By on October 24, 2018

How quickly things change. In today’s era of #disruption, standing still equates to certain death, but pricing isn’t normally the thing seeing the greatest change.

Not at Tesla. Less than a week after the automaker announced a new Mid Range Model 3 that splits the difference between the Long Range variant (now available only in dual-motor guise) and the still-unattainable $35,000 base sedan, the model’s price has undergone a refresh. Musk Math must be at work.

For rear-wheel drive, 260 miles of range, and a reduction in acceleration and top speed, Tesla customers were told last week they’d pay $45,000 before tax credits for the privilege — or way less than that after deleting the fuel and maintenance costs of a phantom vehicle they didn’t buy. (Tesla continues the bizarre and inaccurate practice of bundling anticipated savings into the MSRP. Pushback is growing.)

Sometime after dark on Tuesday night, Tesla’s Mid Range Model 3 shot up in price by a grand, coming in now at $46,000 or two grand more than the RWD Long Range model cost before its discontinuation. However, the dual-motor Long Range model saw a drop in price. That model now carries a price tag of $53,000, or $1,000 less than before.

All of this points to an attempt to maximize profit from the Model 3 line, just dAYSas last night’s announcement of a looming loss of trim configurations points to a need for greater production speed.

Later today, Tesla plans to release its third-quarter financials. It’s unusual timing, as the automaker typically waits longer to toss out numbers after the end of a fiscal quarter. Tesla CEO Elon Musk promised earlier this year that his company would end the quarter in a cash-positive position.

[Image: Tesla]

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26 Comments on “Mid Range Goes Higher: Days After Reveal, Tesla’s Cheaper Model 3 Gets a Price Bump...”


  • avatar
    civicjohn

    So EM’s bullhorn over at Electrek reported this and the fan-men are reporting that this is nothing unusual, just like going to the grocery store, you should expect dynamic pricing from Tesla and they are merely tweaking pricing to be in sync with demand. Others are saying that the mid-range Model 3 will probably be a temporary model, and that the changes to the S/X interior options are simply another brilliant way to maximize production and profitability. Oh, and EM moved the earnings call up because they have nothing to hide, another way to hit the shorts.

    I think that people who don’t follow the daily news of all things Tesla might find the “dynamic” pricing somewhat unsettling, and if I bought a car and a month later that model wasn’t available, does that have an impact on the resale of that car?

    Then we had the short seller who went bullish on Tesla yesterday. All I know for now is that the earnings call will be one of the most interesting of this quarter, if not for the year.

    • 0 avatar
      JimZ

      “EM’s bullhorn over at Electrek”

      love it. Lambert is a complete tw*t.

      “you should expect dynamic pricing from Tesla and they are merely tweaking pricing to be in sync with demand.”

      hey, you should feel *privileged* to have the honor of giving Tesla more of your money!

    • 0 avatar
      SCE to AUX

      I have to agree with you both. Tweaking price on a model you introduced 5 days ago is bad form, and their other recent moves with reducing product options reek of balance sheet desperation, not to mention the late-September sales push.

      It will be interesting to see what actually happens if/when the mythical $35k car emerges, in terms of actual driving range and (possibly required) options. If that’s the car of Tesla’s future, and if it’s a money loser, then they’re doomed.

      • 0 avatar
        hreardon

        At the risk of sounding snarky, the reality is that Tesla’s core buying audience will roll with these punches. Get the money from the early adopters while you can.

        However, it’s another item on the “immature business” checklist and definitely a tactic that will infuriate buyers in the mass market.

        Somewhat unrelated: we have a Tesla retail store here in Northeast Ohio and in my drive to work this morning I noticed that the lot, for the first time, is PACKED with cars – primarily Model 3s.

        Does Tesla build to order, or do they build to inventory like the traditional automakers?

        • 0 avatar
          civicjohn

          I would assume that they have to build to inventory somewhat due to the limited assembly lines available. I could be completely wrong, but it seems like they kick out a bunch of AWD cars, then they move to another type.

          It seems to be the general consensus that the limited paint shop area is also a factor, hence the dramatic price difference for colors.

          I did go by the mall parking lot where the local Tesla dealer parks their excess, and it is as full as I have seen it since August. “Cars in transit” still seems to play a part of the company financials, we’ll (hopefully) hear more at 5:30 PM Eastern.

        • 0 avatar
          JimZ

          the difference, of course, is that since they do their own retail, those cars in the store showrooms and lots are all on Tesla’s books until delivered to the end customer.

        • 0 avatar
          brandloyalty

          I believe they ship to geographical areas in “bulk”. I know where I live Model 3’s started showing up on the streets at the same time I heard a shipment of 600 had arrived. They must be doing unit trains.

        • 0 avatar
          Rick T.

          In the Nashville area I’ve seen three truckloads of Teslas on my evening commute in just the last week headed eastbound on I-40. They aren’t going to the local Brentwood store based on where I saw them. In 10 months going home this route, these are the first I’ve noticed.

          • 0 avatar
            civicjohn

            Were they on their way to Knoxville? Meaning headed east with Nashville in your rear view mirror? They don’t have a dealer in Knoxville so perhaps they were headed further east, otherwise they would have headed down I-65S to Cool Springs Mall if not the Brentwood dealer.

        • 0 avatar
          SCE to AUX

          As of yesterday, my local Tesla store had no Model 3s on the ground available for walk-ins. Every one there was spoken for.

  • avatar
    Sigivald

    I simply don’t take Tesla dealines or pricing claims seriously, ever.

  • avatar
    Stumpaster

    Bad, bad, bad! Tesla. Taking away our natural born right to negotiate for days with the dealers who mark up and down the cars at their whim rather than actual prices and never ever ever list the actual sale price. I will pay you $200 over the invoice I saw someone post on the internet!

  • avatar
    civicjohn

    Tesla blows it out of the water. Revenue $6.62BN, GAAP EPS $1.75 beats Wall St. by a mile. They just released the shareholder letter, that should be entertaining and I’ll still be listening in this afternoon.

    The fan-men called it correctly regarding moving the call up to announce good news, we’ll see what lies under the hood regarding the 10-Q filing, maybe they sold a boat-load of ZEV credits, maybe there is some other interesting nuggets that will may or may not be repeatable in Q4. However, if you’re holding shares from Monday, you are digging the movement of the stock from approx. $250 to $320. A bit too volatile for me.

    Ford slammed it too, up 6.5% aftermarket. That 7% dividend will be good for a couple of more quarters.

    • 0 avatar
      Lockstops

      I just can’t wait to see if there is one cent _really_ allocated to product development of new models to replace the ageing Model S&X platform. And also development and factory tooling for Model 3:s sister models as it’s 100% impossible to be profitable without using one platform for several models. Well, except for with Tesla they deal with completely alternate truths in reporting everything so we’ll never know and then again the business truths are straight from the twilight zone since their customers seem to lap up any and all absolute monotonous crap they spew out of the factory.

    • 0 avatar
      hreardon

      I’m waiting on the 10-Q filing as well. The devil is always in the details.

      • 0 avatar
        civicjohn

        There is a lot of “juice” in the shareholder letter. I have a few friends who argue over stock picks, and my highlighter marker almost ran out while reviewing the letter, I’m ready to listen to the call, may post up some concerns.

        Kinda sure this was a good bit of window dressing.

    • 0 avatar
      Pch101

      Assuming that the average price of a Model 3 sold during Q3 was about $55k, Q3 revenues would have been $1.1 billion lower if the cars had been priced at $35k. Revenues at that level would have produced a substantial loss.

      It should be obvious why not only there is no $35k version, but also that there is the new variant: Tesla is running out of Model 3 buyers on its waiting list who are willing to pay more than $50k.

      So new blood is needed sooner than later. Without buyers who are willing to pay well above $35k for a Model 3, Tesla loses money.

      The reservation list is largely comprised of would-be buyers who cannot currently be served without generating substantial losses. This quarter’s result is probably not sustainable because those high-end buyers are almost gone.

      The shareholder (marketing) letter indicates that “only” 20% of deposit holders have demanded their deposits back. It would seem that Tesla is stalling, hoping to not lose more of them.

      • 0 avatar
        mcs

        There’s a new battery module design for the 3 that’s an improvement over the current version along with being lighter, and cheaper. They admit the lower module cost is needed for the “$35k” car. Production rate is important too.

        As far as new buyers go, they haven’t tapped Europe and the rest of the world yet. That will give them a new stream of customers once the US market starts tightening up. There will also be households that bought one car to try it out adding a second to replace their remaining combustion car.

        • 0 avatar
          vvk

          Tesla estimates demand for M3 as 500k-1M units per year, better than 3-series. They also said that the market for compact luxury (premium?) cars in Europe is twice as large as in the US.

          And then there is China…

      • 0 avatar
        SCE to AUX

        @Pch: You’re assuming that the $35k car is the same as the $55k car. It most definitely is not.

        The $35k car will have about 27 kWh less battery (perhaps $3500 COGS savings alone), plain wheels, smaller tires, a steel roof, a smaller motor and controller, and possibly a cloth interior.

        So it’s possible the $35k car will be $6-8000 cheaper to build than the $55k machine available today. While revenues would be $1.1 billion less, costs might be $400 million lower, too.

        • 0 avatar
          Pch101

          Do the math. On Q3 sales volumes, assuming that your numbers are correct, that turns profit into a loss of a few hundred million dollars.

          Tesla can’t make money selling $35k cars. If it could, then it wouldn’t have changed the delivery system in an effort to introduce new buyers to cut in line in front of the original depositors.

          It also didn’t hurt that $52 million in ZEV credits were sold in Q3, versus none in Q2. That was a bit of a gimmick to defer revenue so that it landed in the high-profile quarter.

        • 0 avatar
          mcs

          It’s not just the fact that the new redesigned battery module for the $35k car has less cells, it’s a new lower cost design that will be used across the Model 3 lineup. I’m curious to see if the lighter weight impacts the acceleration of the performance Model.

  • avatar
    civicjohn

    I’ve yet to see if homologation has taken place for EU sales, certainly not mentioned today. The EU held up Audi because of a software change. I can’t find it out anywhere. I’m sure there are plenty of sales to be had, but it takes a long time to ship them, and 5,000 $50k cars on a boat can rip up the free cash flow.

  • avatar
    Lockstops

    How can everyone not care that the whole company is clearly just winging it? Their product strategies are basically only: “lets make this car and then start selling it, I dunno at XXXX price for example, and then conquer the whole industry”. Then everything else is an afterthought, from equipment levels to pricing to just about every single other aspect… Just winging it.

    And what’s worse, all of this is revealed AFTER years of very bold, arrogant promises of EXACTLY what they’re going to achieve and when. And now we know in reality they had no damn clue what they were doing, at what price they can do what, and how.

    It was all just an arrogant prick wanting to run his mouth, then using billions of investor money to gather ‘some group’ of professionals to see what they can maybe come up with. Musk maybe thought this was going to be easy, maybe he thought it isn’t “But what the hell, what am I going to lose? It’s not my billions…”, but what is clear is that he had no clue what he was doing and had no concrete planning to base his claims on.

  • avatar
    hreardon

    Anyone have any data as to whether Tesla stiffed paying suppliers in the quarter, like they’ve done in the past? They tend to defer supplier payments to gin numbers – did that happen this quarter?

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