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Comment by beamatronic | Hacker News Reader

This last bit is an interesting statement,

"While the P100D Ludicrous is obviously an expensive vehicle, we want to emphasize that every sale helps pay for the smaller and much more affordable Tesla Model 3 that is in development. Without customers willing to buy the expensive Model S and X, we would be unable to fund the smaller, more affordable Model 3 development."

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That's been Tesla's business plan for quite some time, use luxury cars to fund the company to mass production. It isn't news, but it does seem out of context.

They frequently get a lot of people complaining that they're just selling really expensive luxury cars to the rich, so they have to keep repeating this. The high performance car is needed to both fund mass production and prove that electric cars aren't golf carts.

Sorry, I tried finding a citation for that. It's in some Elon video from the past month or so.

Secret Master Plan from ten years ago: https://www.tesla.com/blog/secret-tesla-motors-master-plan-j...

Right. Right. I mean I was looking for a citation on them getting a lot of complaints from people who don't know their master plan.

>That's been Tesla's business plan for quite some time

In practice, they've used stock dilution and debt to fund the business.

Plus selling some higher end cars to extend their runway and build out production facilities...

The high end cars have only been "profitable" recently. If you taken into account R&D and the production build up, the model s still in debt.

extending your runway implies unprofitable

https://finance.yahoo.com/quote/tsla/financials?ltr=1

Is the Model S not mass produced?

Compared with other EVs the volumes seem pretty high: http://insideevs.com/monthly-plug-in-sales-scorecard/

Compared to a comparable line of luxury cars, for instance the BMW 5-series, the volumes are relatively low: https://en.wikipedia.org/wiki/BMW_5_Series#Production_and_sa...

Compaing US sales of Model S for 2015 to say something like a Toyota RAV4 (a popular but not top selling car in the US)

https://en.wikipedia.org/wiki/Tesla_Model_S#Top_selling_coun...

https://en.wikipedia.org/wiki/Toyota_RAV4

Model S 2015: 25,202

Toyota RAV 4 2015: 315,412

In the US, the best selling vehicle the Ford F-Series which sold 780,354 in 2015

So I wouldn't say it's not mass produced, but it hasn't hit full economy of scale, and isn't designed to.

If you really want to make Tesla production numbers seem tiny then compare it to vehicle platforms.

The roadster wasn't, Each model has funded devel/production of the following model. I think parent meant S&X are funding "mass productions (model 3)"

Production for the masses might be more on point.

I was about to quote that myself. While it's true that their luxury models help fund newer models, it's rather odd to state that in a press release. It comes across as: "Please pay too much for this vehicle and help subsidize someone else's future purchase."

I would read it more like: "I know several hundred thousand of you are eagerly anticipating the Model 3. Don't worry, we're still working hard to get it out, this is part of it, not a distraction from getting your cars to you."

"Your purchase will allow more consumers to make a similar, energy-saving, green purchase"

Its a value-add of sorts, the money you give Tesla goes not to a massive car company, but to other consumers who have similar values to yours.

"subsidize someone else's future purchase"

Not what it says at all. And you'd have to be pretty oblivious to how companies, esp growing ones, operate (which I'll give you the average American probably is) to take it that way.

The models sold today are subsidising the research, design, cost of operations(salaries) that lead to a model 3 launch. Tesla is feeding it's profits back into growth. Same as all growing companies do.

I get that it doesn't actually say that, but it has that vibe. Compare "All profits from the sale of these models help fund R&D of the model 3, which will be smaller and more affordable" to "We can't produce a small, affordable model without your expensive purchase". These are functionally equivalent statements but vastly different in tone: one focuses on "funded by profits" the other focuses on "expensive purchase".

"By buying this vehicle you become part of an elite whose ostentatious consumption is allowing poor people to buy cars too."

Sure, but even phrased that way, it differentiates it from some other potential substitute brands – Audi, BMW, etc. where there's no stated effort to produce a car "for everyone else." It may well help shift the brand reputation from luxury for profit to something like next-generation or innovation and progress.

> It comes across as: Please pay too much for this vehicle and help subsidize someone else's future purchase."

"... See, you're not just being a rich snob buying expensive cars, but funding a future wave of electric cars for the masses that will help save the world from global warming. So you can feel good about yourself."

That's what I think they're implying.

Which can be effective, if marketed properly. See carbon credits and marketing products as carbon-neutral for an example.

It seems a strategic error from a sales perspective. Why call attention to the fact that the car is expensive? They could have pointed out that the car funds the Model 3 without highlighting the high price.

I get your point, but I think they are going for a slightly different strategy here. This is the highest trim level for them, produced in limited quantities and is being sold in part based upon its relatively exclusive nature.

Highlighting the price difference doesn't always hurt luxury products.

Totally.

Look at what happened to Chivas Regal sales after 1909.

Something they have to repeatedly say to stop the press from going on about how they only make luxury cars for the rich.

Elon's 'Top Secret Master Plan' has been around since the start.

It is also to help influence people considering buying other electric vehicles... so if you're considering a bmw i8 or waiting for porsche mission e, you might think... this will help promote electric vehicles for the masses.

And other objectives, like colonizing space (SpaceX), standing up to the shady business of car dealerships and their stranglehold on car sales (Tesla cuts out that middle man), etc etc.

A clever marketing way of having people get over the guilt of buying a luxury product.

Doesn't mean it's illegitimate. Buying a luxury Tesla is better than buying a luxury BMW, for everyone.

There is something odd about one consumer product funding another. Someone once wrote about the VW Veron that is was a shame that all the not-rich people buying VW Jettas paid a little more, and got a little worse of a car, so that a handful of the super rich could have Verons. Telsa would be doing the opposite. The rich people buying the expensive car are paying more, and getting less car, so that Tesla can make cheaper cars. Maybe Tesla will pull it off, but it seems unsustainable. VW could justify it as the Veron project was a tiny part of a giant company. Tesla isn't VW. Eventually someone will want to stovepipe the money made on one market into further developments for that market alone.

It is precisely profit from one business venture that allows a firm to invest in order to produce additional goods for consumers. All the consumer demand in the world could not create a Tesla Model 3; only saving and investment can.

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