Op-Ed: With Discounts in the Air, Will Tesla Model S Eventually Follow Suit?

JUL 27 2013 BY ERIC LOVEDAY 15

Tesla Recently Lowered Model S Reservation Amount 50%...Is a Price Cut Next

Tesla Recently Lowered Model S Reservation Amount 50%…Is a Price Cut Next?

With seemingly every available plug-in vehicle getting some sort of price cut over the past year, is the Tesla Model S next?

Focus Electric Window Sticker Reflects New Reduced Pricing

Focus Electric Window Sticker Reflects New Reduced Pricing

Probably not…but maybe soon.

Ford was considered to be the last real hold out in the electric vehicle price wars until it slashed $4,000 off its Ford Focus Electric.

Sure, the newly launched or upcoming vehicles haven’t had a price cut (Chevy Spark EV and Fiat 500e, for example), but the lease rates on those two vehicles is already rock bottom at $199, so we don’t expect to see a reduction there.

But there’s still the Model S.  It’s been on the US market for quite awhile now and it’s slowly trickling into Europe.  Then comes Asia.

The timing of a Model S price cut is unknown (if it will ever come), but if we had to guess, we’d say a good time to revisit the issue would be early in 2014.  By then, Tesla will again focus on fulfilling some US orders (rather than mainly concentrating its efforts on Europe and Asia) and with its backlog of existing US orders fulfilled it will need a new incentive to sell in the volume they are looking for.

Tesla already seems to be aware of this and so has reduced the Model S reservation fee from $5,000 down to $2,500.  The automaker will soon be in a position where it doesn’t have a line of thousands on a waiting list and that’ll be when a price cut comes into play.

How much?  It’s anyone’s guess at this point, but there will have to be some movement in the price to entice new buyers.

Right now, the cheapest Model S can be had for $62,400 after the federal government’s $7,500 tax credit.  We say that needs to drop to a few dollars below $60,000.  Target price after reduction: $59,950.  Basically back down to where it was priced originally.

With A Large Order Book To Be Filled Tesla Increases Pricing Effective January 1st, 2013

With A Large Order Book To Be Filled, Tesla Increased Pricing Effective January 1st, 2013.  After Having Filled Those Orders, Tesla May Need To Return To Original Pricing.

Similarly, the 85-kWh version of the Model S has an after-credit price of $72,400.  Target price after reduction: $69,950.

The price Model S Performance version can remain as is.

That’s how we see.  What’s your take?

Categories: Chevrolet, Ford, Nissan, Tesla

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15 Comments on "Op-Ed: With Discounts in the Air, Will Tesla Model S Eventually Follow Suit?"

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I have to disagree with the statement. “But there’s still the Model S. It’s been on the US market for quite awhile now …” It’s been on the US market for less than a year.

Ehh is there any reason for it? Does it get 10 and going strong competitors like low class EVs?
And btw don’t forget about already issued buy-back guarantee

I don’t see Tesla getting into the normal car manufacturing price wars until the next model is introduced and selling. Perhaps 3 years from now?

One reason that Tesla has to NOT need any discounting is that it is already price-competitive with its potential ICE rivals?

I wonder if they’ll bring back the 40KWH model. There are probably some buyers that would like to buy but can’t afford more than that.

I wouldn’t count on ever seeing a 40kWh Model S for sale. Musk wants all Teslas to have 200+ miles of range. For those of us who cannot afford the 60kWh Model S, myself included, we must wait for the 3rd Generation to come around, 3-4 years from now.

I don’t think “The Only Automaker That Has Figured Out How to Make Electric Vehicles Work” will have too much trouble keeping their prices where they are for the time being. If, in a year or two or three, they have to knock that extra $2500 off MSRP, their margins can probably handle it.

Don’t expect price cut for S until they can’t find enough buyers for 30k or so cars they want to make a year. So, we may have to wait a couple of years. May be when they announce Model X prices, they will cut S prices, if the demand is less then what is expected.

No. The other automakers are cutting prices to nab ZEV credits with a loss-leader in the low-end market. Tesla is trying to make a profit selling EVs.

Tesla has no real EV competition (200+ mile range) let alone any competition offering free fast charging at ideal locations. When real competition comes along and they offer the same perks (free fast charging) maybe that’s when they should consider an MSRP reduction to match or beat the competition.

NPNS!
Volt#671

Tesla effectively cuts the price of the Model S with every Supercharger station they install. And not only does that cut the price of every future Model S sold, it effectively gives all customers who might use that Supercharger station a retroactive discount as well.

I don’t know – they have a pretty nice used car policy. Rember that their rental cars can be bought for the original price with one dollar less for every mile on the clock? (Do I remember that right?)
So I would say they maybe reduce leasing to get some miles on a limited amount of cars if demand should be low for some time.

A real price cut may be available when there is an upgraded range model. A new 100kwh model could then be, where the 85 is now and the 60 would be at the price of the canceled 40 or something like this.

Is there a storage lot full of unsold Tesla’s somewhere? Not until production exceeds demand, will Tesla need to cut prices.

If Elon will buy back your Tesla, will there ever be a used Tesla sold directly by an owner?

Perhaps a price cut is not necessary but in Europe there should be a fix because the standard Model S 85 KWh, that goes for 79900 $ translate into not only 79900$ x 1.327 = 79900 € (106027 $), but the price is actually 85300 € which is 113193 $. That is 50 % more than the New-York Price. A higher VAT and import duty of 6% can explain a part of the higher price but not the 50 % increase. This is especially too bad since European average income is lower than in the US and that the competition from brands like Audi is higher because they propose, at contrary, lower prices. A right move would be to at least have a final customer price of 79900 € instead of 85300 €.