Tesla increases price of all Model 3 variants, even ‘off-the-menu’ base model | Hacker News Reader

Tesla increases price of all Model 3 variants, even ‘off-the-menu’ base model

electrek.co

53 pointsclouddrover80 comments

Translation: we're not going to be able to significantly increase production volumes soon, so may as well stop leaving money on the table.

The funny part, of course, is the $35k pricing only 3 months ago.

Imagine iPhone prices flipping around like that. Sure, different products, different markets, different pressures. None of which mean you're obligated to keep tweeting stupid numbers just to reverse them once you're not stoned.

If iPhone prices went up by $9, I don't think it'd make the HN homepage. Tesla's just in super-interesting mode.

Pretty sure if Apple announced a cheap model and subsequently publicly waffled on the pricing multiple times in a short time span, people would pay attention.

It isn't about one pricing delta, it is about repeatedly being "super interesting".

They could be production limited, but they could also be demand limited, if there's a small pool of customers who want a Tesla but are relatively price insensitive.

A whopping 1%. Anything Tesla is big news, I guess.

Is this a big deal? How often do major automakers adjust their prices?

They tend to lower the prices instead of increasing them to not go bankrupt.

Tesla won't go bankrupt. They have a very valuable brand and a lot of valuable IP. What could happen if they don't make it is that they get bought by another auto maker or company that wants to enter the space at a price that is much less than what Tesla's shareholders would prefer and the investors take a big haircut.

That doesn't mean they won't go bankrupt... The brand and IP are assets but the liabilities can easily exceed them. Perhaps you mean that Tesla won't disappear...

They have a ton of debt and that's what matters, investors can only legally take a haircut down to 0% and debt must be paid down. Another company buying then would be buying the debt as well. If their cash flows aren't enough to pay down the debt and keep operations going, then they will ha e to file bankruptcy, at quick point those other companies you mentioned might buy Tesla's assets.

Why the downvotes? Tesla is objectively a bankruptcy risk. A huge number of professional analysts agree with this statement. You’re better than this, HN.

They just raised $1.5B at relatively reasonable terms. Not great, but not horrible either. So now short-term bankruptcy is off the table, and investors have bet $1.5B against those "professional analysts".

Fiat Chrysler is also paying Tesla $2 billion over the next 2 years for EV credits in Europe to avoid even higher fines for the inability to sell enough low emissions vehicles.

https://www.theverge.com/2019/4/8/18300393/tesla-fiat-chrysl...

Why is Tesla a bankruptcy risk and Uber is not?

Where did I say that?

My opinion? Competition with deep pockets and a lot of relevant expertise. Tesla is going against the whole automotive OEM sector and did well dor quite some time. Continuing so requires a lot of cash for a long time which Tesla has trouble generating from operations.

Uber on the other hand is going against a fractured market with uncoordinated incumbents that are to large part protected by regulations. That means small competitors who are not used to that kind of competition. Also requires a lot of cash, yet has a clear end game and less market penetration challenges.

Both are a gamble, sure, but Tesla is IMHO the riskier bet.

>Competition with deep pockets and a lot of relevant expertise. Tesla is going against the whole automotive OEM sector and did well dor quite some time.

The same story was told 5 years ago. I think Tesla proved that it has enough expertise in the industry and the deep pockets do not matter if you can't produce one decent EV model.

> Uber on the other hand is going against a fractured market with uncoordinated incumbents

Isn't uber going against lyft, ola, didi in the short term and going against tsla, waymo long term.

Its almost trivial to start your own uber but almost impossible to start your own tesla.

Where did you read that Uber is financially stable?

Aside from actual numbers those are very different businesses. Manufacturing vs service.

For a manufacturing company cutting costs is hard. If they reduce production they lose lots of scale effects. Supply contracts become more expensive etc.

Uber can to some degree easily pull out of competive markets and focus on high margin markets. At some point they damage their brand, but zu there is room.

Nobody can say if Uber is a bankruptcy risk at this time, because they went public just a couple of days ago, and are still swimming in VC cash that the public markets are paying back. Tesla on the other hand is years past its IPO, and can only raise money now via junk bond issues, which costs them much more in interest payments than their competition.

Their 2025 unsecured note had a coupon rate of 5.3%, and the cost to insure against default was 22 cents on the dollar. At worst, VCs only seek to be repaid in shares.

Source: https://www.reuters.com/article/tesla-bonds/update-1-teslas-...

The coupon on Tesla's latest issue is under 2%, so it's costing them considerably less than their competitors. Of course the reason it's so low is because it's convertible, but...

And while its competitors may be not be rated junk, Ford is just one step away. It's priced at junk levels and Moody's has warned that the likelihood of a downgrade to junk is high. Ford has $150B of debt.

If you're going to ignore the terms of the conversion, of course it's going to look extremely cheap. Tesla spent over 10% of the money they raised (in equity+debt) on partially hedging against the potential dilution from the conversion, so clearly they didn't see the terms as rosily as you do.

Then you jump to how much debt Ford has, but the vast majority of it is in their financial services division. Having large amounts of debt is not some red flag, it's the nature of the business - well or poorly run.

I'm not exactly a Tesla fan, but there are plenty of good things you could say about the company without resorting to manufacturing whatever the opposite of FUD is called.

https://www.fool.com/investing/general/2016/03/11/why-ford-m...

It's a big deal because the $35,000 price point was Tesla's big promise.

Attaching a specific price to a long term marketing campaign that becomes entrenched in the minds of consumers should be considered an antipattern. It locks vendors into a price point that ignores inflation. This can be tough to break free of when inflation (or tariffs or commodity prices, etc.) inevitably make legacy price points unprofitable. See 5 cent coke[0] and $5 footlong Subway sandwiches[1].

Tesla should be able to raise prices by ~2%/year (the rate of inflation) without it being a big deal to consumers. Hopefully consumers are getting their annual cost of living wage increases at their respective jobs.

[0] https://www.npr.org/sections/money/2012/11/15/165143816/why-...

[1] https://www.npr.org/2019/05/07/721193879/subways-five-dollar...

In fairness, 5-cent coke came about because of an unwise contract in which Coke promised syrup to a bottling company for <5 cents, under the impression that bottled drinks would never take off. The ad campaign followed, from coke (not the bottler selling the cokes), as an attempt to keep the bottler from raising prices, because at that point Coke only profited from sales volume, not increases in retail price.

This only hurt them after they managed to buy back bottling rights, but the 5 cent coke ads had become deeply entrenched.

That, and also vending machines. There was no way to do a slight increase in the price of coke. To go up to 10 cents would DOUBLE the price of Coke. Coke even asked for congress to issue a 7.5 cent coin, but was denied.

More details:

https://www.npr.org/2019/05/01/719213730/episode-416-why-the...

Nobody forced Tesla to push "$35,000 EV" as their rallying cry. They did it because, among other reasons, they saw how successful it was for brands like Apple, which they like to be compared to. The problem is, when Apple announces a new iPad model at $499 (2010-2015), they know they can manufacture and sell profitably at that price.

Tesla on the other hand cannot meet its own production targets, so they shouldn't have tried to publicly anchor their own price at $35k.

Apple also increases their prices regularly. And Apple customers don't mind paying a little more because they believe they are getting a premium product. Tesla has built a similarly premium brand and could similarly increase prices without consumer backlash, if not for the famous $35k Model 3 pitch.

> Hopefully consumers are getting their annual cost of living wage increases at their respective jobs.

There are very few jobs where that is even considered

Do you have any data to back up this assertion?

And it still exists, if you read the article.

Edit: Alright I am wrong.

From TFA:

> “Today, in the U.S., Model 3 base prices increased by $400. This price increase applies to all Model 3 variants, including off-menu Standard Range...”

Tesla's promise was that the $35,000 model would be readily available for consumers, not that they would have to jump through hoops to obtain it or that it would simply "exist."

Making a phone call or visiting a store is hardly jumping through hoops. It’s still a thousand times easier than buying a car from a traditional dealer.

I keep seeing this complains about dealers. What exactly is so difficult in buying a car from a dealership. I bought and leased 9 cars in last 5 years, it never took me more than 30 minutes after I picked the car to drive away with it. What exactly is so difficult about it?

Picking the car is a gigantic hassle. Inventory is inconsistent and salespeople are complete idiots.

Once you actually pick a car, then you have to haggle (unless you want to trade money for time and just accept that you’ll get ripped off), refuse the hard sell on a bunch of BS add-ons, haggle again when they try to hand you a final agreement for more money than you previously worked out, and finally leave with your car.

And if you’re very lucky, like I was last time I did this, they’ll go ahead and file a lien on your car even though you didn’t finance it, mildly fucking you over when you try to trade it in years later.

Compare this to Tesla, where you place an order for exactly the configuration you want, the price is laid out for you in advance, most of the paperwork is done ahead of time on their web site, then someone drops the car off at your house, has you sign a few things, and hands you the keys.

I don't hate dealers, but stories like yours are what I think of when people complain about Tesla delivery issues or service issues.

Both of them are really far from perfect.

Which to be honest they should have flat out stated that inflationary pressure had led to raising it and just ate the bad press which would bled off much quicker than forever acting apologist not to customers some of who may move on but instead they were always reacting to influencers and you can never win that game.

I own a LR TM3 and am still happy with it to the point it really sleights my point of view to any gasoline powered vehicle or item. I still think they make the best EV at their price point.

tl;dr

Just be upfront with the price increases and eat the bad press once and quit reacting to influencers and people trying to short the stock

GMs big ev promise was that it would have real competitors in volt and bolt, that kind of didn't get there.

This is a pretty big deal. 3 months ago [0], Tesla made it a big deal that it would start finally selling Model 3s for $35K, and that it was possible because it would be closing down most of its retail division and selling online. About a month ago, it was a little bit controversial when Tesla made the $35K option an "off-the-menu" option on the website.

[0] https://news.ycombinator.com/item?id=19275985

A much more normal pattern is to raise prices a small amount each year, and a little more when they do a visual refresh or complete redesign. Then as that model generation ages, they keep the official price the same, but offer discounts through their dealership system as incentives. It's not so different from lowering the price, but it's slightly more hidden.

It gets more obvious when a certain model (or an entire make) is unpopular, and starts seeing several thousand dollar discounts across the line. Even really popular vehicles like pick-up trucks sometimes get five figure incentives placed on them. "20% off brand new trucks!"

It's not at all weird for vehicles to get more expensive each year, but it's usually obfuscated by the wide variety of trim levels and options, which are often shuffled with the price changes. A mid-year price increase is, at least to my mind, pretty unheard of. Of course Tesla is in the news 24/7, and might be getting more attention than we're used to. With the spotlight on them, they can't do this without serious scrutiny, and it is an atypical pattern of "playing" with prices to try to find profitability while moving a lot of product.

Pickups are a bad example. They follow the medical/college model when it comes to sticker price vs actual price. There's 5k-10k of noise in your pricing data at any given time.

What model is that?

Basically everything that isn't made by Toyota (I don't know why they don't do this but they probably have a reason).

Pretty much nobody pays sticker price on new pickups. At any given time there's discounts of 5-10k on any given model and if there's not a hefty manufacturer discount on the particular set of options you want then you wait a month or choose a nearly identical one you can get the rebates on. The sticker prices aren't really indicative of anything. They're like the "normal prices" on products that are perpetually on sale.

Sorry, I meant what is the “medical/college” model.

They are a bad example of what, exactly?

Almost all cars have differences between sticker price compared to what you can negotiate as the purchase price. In some cases, you'll pay more than MSRP because of limited inventory and popularity. In other cases, you can easily pay less.

They're a bad example of pricing trends. The OEM might kick up some option by $500 but they turn around and run $1k more rebate on everything. Is that a $500 increase or a $500 decrease?

>Almost all cars have differences between sticker price compared to what you can negotiate as the purchase price. In some cases, you'll pay more than MSRP because of limited inventory and popularity. In other cases, you can easily pay less.

Only pickups routinely have manufacturer rebates in the $10k range. These are manufacturer rebates paid by the OEM. You either qualify or you don't, no haggling needed. We're not talking about small differences, we're talking about changes as high as 20% (10k off a 50k truck), sometimes more. Other vehicles do not have that massive error bar tacked on to their price over time graph.

I don't think pickups fail to exhibit typical pricing behavior. The big difference here is scale. Pickups have traditionally healthy profit margins, and as such, the dealerships (and manufacturers) have the most flexibility in deviating from the MSRP to move product.

My guess is that manufacturers enjoy and encourage this margin and the apparent rapid inflation of pickup truck pricing. In other words, if MSRP keeps going crazy, even though savvy shoppers can purchase a truck for way less than MSRP, the general consensus is that they are more expensive than before, and you'll have to spend more than you did last year and the year before. People throw around "spending $50k on a truck" all the time, and while it's true that you can probably get a brand new crew cab with decent trim for $35k (and feel like you got a super good deal), the perception of truck prices has been inflated over time.

But back to the original raise/lower prices, we still see the same thing with trucks as with other classes of car. The price is increased each model year. The trim levels are tweaked. Options are bundled. Rarely does a manufacturer announce a big drop in pricing, or a spur of the moment increase.

Gee, sounds like tesla pushing prices up or down all the time.

Tesla doesn't have traditional "model years" either.

Disclaimer: I work for GM, my opinions are my own.

Generally automakers update their suggested retail price yearly - but remember Tesla uses a completely different sales paradigm. Most OEMs don't sell directly to customers, they sell to dealerships. For many reasons, dealerships may choose to sell below suggested price, or above! OEMs may offer a "factory rebate" or special financing to lower prices, but I don't know of any general practice whereby a manufacturer raises prices in the middle of the year (other than removing incentives, which would effectively raise prices)

I work with automotive data and I assure you there are many manufacturers that raise msrp prices throughout the year, sometimes multiple times on the same model.

Citation or proof needed for a claim like that. Since you work with the data directly it should be really easy to back up your claim.

Just do a google search on any manufacturer like “ford raises msrp on”, here’s the first link for this example:

https://www.autoblog.com/2018/06/17/2018-ford-f-150-svt-rapt...

Not even remotely the same thing. Ford raised the price on the most popular truck model in America to make additional profits before the next model year came out in a few months. I quote the article itself: "When you have a winner, take advantage of it. That's clearly the motto at Ford with the F-150 SVT Raptor."

Tesla raised prices as an act of desperation because it needed every dollar it could get from people still willing to buy Teslas, which based on their quarterly sales and drop in production in Q2, suggests is not sufficient to keep the lights on much past the end of 2019.

wow, doing some mental gymnastics there are we? First, it doesn't matter why prices were raised, I was simply refuting the statement that other manufacturers don't raise prices mid-year. That's exactly what I proved.

Secondly, there are dozens of examples of manufacturers raising or lowering prices, it's not just on popular vehicles.

This article proves MSRP prices change all the time, You can downvote me all you want, facts are facts

https://www.carsdirect.com/car-pricing/when-msrp-prices-chan...

I don't understand the downvotes. Your point is valid, regardless of what people want to read into the reasons behind the price changes.

Gamblor956 is the only one downvoting, he obviously has a bias against Tesla.

You can't downvote replies to your own comments on HN, so it's not me.

If that’s the case, then I apologize. It seemed like you were the one downvoting since I would get downvoted right after you replied.

Personal attacks will get you banned here. Please don't post like this to HN.

Also, please follow the guidelines and refrain from commenting about downvotes. "It never does any good, and it makes boring reading."

https://news.ycombinator.com/newsguidelines.html

my apologies, I’ll refrain from doing that in the future

Thats fair. I still think that the bigger difference comes from not having dealerships and "factory incentives"

Of course. There are all sorts of hidden dealer kickbacks, I’ve seen upwards of $10,000 on some slow selling models

It's definitely not a big deal if people generally don't know how it usually works. One of those cases where industry insiders might be shocked, but consumers take it in their stride.

"The base version of the Model 3 at $35,000 was also put off-the-menu and can only be ordered by calling Tesla or going at the store."

so it is available still?

Yes, but at the new price of $35,400

According to the article:

> In an email sent to employees obtained by Electrek, Tesla said that it also applies to the base Model 3 off-the-menu:

>> “Today, in the U.S., Model 3 base prices increased by $400. This price increase applies to all Model 3 variants, including off-menu Standard Range and Long Range Rear-Wheel Drive. Leasing for Model 3 Standard Range Plus continues to be available for $399/month.”

Constant price changes keeps Tesla in the news. People don't care if it is $400 more this month or $1000 more, that means pennies on the finance that pays for it. But with each of these price change news events there is that nudge-nudge for eco-nsumers to get the wallet out for the Tesla their backside deserves.

There is quite a cottage industry of Tesla watching blogs forever able to make mountains out of mice when it comes to the latest Tesla news.

>People don't care if it is $400 more this month or $1000 more, that means pennies on the finance that pays for it.

I sincerely doubt this.

I believe it. A lot of people don’t care in the slightest what the price of the car is. All that matters is the monthly payment. I’ve talked to people who had no idea what their car cost. I had one memorable conversation with someone comparing cars. They asked what mine cost, I gave the price, and they said, no, what’s your payment? I had purchased the car outright and so we had no way to compare, besides trying to reverse engineer financing numbers.

It's hard to square your anecdotal experience with Tesla's actual marketing data and strategy. If people "don't care in the slightest what the price of the car is", then I doubt Tesla would be headlining major announcements with the price, e.g. "$35,000 Tesla Model 3 Available Now" [0] (there's even an exclamation mark in the first sentence). Having people unnecessarily fixate on a price like $35K seems counterproductive for Tesla, given its desire to upsell features, and natural fluctuations due to changes in tariffs and subsidies.

[0] https://www.tesla.com/blog/35000-tesla-model-3-available-now

I said a lot of people, not all people. A lot of other people do care about the actual price.

A big part of that announcement was be able to claim that they had delivered on their promise.

you can disprove this by induction. monthly payment is $500

raising the payment by a penny causes 0 people to change their choice.

monthly payment is $500.01

raising the payment by a penny causes 0 people to change their choice.

repeat

thus we can conclude the monthly payment may be infinite and people will still buy the car.

Disprove what? I only made a statement that a lot of people focus entirely on the monthly payment. I said nothing about how change to that payment affect their buying decisions.

You aren't wrong at all. Though it does matter more if it crosses a physcologically significant number (thus so many prices ending in "$.99 or $xx,x99").

There's now quite a cottage industry of YouTube vlogs criticizing the final season of Game of Thrones. But I'd need more evidence before concluding that making the show bad is part of a deliberate strategy to get people talking and watching.

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