By on December 22, 2011

Tesla released the finalized features and pricing for the Model S sedan this week, with deliveries of the most expensive variants to begin in “mid-2012,” the others to follow by the end of next year. More than a few people who thought they were going to be able to buy a “premium electric sedan” for $50,000 seem miffed by the final pricing. Yes, there will eventually be a $50,000 car (after a $7,500 tax credit). But it won’t have full motor power, leather, nav, or the ability to use fast-charging stations. Tick off all the boxes, and the Model S pushes double the hyped number. But, let’s face it, these guys have to turn a profit and must pay at least as much for parts as the big established car companies, on top of that big expensive battery pack. So does the announced pricing seem reasonable?

First off, a caveat. Tesla released “full features and pricing,” but a few holes remain. The car has eight airbags, but what are the two beyond the typical six? Front knee airbags, rear side airbags, or counting each side curtain airbag as two (front and rear)? Does the base car have a leather-wrapped steering wheel or an auto-dimming inside rearview mirror? Are the external mirrors heated? Is obstacle detection standard, optional, or simply not available? None of these are pricey enough features to make a big difference in the following analysis, but be aware that the omissions, if they’re on the car, might be worth a few hundred dollars.

The big jumps from $50,000 are due to the optional battery packs. Three packs will eventually be available. The base car will have a 40 kWh battery pack good for a 160-mile range and a zero-to-sixty time of 6.5 seconds. How is acceleration affected? The electric motor appears to be a powerful 300 kW / 402 BHP unit in all cars, but only the highest capacity battery pack is capable of outputting enough energy per second to fully power it. The figures for the other two packs: 60 kWh / 230 miles / 5.9 seconds and 85 kWh / 300 miles / 5.6 seconds. With the largest pack another bottleneck is encountered. Step up to a “Performance” model, with the 85 kWh battery pack and a high-performance inverter, and the zero-to-sixty sprint drops to 4.4 seconds. One implication: with an electric car, it’s not enough to know the peak power output of the motor. The battery pack and inverter are also critical parts of the equation, and these aren’t always capable of providing the motor with sufficient energy.

To put the sizes of these battery packs in perspective, the Chevrolet Volt has a 16 kWH pack, while that in the Nissan LEAF is 24 kWh. So the increments between packs are as large as the entire pack in these smaller cars. And the lithium-ion pack in the new Prius Plug-in Hybrid? A mere 4.4 kWh, for which Toyota charges about $5,400 extra. Using Toyota’s math, even if we ignore the cost of the standard Prius’s 1.3 kWh NiMH battery pack (or at least assume it’s offset by the cost of a charging system), Tesla would charge about $24,500 to go from the 40 kWh to 60 Kwh and about $30,700 to go from 60 kWh to 85 kWh. Instead, they’re charging a mere $10,000 for each bump. So either Toyota is making a bundle, Tesla is losing one, or Tesla knows something about lithium-ion battery packs that Toyota does not. They certainly can’t be faulted for their battery pack pricing as much as it bumps the price of the car.

And that high-performance inverter? Another $10,000, plus an additional $5,000 to cover mandatory additional standard equipment (leather interior, air suspension, and 21-inch wheels) that costs $6,500 to add to the regular car. So the “quicker than a 911” Model S starts at $85,000.

Optional even on this top model: $750 metallic paint, $1,500 panoramic sunroof, $3,750 Tech Package (nav, rearview camera, xenon lights, power liftgate, passive entry, Homelink), $950 580-watt 7.1 audio system, and $1,500 for a kids-only rear-facing third row. Oh, and if you want a parcel shelf to hide your cargo (like the one standard in a Hyundai Accent) that’ll be another $250. Two further options ($1,500 for a second on-board charger, $1,200 for a high power wall connector to feed it) enable quicker battery charging. Include all of the listed items on the Performance model and you’re at $96,400. Of these options, the $3,750 price for the Tech Package seems to have prospective owners most in a tizzy, as the price seems a little high given the contents, at least some of which they thought would be standard.

Disregarded here, but certainly not elsewhere: the first 1,000 cars will be “Signature” models with a unique red exterior and white leather interior. These start at $87,900, a few thousand higher than a similarly equipped regular production Model S. [Ed: Residual value speculators, start your engines]

So, how does the non-intro car’s pricing compare to the Infiniti M35h I had last week, which has a 1.4 kWh battery pack? Add metallic paint, leather, and sunroof to the Tesla, to minimally match the M’s standard equipment, and it actually comes in nearly a grand lower, $53,650 vs. S54,595. But the Infiniti includes additional standard features. Adjust for these using TrueDelta’s car price comparison tool (where additional models can also be compared), and the Infiniti ends up with a $1,455 price advantage. Load the cars up further, adding nav and the high-end audio systems, and the Tesla comes out better, $57,600 vs. $61,745. A $2,850 adjustment for the Infiniti’s additional features leaves the Tesla with a $1,295 feature-adjusted price advantage. Coincidence that they’re so close? Probably not.

But the Infiniti with a combined power output of 360 horsepower gets to sixty in about 5.5 seconds. So it’s as quick as the standard Model S with the 85 kWh battery pack. Add this pack–also the only one that will be available initially–and the Tesla comes in about $20,000 above the Infiniti.

So, for equivalent range and performance in the Tesla (or if you’re getting one of the first cars) you’re going to spend quite a bit more. How you evaluate this depends on whether you tend to see the glass as half full or half empty. Does Tesla deserve congratulations for doing a surprisingly good job of absorbing the cost of the standard 40 kWh battery pack ($20,000 even at their “bargain” prices) and charging much less than Toyota per kWh for the larger packs? Or should they be taken to task for not delivering the capability of the 85 kWh car at the price of the 40 kWh car?

I’m personally inclined towards the former view. But then this is a purely intellectual exercise for me: I haven’t plunked down $5,000 to get in line for one. If I had, then I might be upset to not be getting the car I expected for the price I expected to pay, even if it always did seem too good to be true.

Michael Karesh operates TrueDelta.com, an online provider of car reliability and real-world fuel economy information.

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49 Comments on “Tesla Model S Pricing Analysis...”


  • avatar
    jmo

    It is a hot looking car.

  • avatar
    bunkie

    Funny, my reaction was that they had hit pricing that would make this car a success. But then, I never believed in the whole “under 50K” story.

    Here’s my logic: Compare the performance model to, say, a CTS-V. Cost is higher, but not as much as higher-end Benzes, Jaguars and BMWs. Looking at this car, I think it certainly would compete in that space. The Styling is almost Aston-Martin beautiful with the exception of the somewhat poorly-executed grill. I think the rollout schedule shows that Tesla understands this. They know that the car has to have serious range to succeed.

    I see an awful lot of high-end imports where I live. I can certainly see that crowd going for this car in decent numbers. If they can get manufacturing volumes where they need to be, I think we might actually be seeing something completely new.

  • avatar
    Conslaw

    I think the Model S is competitively priced within the spectrum of “aspirational vehicles”. Tesla buyers aren’t opposed to paying a price premium for the status of being technological pioneers any more than other buyers will pay a lot more money for a very small boost in acceleration. The other day, I saw a Chevrolet Avalanche truck with a MSRP of $50,000. You’ll get a lot more attention with your $50,000 Tesla Model S. At the high end, it’s probably no coincidence that the $100,000 Tesla accelerates the same as the Porsche 911S, because that’s what the Porsche costs as well.

    The problem with this pricing is not whether it matches the market; rather it’s whether the pricing produces enough profit at the volumes sold for Tesla to make a go of it. I suspect that $50,000 Chevrolet Avalanche truck has 5 times the profit margin as the $50,000 Tesla.

    • 0 avatar
      krhodes1

      I can’t believe for a second that Tesla will make a profit on the $50K entry model. I am sure they are hoping to not actually sell any. Given how long it takes to recharge any electric car, who would NOT want the largest possible battery? If you have the disposable income to be interested in the $50K car, given its limited range and the other caveats, you probably have the readies for the $100K car.

      And considering the current conundrum with fire and the Volt’s relatively puny battery, the boys at Tesla had best have thier safety ducks in a row. Note that I think all the wailing and gnashing of teeth over the Volt fires is silly, but still…

      • 0 avatar
        CJinSD

        The ‘profits’ all came with the half a billion dollar political patronage from the energy department. We’re paying for this company’s ‘success’ whether we ever sit in one these rich man’s follies or not.

      • 0 avatar
        sublimaze1

        just like all other government services :) – - – fact of American life.

      • 0 avatar
        Brian H

        CJin;
        Drivel. That was a loan, which TM is on track to repay at an accelerated pace.

        They are being very careful to have profit margin on every S sold, to make sure of that.

      • 0 avatar
        CJinSD

        Right up until they declare bankruptcy, and the only thing left to show for the ‘loan’ is a decadent physical plant. If they sell some cars, that is just another opportunity for taxpayers to subsidize the delusions of wealthy imbeciles.

      • 0 avatar
        stuki

        Damn, CJinSD…

        While I’m as anti-government as the next guy (probably quite a bit more so than most next guys), this does at least look to be a cool car. If independent testing indicates the reported specs are somewhat accurate, reliability and fireproofness is up to par, and there are no caveats about strapping on a minimally aerodynamic rooftent and doing prolonged top speed runs up the Panamints out of Death Valley mid summer, I’m getting one. It’s as fast as a Panamera Turbo, looks as good as an Aston Rapide, and costs less than either. And all that while being built primarily in one of the most cost unfriendly locations in the world.

        Realistically, like most things, Californian or otherwise, these days, there’s probably more hype than reality to this thing. And being stranded in the Panamints mid summer, atop a blazing battery pack, must surely suck. But that whole reality bites stuff is for after Christmas. For now, it’s Santa Claus time! We might as well enjoy it while it lasts.

      • 0 avatar
        Brian H

        stuki;
        You might like to wait a week or two till the Model X crossover is revealed. It will have the same platform, luxury level, range, etc., but seat 7 adults and have more vertical cargo space, plus various off-road handling enhancements. Cost should be slightly higher.

      • 0 avatar
        Brian H

        CJinSD;
        More of your nonsense. The plant, btw, has been extensively reno’d, and the part of the huge facility in use is state-of-the-art robotics and presses, etc., etc.

        http://www.bizjournals.com/sanfrancisco/blog/2011/10/tesla-model-s-beta-event-scores-with.html?s=image_gallery

        Start at about #69 in this one:
        http://holtarts.smugmug.com/Trips/San-Francisco-Tesla-Model-S/19320674_SfnBL5#1513266153_L7V3gjN

  • avatar
    Sundowner

    I’m going to count this as a huge success for Tesla. We live in a world where $70k-$100k sedans are nigh commonplace; I had to deal with two Panameras just this week, and the Tesla model S has more kit to it than a Panamera. It’s got the sexy sedan cred of the Porsche or a Jag and the treehugger cred of a Prius. Owners can look holier than thou and weathier than thou all on one sedan. Well-to-Do early adopters of tech will be lining up for this thing just like they did for the first [Apple product here].

  • avatar

    Regarding battery pricing: Li-ion costs are roughly $375-$450/kwh. I’m shocked at the premium Toyota is asking for the plug-in Prius. By my calculations, it could be much less. I suspect they’re not really going for any substantial volume.

    But comparing the Tesla’s battery costs to the PHEV Prius is probably not an ideal comparison. Tesla’s battery costs are even lower than average, because they’re using commodity cells, at the expense of longevity. And then there’s no gas engine and transmission to pay for too!

    • 0 avatar

      I used the Prius PIH because it’s the only other case where a single car is being offered with two different battery packs. Toyota is charging a ridiculous amount for the car. A charging system is included in the additional cost, but this shouldn’t cost more than the NiMH battery pack that is replaced.

      Based on your figures, Tesla is charging just a bit above commodity prices…which I suppose they can since they use commodity cells. If they’ve sacrificed longevity too much, though, people won’t be happy.

    • 0 avatar
      Brian H

      False. They’re using purpose-built Panasonic cells; Panasonic is a part-owner.

  • avatar

    The Model S in its overall design, looks more like a Mercedes-Benz CLS than anything else, and the performance is very similar. It is also well known that Tesla has a partnership with Mercedes, so there are probably healthy numbers of common components.

    With the base CLS at $71k, this pricing actually looks very good, even for the top model. In fact, the $80k Performance model matches the $94,900 CLS63 AMG in acceleration.

    I don’t see how anyone who signed up should be disappointed – they were promised a $50k car with mediocre range, or a much more expensive car with better range, and they delivered.

    Except for one “little” problem: range is determined by constant performance at 55mph. The number of people who will drive these at 55mph is best left as an exercise to the reader. What we really need is some kind of urban/commuting style range figures. When I saw the promotional material for the Model S, I thought it was being promised 160 miles on an urban cycle, not a constant speed. Urban cycle range is likely to be much worse.

    To give you an idea of why this matters, my Mercedes E320 gets under 20 in urban driving and 27 on the freeway. That’s a huge difference.

    How much worse? I look forward to hearing the answer.

    D

    • 0 avatar

      The city and highway figures should be closer together than with your Mercedes because of regenerative braking. But a constant 55 MPH is peak efficiency regardless. So establishing range based on this test is more than a little disingenuous. They’re setting themselves up for owner complaints.

      • 0 avatar
        healthy skeptic

        You know what I would do if I had a Model S, especially the 230 or 300 mile model? I would take it out of my garage fully topped off from an overnight charge. I would drive on the freeway at my usual 70-75 mph, making no effort whatsoever to hypermile it. I’d smile, I’d enjoy myself. With the 230 mile model, I might do 100 miles of real-world freeway driving, which might eat up 130-150 miles of LA4 “range”. Then I would pull into my garage with 80-100 miles of range still to spare.

        Repeat as necessary.

        In other words, unless you’re going to be doing cross-cournty driving (which you wouldn’t use an EV for anyway), or unless you know ahead of time you’re going to be pushing the range envelope on a given trip, drive as fast as you want.

      • 0 avatar
        Dan

        Constant 55 mph most assuredly is not peak efficiency. See graph below for the Tesla Roadster.

        http://webarchive.teslamotors.com/display_data.php?data_name=range_blog5

      • 0 avatar

        Healthy Skeptic, I think you have the right attitude overall, and I believe you are largely correct.

        But I do feel a need to see realistic range numbers before plunking down my (gulp!) $80k.

        I definitely think the 300 mile car should be enough for me to take my typical 130 mile round trip from West Palm Beach to Miami, and that’s good enough for me when it comes to range. Maybe the Aventura Mall will get high-speed chargers and then I’ll really be in clover, range-wise.

        D

      • 0 avatar
        Herm

        You wont be doing 55mph average in LA, 45 is more like it if you are lucky, so the quoted numbers might match your situation closely.

    • 0 avatar
      Brian H

      All false. The range is based on mixed driving. The beta testers were getting more than the advertised ranges. The lowest mileage is at constant highway speeds. In just city driving, the lower speeds plus regen result in huge range increases, well up over 400 miles.

  • avatar
    GS650G

    Again, why do we need to subsidize the purchase of this car?

    • 0 avatar
      Sundowner

      Because it’s a a $7500 dollar incentive to get some rich dude to shell out $80,000 of real world R&D that can be applied to later generation cars for lower life forms like you and me.

      • 0 avatar
        GS650G

        How about we spend 7500 dollars converting a regular car to run on natural gas or propane instead, that’s not a pipe dream but an attainable goal today.
        But that commits the sin of burning fuel directly for transportation, instead of indirectly burning fuel to make electricity for transportation.

    • 0 avatar
      MattPete

      Because it’s cheaper than using our military to subsidize the oil companies?

  • avatar
    bd2

    The overall design is nice (albeit not groundbreaking), tho the shape of the grill needs to be reworked.

    With the tax credit, there should be enough well-off buyers willing to buy a nice-looking and luxurious sedan which enable them to bypass gas stations (think the Prius crowd who, well don’t want to “slum” it in a Prius).

    But the key for longer term success will be how the Model S holds up and the level of service Tesla offers its owners.

    If there are any issues, Tesla had better address them quickly and to the satisfaction of the early adopters.

  • avatar
    gslippy

    [I\'m surprised the Tesla/Musk haters haven\'t chimed in yet, who called the Model S \'vaporware\' and predicted Tesla\'s demise before the S was released.]

    Like others here, I doubted the viability of the $50k price point, but I don’t recall any specific promises of what that money would get you. If it was promised to be the 85 kWh pack, then oh well.

    Lithium ion prices are rising due to high demand, so that could be part of it. Tesla will also suffer from higher pricing due to lower quantities, so they may have miscalculated on this one.

    Frankly, I don’t remember if the Model S follows the Roadster battery pack design (using gazillions of 18650 cells, the most common lithium ion cell in the universe), or if it’s a custom package. This will strongly affect price. The magic of the Roadster was Tesla’s ability to wire all those cells together, which is no small manufacturing task. A more manufacturable pack for the Model S will suffer from higher cost per kWh.

    While I appreciate the price comparison to the Infiniti, it should obviously be noted that the Model S doesn’t use gasoline and the attendant regular ICE/transmission maintenance issues, and has the Tesla name on it. The Model S will turn more heads than an Infiniti; saving gas is merely a novelty with this car.

    • 0 avatar

      I don’t believe Tesla ever promised the 85 kWh battery at $50,000. Even the 40 kWh battery at this price is a marvel (though one that won’t be seen for nearly a year). But if anyone expected a Tesla Model S for about the same price as a premium hybrid sedan, this is only happening if you sacrifice range and performance with the smaller pack.

      Prospective owners don’t seem surprised by the base prices, but by the options and their pricing. The largest target: Tesla apparently showed a big nav screen often. So some people are surprised to find it’s the key component of a $3,750 package.

    • 0 avatar
      Brian H

      The pack uses about 8,000 special-built cells from Panasonic, integrated into a flat pack under the floor. The 85kwh cells are more advanced chemistry, with higher capacity, etc.

  • avatar
    Dynasty

    I like the fact that it doesn’t look like a crumpled up folded and wrinkled piece of (yesterday’s news) paper styling exercise so many other TTAC commentators seem to be having a fetish with lately.

    I wonder what the resale value will be on these when they reach four years old.

  • avatar
    bunkie

    I *so* want Musk to succeed. If he manages to make both of his commercial ventures (Tesla and SpaceX) succeed, he will be, in my opinion, more influential than Saint Steve Jobs.

    Right about now, I’d put odds at about 50-50 on Tesla and a little better than that for SpaceX. Both of these ventures are huge, potentially game-changing companies.

    • 0 avatar
      gslippy

      Agreed. And each venture is equally difficult, in my opinion.

      Tesla has to contend with a fickle, critical market, and many competitors.

      SpaceX is rocket science, and people could die.

      I’d rather deal with the latter, but both are fantastic adventures in engineering and cost containment.

  • avatar
    mkirk

    If the range numbers are accurate It could work.

  • avatar
    healthy skeptic

    Personally, I think the prices are competitive for the market segment. To benchmark the Model S against the Bimmer 5-series, I went over to the BMW USA site and clicked on the build-your-own link for both the 535i and the 550i. The twin-turbo 6 535i starts and $52k, and the V8 550i at $68k, and both prices probably climb fast once you start piling on the options. You can nitpick over this or that option, but Tesla is certainly in the ballpark for this market segment.

    Assuming that Tesla can deliver and the Model S will be all they claim, it’s probably my dream car right now. If I win the lottery, I’m getting one. Yes I’m a geek, and something of an early adopter at times. So judge away!

    Realistically, maybe I’ll pick up a used one in a few years, and hopefully by then I’ll have a place where I can plug it in.

  • avatar
    sublimaze1

    I expect mine around November. I am not going to get the introductory (small) level battery pack, but the middle. The other options I am going to get include the Blue Paint ($750), the Tech Package ($3750) [yes, this does seem a little high, but I am getting the impression with my assigned associate that there will be connectivity with the TESLA facility to monitor the car online - do they pick up the tab for this? I don\'t know - we will see], and the rear seats ($1500) for my wife’s kids. Now, I have shelled out $5K four years ago, and after the tax credit, that puts me at $65,900. So, I see that as a reasonable financing situation for the vehicle I am getting.

    Again, this is not a volt. This is not a Prius. This is a 5-series, E class equivalent with a bit of swagger (at least for the time being)

    As an aside, maintaining the 19″ wheels and not going for the low profile sport wheels or the flow-reduction 19″ wheels is fine by me, and the tires should be a bit easier to find and purchase.

    I can’t make it to Houston to see family (I am north of Dallas), but that’s what the wife’s ICE vehicle is for.

    My 2 cents worth

    (oh, and I am not impressed at all with the front grille either)

  • avatar
    mjz

    What a beautiful car. This is what a Jaguar sedan should look like. Yes, there is a resemblance to the A7, but that’s ok, because that’s a stunning automobile as well.

  • avatar
    kroneal

    A very fair article. I can tell you why I became a reservation holder. First, it’s a great looking car. Second, never having to go to a gas station again without any range anxiety for my driving habits is the Holy Grail. Third, performance is pretty darn good (I reserved the larger battery pack). Fourth, I like gadgets and the large touchscreen is awesome. Fifth, having ridden in the Model S, the silent acceleration is as close to flying as you will get while still on the ground. Finally, the price is reasonable for what you are getting for a performance sedan. Compare the top Model S with an M5 or top E Class and the 85Kw Perfomance Package Model S looks pretty good. Compare the base Model S with any other plug-in and the Model S is a better car, albeit more expensive. So you get what you pay for.

    With respect to the comparison of Plug in cars with compressed natural gas, there is no comparison. The closest CNG station is 20 miles out of my way but I can plug in every night at home. I can plug in at work. The infrastructure for electric cars is essentially complete. Electricity is everywhere. Converting gas stations to CNG takes a lot of investment. Also, experience shows that with fewer moving parts, plug in car maintence is a fraction of the cost to maintain an ICE car. Then, factor in the cost of electricity vs. CNG, diesel, or gas. Depending on your utility and rate plan, a plug in is anywhere from 1/10th to 1/6th cheaper to drive per mile.

    These are the reasons I am on the bandwagon but since I, by nature, have some healthy skepticism, I will wait to pass final judgement until the cars are on the road.

    • 0 avatar
      Brian H

      No, it’s 9/10ths or 5/6ths cheaper. Leaving only 1/10 or 1/6 to pay.
      ;)
      Where I am, it’s even better than that. Try figgering with gas at $5.20/USG and electricity at <7¢/kwh!

  • avatar
    kroneal

    Must be iPad math. Touché.

  • avatar

    I think I want a Performance model, with everything but the in-law seats and the metallic paint (just want one in black, hot temperatures be damned).

  • avatar
    Andy D

    Maybe I missed it. What is the expected lifetime of the battery packs? TIA.


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