Tesla Model S Pricing Analysis

Michael Karesh
by Michael Karesh
tesla model s pricing analysis

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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2 of 49 comments
  • Alex Nigro Alex Nigro on Dec 28, 2011

    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).

  • Andy D Andy D on Dec 28, 2011

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

  • Inside Looking Out This is actually the answer to the question I asked not that long ago.
  • Inside Looking Out Regarding "narrow windows" - the trend is that windows will eventually be replaced by big OLED screens displaying some exotic place or may even other planet.
  • Robert I have had 4th gen 1996 model for many years and enjoy driving as much now as when I first purchased it - has 190 hp variant with just the right amount of power for most all driving situations!
  • ToolGuy Meanwhile in Germany...
  • Donald More stuff to break god I love having a nanny in my truck... find a good tuner and you can remove most of the stupid stuff they add like this and auto park when the doors open stupid stuff like that