amount will be delivered first and will be highly optioned cars at $42.5K+

    Marketing genius!
     
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  4. SoFlaModel3

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    That's where I disagree. If the Tesla site says new orders placed today can be expected by mid-2018, then it's hard to believe a base car already reserved with priority doesn't get the credit.

    My guesses ....

    Car 200k hits 4Q 2017
    $7,500 runs though 3-31-2018
    $3,750 runs through 9-30-2018
    $1,875 runs through 3-31-2019

    $35k cars begin to exist in 2Q 2018 and quality for the $3,750 and $1,875 credit.

    For me personally I know I only need the 60 kWh battery, but (1) I don't want to wait and (2) I suspect waiting costs me $3,750 minimum so I might as well get the 75 kWh. What I also don't know is when the 60 exists will it even exist with the other options I want? The trim levels introduce a new wrinkle.
     
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  5. Guy Weathersby

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    For whatever it's worth, I expect Tesla to deliver $35 K cars by the end of 2017. Putting it much longer than that would be a major PR problem.
     
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  6. ModFather

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    SFM3 you make some strong points, but there are some things that confuse me (which I am a lot lately).
    The government site reads:
    The credit begins to phase out for vehicles at the beginning of the second calendar quarter after the manufacturer has sold 200,000 eligible plug-in electric vehicles (i.e., plug-in hybrids and EVs) in the United States as counted from January 1, 2010.

    I believe that it has been stated here on M3OC that Tesla has sold around 100K Roadster and MS/X since 2010. I believe that another 100K MS/X/3 will be sold in third quarter 2017. So that means that "phase out" will begin on 1/1/2018. Phase out will be 50% rebate for 6 months, and then 25% for the 6 months following. So the rebate will be kaput by the end of 2018.

    In effect, my theory supposes that no $35K vehicles will be available until first quarter, 2019. Only highly optioned cars will be available through the end of 2018. EM gets the government to help fund his high margin options. Genius! At this point, it is only my theory.
     
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  7. ModFather

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    Your opinion is worth a lot to me!

    But isn't that what EM is doing? delivering a $35K car after rebate. I don't see how that is contrary to anything he has said or tweeted. I think there were/are a lot of people (including me) who assumed too much in his $35K price point. I think that was always his intent to deliver a $42K car for $35K.............initially.................after rebate. I would really prefer that the TM3 be a $42K car in order to keep Tesla a viable company. I don't see how they can produce a $35K car of this caliber, with this technology and still make money, at least initially (first year or two).
     
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  8. SoFlaModel3

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    Disagree button ;)

    What if half of the 400,000 pre-orders want a $35k car? They will get those cars with certainty next year. Tesla is saying new reservations placed today are going to get the car next year.
     
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  9. Michael Russo

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    @ModFather , I was fine with your first reasoning, yet now when I read this I am not so sure... reason is my hunch is they're going to do everything to deliver a maximum number of cars as far as they can during the first half of 2018, which could potentially all be eligible for the full $7,5000 tax credit (rather than 'rebate' if I learned my lesson well...) to the extent the 200k threshold is only surpassed as of 1/1...

    In this case, I could see some of these 1-2Q18 deliveries to be relatively scarsely optioned cars, for reservation holders with more limited budgets, yet determined to get a Model ≡, that could go for 30-35k after tax credit... :rainbow:
     
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  10. ModFather

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    Who knows what percentage of reservationists want a $27.5K car after tax credit, but these two polls on M3OC give some clues,
    Poll 1
    Poll 2
    These two polls had over 500 respondents. It is difficult to say if this is a significant sample that can be extrapolated to the larger population and some may have voted in both polls. I presume that the votes were for a price range BEFORE tax credit, I know that's what I presumed when I voted.

    So between the two polls, an average of about 5% of respondents desired a $35K car ($27.5K after tax credit). This percentage is hardly significant in terms of 400K+ reservationists and consequently they will not get an early build, not get the tax credit, but will get an incredible $35K car for a net cost of $33K-$35K, but later on. The biggest percentage of responsents were in that $45K-$50K categories. These are reservationists that hope to get the tax credit and have a net cost of $35K+. I think they will get that car for that net price because those will be the ones built first.

    Yes, you are correct that it is a tax credit and not a rebate. I was imprecise in my language. In fact some early reservationists may not qualify for the tax credit even though, in theory, their cars do.

    But Michael you refer to "delivered" cars to qualify. That's not what the law says. It says "sold" cars. So when is a car considered sold from the standpoint of the Gob'ment? I think it is when Tesla considers it sold. which is when your $1000 deposit is non-refundable, this presumption is, of course, subject to debate. Given my presumption, I believe that 200K threshold will occur before the end of Q3/2017 when you add in around 100K Tesla MR/S/X sold since 2010. I believe that Tesla will make at least 100K TM3 deposits non-refundable in the next three months Q3 and those will be highly optioned cars, that has already been confirmed. So that means that all cars sold in Q4/2017 will also qualify for the full $7,500 tax credit........but none of those sold cars will be no option $35K cars. I think your expectation that any cars "sold" in 2018 will qualify for the full tax credit is not realistic.

    If my calculations are correct, then there will be only a 50% tax credit in Q1-Q2/2018 and 25% tax credit in Q3-Q4/2018. If you are one of the reservationists who want a base $35K car ($27.5K after tax credit), it will be listed on the configurator but you won't be able to "purchase" it (by Gob'ment definition) until sometime in 2018 or even later and it won't qualify for the full tax credit, if any. I know that scenario would upset some people, about 5%, more or less, if the polls are correct.

    Good discussion guys, anyone else want to jump in?

    And Michael, it is okay if you refer to me as MF, but only if you refer to me as MF with a smile on your face! ;)
     
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  11. TesLou

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    Hmmm...I don't know...seems to me that, with the limited amount of options available at launch, MOST of the initial production cars are likely to be the ones nearest to $35k. And those are the ones that will definitely qualify for the full tax credit.
     
  12. ModFather

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    You could be right, but it has been reported that initial deliveries will be cars with extended battery packs, upgraded interior, premium paint, glass roof, and perhaps other options that will boost the price up to around $45K. That will make the car net at around $37.5K after tax credit, a real bargain. I don't know, but that is what is being reported and what EM seems to imply in his Tweets.
     
  13. SoFlaModel3

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    You misinterpreted picking your color and rims to mean base model. We will be steered toward what is likely the middle option in between the base and the performance model.
     
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  14. SoFlaModel3

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    I believe you are incorrect. I'm nearly positive it's when the car transfers to the owner and thus they take possession of the car.
     
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  15. ModFather

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    Yeah, I really don't know.
     
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  16. SoFlaModel3

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    I'm nearly positive in fact. Just because your $1,000 deposit is converted to non-refundable doesn't mean you can't still cancel the order. It is definitely dependent upon completing the sale.
     
  17. 3Victoria

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    First we are only talking about cars sold in the US ... a very large proportion are exported. I think that Tesla will try to hit the threshold on Jan 1 2108, so that the full tax credit will continue to June 30th 2018, so as to maximize the number of people who can take advantage of the credit.

    As an added bonus, they may have to increase exports in late 2017, and maybe I will be a benificary here in Canada :):rolleyes:
     
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  18. ModFather

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    Good point! I wonder what percentage of TM3 will be exported the first two years? I wonder if changes to NAFTA will have an effect on Canadian imports with regards to Tesla only please.
     
  19. 3Victoria

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    The NAFTA is anyones guess. However, if things don't change, then the Model 3 should not have duties on it, as it will pass the amount of American content that qualifies it, due to the batteries being made in the US. The S and X missed that level as I understand.
     
  20. SoFlaModel3

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    I think that's the ideal scenario for sure. Hitting on the first day of Q1. Part of me still thinks they will hit on Q4 though.

    Well what percentage of the 400,000 reservations are from countries outside of the US? Everyone one of the 400,000 will get a car in the first 2 years.
     

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