Value Walk: Tesla Motors Gen III Model E Well Optioned For $50,000

MAY 4 2014 BY ERIC LOVEDAY 77

Tesla Model S Under Wraps

Tesla Model S Under Wraps

Tesla Motors CEO Elon Musk has long stated that the target price for the Gen 3 Tesla (Model E) is $35,000.  However, Musk is vague on what that price implies.  Are we to take into account inflation since Gen 3 won’t launch until 2017?  Is that an after tax credit price?  Is that a base MSRP price?

That's a $50,000 Up Sell

That’s a $50,000 Up Sell

Starting from the $35,000 baseline (let’s assume that doesn’t include the federal tax credit since Musk previously stated that Tesla isn’t counting on Gen 3 receiving the credit come 2017), coupled with the fact that almost nobody buys a base Tesla Model S, Value Walk puts an Average Selling Price on Gen 3 of $45,000-$50,000.

To us, that figure seems on target.  Sure, Tesla will offer a $35,000 Gen 3, but we suspect that only a few percent of sales will be for that base model, which likely won’t have Supercharger access and some features that most car buyers will be looking for.

Stepping up to a Gen 3 with Supercharger access and range of 200 miles will probably be a pre-packaged option and will probably put the vehicle’s price closer to$45,000.  Add on a few more extras (tech package, sport suspension, etc) and your likely touching $50,000 or more.

Tesla knows how to up sell.  It has proven that with the Tesla Model S.  We’d be dead wrong to assume that Tesla doesn’t expect the same to be true of Gen 3.

So, while a $35,000 Gen 3 may soon exist, it won’t be the Gen 3 that most buyers buy.

Source: Value Walk

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77 Comments on "Value Walk: Tesla Motors Gen III Model E Well Optioned For $50,000"

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Well, I reckon that both Nissan and BYD can come close to a genuine 150 miles + electric car by 2017, so the market should get interesting.

And where will you drive this Nissan? Still will be a city car. The tesla supercharger network is the game changer. Makes long trips possible. No other company will do it.

What? I have a quick charge port in my LEAF; it worked beautifully the one time I felt the desire to do a test.

I always assumed that the base price included 200 mile range. And tesla would offer the upsell of 250-275 mile range pack for 10K more.

The options list will only get longer between now and then too – highway super cruise and other safety features, more advanced in car computer to run the center screen, etc.

Exactly! That’s why I think a fully optioned Model E will cost over $60,000; just like the BMW 3-series or the Mercedes C-class. Both the M3 and the C63 AMG clear $80,000 when optioned up. I don’t expect the Model E Performance Plus AWD to be any cheaper than the competition-quite the opposite really. But it’s going to be fantastic!

I thought it will cost close to what a 60kwh costs!

I believe Teslahas stated that they will only produce Supercharger charger capable and highway capable and 200 miles or greater range. They may charge $2k for Supercharger access but there no reason to believe the base model will have less than 200 miles range. It remains to be seen if they can hit their $35k before credit goal. If they do or at least come close to it that would mean at least a 30% reduction in battery cost so the upgrade to the next sized battery may only be $7k.

Tesla’s backed off on “200 mile” claims, and already changed its vocabulary to “300km”. I don’t think 200 miles is so magic a number in the first place.

“Tesla’s backed off on “200 mile” claims, and already changed its vocabulary to “300km”. ”
Link to this please? I don’t see Tesla using “km” in the US. It was probably a more convenient number to use with an audience outside the US.

Source?

Haven’t got links, but has “200 miles” been as recently linked as “300km”, in Euro land? I think it has been a while since that goal was last put forwad, by Tesla. I would be happy to be wrong, but don’t believe so. Resident historians?

200 miles is something of psychological barrier. That may changes as people get more comfortable with EVs. The issue is not commute distance but to once-a-month long driving day. I have at least on 100+ mile day a month – the current crop of EVs (except for teslas) just doen’t cut it.

No they didn’t they still use 200 miles. The km vocab is what they use in Europe. He rounded it to 300km then corrected it with more precise number and I quote:

“At least 300km closer to 320km with options to go higher than that”.

320km = 200 miles.

Elon Musk has stated that the $35k is in 2012 dollars. After inflation, that’s more like $40k in 2017 dollars. He has also stated that the minimum range for Tesla’s philosophy is 200 miles. And that supercharging is what sets Tesla apart (the 200 mile range is required to use the network anyway).

So, the Gen III will likely start just over $40k, with $2-3k option for supercharging access. Fully optioned, it will probably push $60. Incidentally, this is half the price of the fully optioned Model S.

And if history is any guide, that $40k starting price will become a $50k starting price after the car hits full production (see also the Model S and the Roadster).

The original quote was “sub 30k” in 2009 and then was adjusted to 30,000 adjusted for inflation from there. Here is the original quote from 2009: “I think the sports car is cool, but really we want the mass-market car, that’s what we want to get to, as soon as we possibly can. We’re trying to grow as fast as we can to do that. I feel pretty confident we can get to a compelling sub-$30,000 car in five years.” It should be noted that the Model S was also $50,000 at the time – and he equated the cost of ownership to something like a Nissan Maxima. “And one thing I should also point out is although the sedan will be $50,000, because the cost of electricity is so much less than the cost of gasoline and you’ll be able to lease our car or finance our car, buying our Model S will be equivalent to buying maybe about a $35,000 gasoline car, when you take into account the lease payments of a gasoline car versus the electric car and the cost of electricity versus gasoline. So it’s more affordable than it first seems. Even so, we’re working as… Read more »

Maybe 50k with Falconwing Doors… 😉

Yes, his original plan was for each generation to cost half of the one before it. So roughly speaking, that was a $100k Roadster, $50k Model S and $25k Gen III. We know that the Roadster got a significant price bump and the entry-level Model S was cancelled (effectively giving it a price bump). We went from a $120k Roadster to a $70k Model S.

My money is still on $40k starting price (and yes, $39,999 is $40k). I’m also betting that will go 200 miles @ 55mph, and will not have access to superchargers.

We will all know in a little less than 3 years, when one can actually go buy the car. In the meantime, what does all this speculation buy us? For me, it just makes me that much more anxious to own one of these cars 😉

If the Model E had no access to the Supercharger network, that would be a deal breaker for the majority of people considering it. Of course it will be Supercharger capable! But it will cost $2,000+ for that “option”.

Of course it will have access to supercharger there would be no point in Tesla selling cars with out it as an option. It is how they make electric out preform conventional gas/diesel

It was actually the market (with a little nudging from Tesla’s salespeople) that pushed the S pricing. They cancelled the 40’s when they had more than enough demand for the others and those were more typically optioned to more profitable configurations. Tesla also evolved the Supercharger plan and saw the long term competitive advantages of it. The point and purpose of the E is different as well as the scale of the company will be too. Even with their envisioned battery cost reduction of 30%, $35K for a 200 mile version looks to be a stretch but that is pretty clearly the current goal.

I just hope they don’t kill themselves with it. A 140 mile (35KWHish), Leaf sized, Tesla styled and performing hatch/CUV would do very well today at $35K. That is a very achievable goal and one they could even likely beat. The Leaf shows the worldwide market for this more practically ranged vehicle exceeds 80k. Sure, longer ranges are better but the purchasers in this price class are far different from their average S buyer.

140 miles with 35kWh wouldn’t sell like 200 with 60kWh. It’s not because of the range itself, it’s because charging would be too slow to allow Supercharging or to make it a longer-trip vehicle. 1:1 Supercharge:drive ratios just aren’t supportable for reasons of contention.

I’m certain that the 200 mile minimum range Elon Musk has repeatedly mentioned is because the capacity has to be high enough to allow fast Supercharging.

Now, if Model E succeeds, I wouldn’t put it past Tesla to go crazy in Gen 4 and sell shorter range vehicles and offer rental of 60/85 for longer trips.

Here is Elon’s own words from earlier this year: Around $35k and 200 usable mile range.

Glad to finally see an article that says the base Gen 3 will be around $35k without any tax credit. As for now that and having a 200 mile range is all we know per Musk’s comments.

Plus, Elon has also stated that the Gen 3 (Model E) cars will have free access to the SuperCharger Network.

I remember when the Model S adds first came out.

50K for a Model S. That was the add.

Well we see what happened with the final model S.

Looks like the same deal with Gen 3 Tesla.

That’s funny George, I posted the original gen 3 and original model s 50k quote (above) like 3 minutes before you mentioned this, (=

The cost for future expansion has to come from somewhere… Harsh business realities often collide with idealistic optimism. But as more Teslas are sold around the world, prices will ultimately drop. It’s always a bit of a gamble by exactly how much.

Model S “upselling” won’t work so well in the down market. It is fashionable to “up-buy”, when 100k, 90k and 115k, all represent about the same affordability.

I think Tesla will do better to do everything short of using an engine, if they really want to achieve volume. Not so sure packing 200mi of current battery tech will allow the prices discussed. They also need to prognosticate about the possibility they will become and “also ran”. They’ve done great to prompt the competition (BMW and MB). Maybe if they still want a main stream car, they need to make sure they will be able to eat their own lunch.

Upselling works just fine for BMW, Mercedes, Audi, Lexus, Porsche, Cadillac, … EVERY car company plays the expensive options game, esp. luxury ones. A $35,800 Mercedes C250 never gets sold at that price. A fully optioned C250 clears $60,000. We already know that the BMW 3-series sells at an average of $45,000+ in spite of the MSRPs in the 30K range. There is no reason to think Tesla can’t pull of a $35K car and sell it at an average price of $45,000+ at a more than 25% profit margin if MSRP is break even.

From the way Musk talks about it, “200 miles” (which likely refers to Tesla miles judging from previous history, rather than EPA, which will probably end up somewhere around 175 miles) is the minimum spec for the base model, not a spec you have to option for. Although I do agree that with options the price will probably be closer to $50k.

Simply incorrect. Tesla is talking about EPA miles. What a lot of people don’t realize is when Tesla Model S was going initially, the 300 miles was based on EPA 3 cycle test range. By the time Tesla Model S was released, the EPA test has changed to a more rigorous 5 cycle test.

So it is not Tesla’s fault that the EPA test changed in the middle.

I’m well aware of the EPA change, but even afterwards, Tesla still continued to refer to the Model S as a “300 mile” car and that number is based on “Tesla” miles (which is steady state 55mph).
http://www.teslamotors.com/blog/model-s-efficiency-and-range

The car itself still displays “ideal” miles which is equivalent to “Tesla” miles (“rated” miles is EPA).

Given Tesla has never once referred to the 200 mile target for Gen III as “EPA” or “rated”, I think it’s safer to assume it’s also “Tesla” miles.

Tesla does show rated miles as default and the site shows rated range as default. Tesla did clarify at one point that 200 miles will be EPA range.

Again, ideal range is based on the old EPA cycle.

“Tesla did clarify at one point that 200 miles will be EPA range.”
Do you have the source for this? It would be news to me.

Sorry that was a bad copy and paste by me, I was going to do an @Weapon, but don’t know how I ended up pasting into the name field.

“Tesla did clarify at one point that 200 miles will be EPA range.”
Do you have the source for this? It would be news to me.

Here is one such source:

“Chief among the future cars is the “Gen 3” sedan which Tesla rep Alexis Georgeson said should see 200 miles EPA-rated range on the sticker, and cost around $35,000.”

http://www.hybridcars.com/tesla-sheds-light-on-pending-gigafactory/

That sounds like paraphrasing and the journalist filling in the “EPA” part to me. I would like a proper clarification where it’s explicit that Tesla is talking about EPA and not some other number (either direct quote or in response to a question that asks for such clarification).

It’ll be tough to reach 200 miles EPA in the given price target. I expect something like the next gen dual capacity Leaf to get something like 160-170 EPA (and end up costing around $33-$34k) and Tesla to get something around 180 EPA for $35-$40k.

Since I actually remember Musk clarifying at one point that 200 mile epa range(though don’t remember where), I would disagree that it is paraphrasing.

Tesla is going to have much larger economies of scale then Nissan with the gigafactory. So their cost for a 200 mile being 35k is not that hard to believe.

Not to mention, the math in itself makes sense. The Model E will be 20% smaller, right now a 208 EPA rated Model S costs 70k. 20% smaller means 56k. By end of this year Tesla plans to hit 28% gross profit. Which puts it at 40k.

Aka, Tesla will already be able to build a 40k Model E break even by end of this year.

Assuming battery is half the cost cuts down cost by 30% and later 40% with the gigafactory. That will drop the price to 28k and later 24k.

So assuming Tesla prices the Model E at 35k base. At 28k build cost that is 20% profit margins. And at 24k that is 31.5% profit margins.

Nissan said 150 miles. That’s their goal.

So the $5 billion question is: will there be a 300K+ unit global market for a $45-$50K electric car needed to make the Gigafactory economical?

Just as a sanity check, the 3 series sells 400k-500k a year world wide, C-Class is about 300k-400k a year world wide.

…and both these cars start at ~$35K. Tesla should really try to stick to that price goal.

Model E starts at ~$38k
Average Selling Price of ~$52k
Fully optioned Model E Performance+ $65k

80% of the benefits at 50% of the price of Model S.

~110k units each in North America, in Europe and Asia. ~330k units.

NO BRAINER

Balance 20k Model S each in North America, Europe and Asia

Plus 20k Model X each in North America, Europe, and Asia.

500k units worldwide by 2021.

You should look at what the competition is charging for their cars. I highly doubt the Model E Performance will cost less than $80,000 fully loaded considering both the M3 and the C63 AMG top out at more than that.

Why is everybody so skeptic about a $35K, 200 mile EV? Nissan Leaf starts under $30K and that has a battery that Nissan charges ~$6K for in Europe, taxes excluded. The ~50KWH battery Tesla needs for Model E is unlikely to be that much more expensive in 2017 and the car itself is slated for far bigger production numbers than the Leaf, so better scale economics. $35K seems perfectly doable to me.

Doable, but tough with current chemistry. 50kWh is not enough for EPA 200+ mile range on the Model E. You probably need 54 to 56 kWh.

A steel car like the Leaf would probably need 60kWh.

Even better aerodynamics than the Model S and lighter weight will make it possible for the Model E to have a 48kWh battery to take it 200 miles EPA.

Remember, the larger, heavier Model S already achieves 209 miles EPA with a 60kWh battery. Reduce weight, size, and drag by 20%, and 200 miles on a 48kWh battery is totally possible. In 1999, a NiMH Gen II EV1 could travel over 160 miles per charge. That was 15 years ago!!!

Lots of people like to bring up the EV1 range (on 26kWh battery), but it’s not equivalent. First of all, the 160 mile number is a steady state number that is completely inapplicable. The closer number is the 140 mile driving cycle number (with impressive 17.9kWh/100 mile rating), but even that is not the EPA cycle yet.
http://www1.eere.energy.gov/vehiclesandfuels/avta/pdfs/fsev/eva_results/ev1_eva.pdf

The EV1 got 30kwh/100mi for city and 25kWh/100mi for the highway on the EPA cycle, which works out to 28kWh/100mi combined. Range would work out to 90 miles given these numbers. And keep in mind this is the more lenient outdated 2 cycle EPA.
http://www.theautochannel.com/articles/date/19961017/news02258.html

This is the same rating as the i3 under the stricter 5 cycle test.
https://www.fueleconomy.gov/feg/Find.do?action=sbs&id=33640

20% is a LOT to cut out of frontal area and weight (you need both to get 20% reduced fuel economy). I think it’ll be less than 15%, i.e. 105-110 MPGe highway (Model S 60kWh is 97 MGPe highway).

But I think there’s some more low-lying fruit for Tesla: regenerative braking. All other EVs have much higher MPGe in the city than the highway, but the Tesla has the same 90 MPGe for city and highway. AFAICS, that must mean they aren’t recovering as much energy from city stops as they could. They should go from 94 MPGe in the city to ~125.

It might have to do w/the weight of an 85kWh battery, thus more braking w/actual pads touching rotors is required. I don’t know the specs on Telsa’s blending model, but it may be out there somewhere.

I think the base model will be sub 40K, possibly even 35K, but it will not have supercharging.

The big question is the base range. To get a 200 mile EPA range it will need about a 54 kWh battery. That’s practically a Model S battery and currently too expensive.

If the gigafactory shaves off 30% of that cost, and the battery remains the same percentage of the total cost, then you are looking at $69,900 * 54/60 – 30% = $44,037.

So to get to 35K or even 40K, one of these have to happen:

a) The battery cost falls by more than 30% by using newer chemistry.
b) The EPA range is less than 200 miles.
c) Battery cost is a higher percentage of car cost.

If c, then the base Model E will be bare bones to the point where it will be virtually impossible not to option the car into the low 40’s, and where the sweet spot will be in the high 40’s, topping out around 70K.

Tesla has said more than once they expect battery cost to fall 30% in 2017 and 40% by 2020 when GigaFactory operating at full capacity.

Of course there will be chemistry upgrades. The question is how big of a performance upgrade they will yield.

Musk also recently said that scale of production and smaller size of E is targeted to save another 20% from S cost.

Numbers that are floated put current battery cost at ~$200/KWh and future prices at ~$150. That should put Model E battery cost at ~$8K. That leaves a $27K budget for the rest of the car. That’s almost the price of a Nissan Leaf, battery included.

Yeah but you are forgetting gross margin, which Tesla wants to maintain at 25%.

That, and Nissan has cost advantages through scale and design choices. The Lead is made out of steel. Presumably the E will be aluminum. The E cannot be a low end car. Think entry level luxury, so it should be obviously better than the Leaf in a lot of ways.

Actually, Tesla noted that they expect 18% gross margins on the Model E.

Tesla also expects 28% gross margins on Model S by end of this year.

Though when Model E comes out, it is possible for them to be aiming for break even. And then make margins as they go along, same as Model S.

Tesla earns >25% profit margin on Model S. They expect 15% gross margin on model E. That will cut a bit. Economy of scale on some of the basic parts and reduction of some luxury features will get it down to 35k bare bones. You will get 200miles as promised, but absolutely pay at least $2k for the DualCharger/supercharger access. Other options will likely make a very well equipped Model E cost 45k-50k as reported.

I’d also guess (hope) that they will also make a shift change to the Model S around 2017-2018. With the current 60kwh becoming the 40kwh price, the 85kwh becoming the 60 and a new 100kwh AWD P+ taking over for the 100k+ range model.

I’m curious about the 60. It’s not available anywhere outside the US, which to my mind is strange, even backwards. Teslas tend to be more expensive in export markets, so you would figure they would want the 60 out there. In China for instance it would shave at least 15K from the price of the car.

And, Americans put on a lot more miles and have longer commutes on average than Europeans. You would think a 60 would be a better fit in much of Europe, and especially France, Holland, Belgium, Italy and the UK (the Germans chew up more power because they drive so fast).

I have no idea how many miles the typical Chinese high-end driver puts in, but my guess is less than Americans do as well. Traffic is more congested.

The battery will certainly be a higher percentage of the total cost. Just like a Honda Civic’s engine and transmission is a higher percentage of total cost than an Acura.
Luxury cars add costs via amenities at a far greater rate than engine performance.

It’s kinda hard to nail down the Gen3 price when Tesla hasn’t even told us what the Model X price is, and they’ll be building it this year.

Once the Gigafactory is up & running, does that mean the price of the Model S & X will also come down due to battery cost savings?

Of course they’ll have to lower the S and X, unless they’ll try to increase their margins. With rebates possibly not being available, those lower battery costs will come in handy.

That’s what I’m wondering, if they will keep the price high on the X & S to help subsidize a cheaper price for the Gen3 and the SC network.

I’m not sure the SC will be free to Model E owners. In fact I’d guess the opposite. Either as an extra cost option or a fee (yearly or per use).

Probably be $2k, like the 60kWh Model S is. I don’t think they’d do a yearly fee.

The Model X will be in low single % more expensive then the S. So expect maybe 5k more or so.

The Model S and X price will always be higher but it will be ahead technologically. Next year Tesla plans to bump up the range of the Model S. They probably will do another bump when Model E comes out.

So Model E might offer options for 200-300 miles range. And Model S will be 400-500 miles range.

400-500 miles is absolutely ridiculous and wasteful, not to mention impossible. The next gen will probably be using Panasonic’s new 4.1A cells which should bump the Model S’s EPA range over the 300-mile mark, and maybe as high as 320 miles EPA. Imagine a Model S P100+ AWD…I’m drueling already! The great news is that it is coming in the next few years.

Tesla will probably have 2 battery options for the Model E (48, 60kWh), and 3 for the Model S and X (60, 85, 100kWh). Their’s supposed to be a 5 seat CUV planned that will be based off the Gen III platform, as well as a Tesla hypercar, a truck, and who knows what else! Tesla Motors has a grand future ahead of them.

Tesla actually plans to bump the Model S range next year.

The 400-500 miles will be their 2017/2018 Model S which will be a complete redesign.

Musk himself mentioned that a 500 mile Model S around that time frame. He also said the old Model S will be upgradeable to 500 miles.

Seems like the market is converging on a 50KWH car. The Tesla E will get better milage from an aluminum body and other weight reductions.

The difference is going to be access to the Tesla supercharger network. The math couldn’t be more clear, 50KWH sipping from a 50KW charger is an hour, 100KW = 30 minutes, 200KW is 15 minutes.

Honestly, the charger thing mystifies me. Batteries are a hard problem. Chargers are not. You crank that as hard as you can, and do something to get rid of the heat.

Go outside and look up . Those overhead wires are 4KV and up. We can do that. It is not rocket science.

Elon being Elon. He needs to make the company profitable. But his quarterly numbers are suspect at best. I have no idea what a China factory costs! Only I am told at a market price of 200k/share it requires them to sell 200k cares. Funny I read through these postings and no one mention China economy is coming to a screating halt. For a factory in China to take advantage China credits, what’s the cost? To build a giga factory what is the cost? Litium is a very toxic material. Can they get enough to build the batteries? And who will want that stuff driven through their town? There is a reason why Panasonic makes them. Don’t get me wrong Elon is the smartest guy in any room he enters but there are a lot of guestions being raised. Its only going to take one more car fire and someone dying for this stock to inplode

Lithium is toxic? People take it to feel better…

Clarification: Pure lithium metal is toxic, but lithium ions are not. It’s a type of salt. Lithium ion batteries are considered non-toxic and landfill safe by the EPA. It’s simple chemistry. Take highly toxic chlorine gas; combine it with dangerous sodium metal, and Viola! Sodium chloride (table salt) which is delicious and non-toxic in reasonable quantities. Don’t be spreading straight up lies about lithium batteries.

Pure lithium is not considered toxic in ion or elemental form actually. Obviously if you overdose it can have implications, but overdosing on oxygen has implications as well.

Don’t worry about china factory, it is years away and it won’t cost much. They only need to hit bare minimum requirements to avoid import taxes. The amount of cars they need to sell depends on their margins. They can do it with 100k cars truthfully. China’s economy coming to a halt or not doesn’t matter too much. Most people in china are farmers, they aren’t the ones buying the cars. The ones who can afford cars will have no issue one way or another. Cost to build gigafactory is 4-5 billion, they will do it with a partner and Tesla already raised the funds they need on their end. Lithium is not considered toxic. They can get plenty of lithium and I don’t think anyone cares of lithium being driven through their towns. Out of all the elements you can mine, lithium mining has the least environmental impact. Yes, Panasonic makes them because they have the best technology at the moment. And yes, there are plenty of questions and answers for ALL of them. If people actually bothered listening for answers. Car fires and people dying in cars happens, all cars(unfortunately). It will make some news like the first… Read more »

To be really practical an EV need to have 400 miles of autonomy not 200 miles, so even the Model S 85 KWh still lacks 100 miles. If you can’t have that, you need superchargers all over the place and even then it still is a good option to have a Rex on board, especially one of those Toyota Direct Free Piston Generator (http://www.carscoops.com/2014/05/toyota-shows-new-gasoline-engine.html ), if you happen to drive in a country or a region that doesn’t have superchargers. So if you have only 200 miles autonomy you really need a Rex otherwise you automatically enter range anxiety territory and even worse real range lack territory.

Rubbish. At 150 miles you have 2.3 hours of range, which even on long trips with gas cars, about matches the time between when normal people take breaks. Given a reasonable charging infrastructure, there is no need at all to drag around the weight of such a battery, and it would waste a lot of energy in day to day driving to do so.

If you want a hybrid, get a hybrid. For everyone else, EVs are reasonable.

Not an hybrid, they are outdated, but an EV with a Rex is certainly interesting if you live in Alaska but also if you want to have some plan B capability in case of a blackout, a desert trip in Morocco or even if you simply don’t want to waste time supercharging, especially since they are still mostly absent and we keep on waiting for battchangers. The future is great but unfortunately we live here and now in the present and at a random location not downtown LA.