[Jim Fallston Md.]

This was the body of the email I got today.
Tesla
One year ago, we introduced the Model S 60 kWh battery as a more affordable option to accelerate the adoption of electric vehicles. However, most customers ended up buying an equivalent to the Model S 75 kWh. To simplify the ordering process for our customers, we will be removing the 60 kWh option from our lineup.
Customers who still want the opportunity to own a 60 kWh Model S will have until April 16, 2017 to place their order. Any 60 kWh Model S will have the ability to upgrade their battery to 75 kWh via an over the air update.
ORDER NOW
VISIT A STORE

 

[Qinsp]

It never made sense to ship a car with a 75kWh battery and bill the customer for 60kWh.
Now that the Bolt EV has been released with more range than the MS60, it was sort of an embarrassment.

 

[Bacardi]

It never made sense to ship a car with a 75kWh battery and bill the customer for 60kWh.
Now that the Bolt EV has been released with more range than the MS60, it was sort of an embarrassment.

I agree; was an interesting experiment because Tesla will get the majority of them back within three years...Very few customers buy them and drive them for a decade and you'd imagine that #1 leased Tesla was the cheapest or the M60...For free Tesla can increase kWh and resell them at a higher dollar amount...

 

[11715]

It never made sense to ship a car with a 75kWh battery and bill the customer for 60kWh.
Now that the Bolt EV has been released with more range than the MS60, it was sort of an embarrassment.

60kw battery made it less expensive which makes good business sense. Model 3 will fill that gap so they no longer will need the 60.

 

[llninja]

It didn't matter to me.While pricing Tesla's, I seem to always gravitate towards an S100D anyway. I think it's interesting that to get this configuration you have to pick an S90D then expand the battery.

It's go big or go home...and I don't want ludicrous mode at that will guarantee that I do something really stupid.

 

[Qinsp]

60kw battery made it less expensive which makes good business sense. Model 3 will fill that gap so they no longer will need the 60.

The 2017 MS60 is sold with a 75kwh battery. Through software, they derate the capacity. However, the production cost of the MS60 and MS75 is identical.

 

[11715]

The 2017 MS60 is sold with a 75kwh battery. Through software, they derate the capacity. However, the production cost of the MS60 and MS75 is identical.

But not the retail price. It made the 60 affordable for those buyers who couldn't afford a 75.

 

[marcusm]

By limiting it to 60 via software I would think they just had a bigger buffer for charge and discharge --like the volt?


Sent from my iPhone using Tapatalk

 

[Qinsp]

But not the retail price. It made the 60 affordable for those buyers who couldn't afford a 75.

How would I explain this?

A 2017 MS60 sells for $69.2k and a MS75 for $75.7k

Both cost exactly the same to make, down to the penny.

Can you see why businesses that sell hard goods don't do that? Instead, they just cut costs and put a smaller battery in it.

Affordability (or profitability) would be even BETTER if you shave $3000 off the parts required to build the MS60.

 

[llninja]

How would I explain this?

A 2017 MS60 sells for $69.2k and a MS75 for $75.7k

Both cost exactly the same to make, down to the penny.

Can you see why businesses that sell hard goods don't do that? Instead, they just cut costs and put a smaller battery in it.

Affordability (or profitability) would be even BETTER if you shave $3000 off the parts required to build the MS60.

One minor difference. If the owner of the S60 trades in for another tesla at a showroom, I'll bet someone at tesla will tear off the 60, slap on a 75, and spit in some new software to resell it used as a 75. So the cost will be slightly more in this scenario, namely for the labor and a new badge sticker.

Too bad they didn't make 1 vehicle and sold you 4 different settings. If that were the case, I'd buy a 60 now then progressively upgrade to a 100 with subsequent software updates as my savings pile up.

Does anyone know if tesla offers a 75 to 90 or 100 upgrade kit? It seems like it's just adding an auxiliary battery in front of the main one and a software also begs the question of whether Faraday Futures could offer their car with a smaller battery that is upgradeable by adding more modules. Similarly, I'm sure some 2011/12 owners would love to get hold mode and the battery from the 2015 model in their volts for a price.

 

[Norton]

How would I explain this?

A 2017 MS60 sells for $69.2k and a MS75 for $75.7k

Both cost exactly the same to make, down to the penny.

Right!!
Another shrewd business model !
Like giving away free power for life through the Super Charger network.... (They rolled that back too...)

 

[DonC]

When I saw this story I thought about posting that we were getting some hints about the cost of the Model 3. I think eliminating the bottom model makes a clearer distinction between the two models. A Model 3 with a 60 kWh pack at $60K doesn't make sense if you have the base Model S with a 60 kWh pack at $68K.

I thought the base made sense. Just told us the demand was soft. If you have a margin it makes more sense to take a lower margin than no margin. Personally if I were looking at the Model S I would have gotten the base.

 

[ItsNotAboutTheMoney]

It never made sense to ship a car with a 75kWh battery and bill the customer for 60kWh.
Now that the Bolt EV has been released with more range than the MS60, it was sort of an embarrassment.

It really did make sense given the market that it's targeting, the lack of a low-end alternative, the low marginal cost of the 15kWh compared to the benefits of the additional capacity and the ability to recover some of the incentive from later upgrades (if people need to upgrade as degradation hits)

The tricky balance was downselling some 75s to 60s. But otherwise it's like any other incentive.

Tesla has a demand challenge, especially with the fall in European currencies, and needs sales and capital to bridge to Model 3 production, but as they get closer to the Model 3 an upsell to a discounted low-end S/X would be worse than a deferred high-margin Model 3 sale. So, assuming a Q2 final reveal, it makes sense to book the incentive sales in 2017Q2 and then drop the incentives and shift to the more natural S/X market.

 

[Qinsp]

It really did make sense given the market that it's targeting, the lack of a low-end alternative, the low marginal cost of the 15kWh compared to the benefits of the additional capacity and the ability to recover some of the incentive from later upgrades (if people need to upgrade as degradation hits)

The tricky balance was downselling some 75s to 60s. But otherwise it's like any other incentive.

Tesla has a demand challenge, especially with the fall in European currencies, and needs sales and capital to bridge to Model 3 production, but as they get closer to the Model 3 an upsell to a discounted low-end S/X would be worse than a deferred high-margin Model 3 sale. So, assuming a Q2 final reveal, it makes sense to book the incentive sales in 2017Q2 and then drop the incentives and shift to the more natural S/X market.

I think it's simpler than that. The MS60 cost money to sell, the MS75 does not. Tesla needs to raise about $1.15 billion pretty soon. Monetizing the Superchargers, charging for basic paint (black is free), selling AP2/FSD before it works, and now deleting the least profitable model, all are good moves financially.

If somebody wants an entry priced Teslas today, they have a lot of used cars now. You CAN get into a Model S for $50k now. Soon it will be $45k.

 

[Bacardi]

Also remember, Tesla is notorious to offering some type of lower cost variant towards the end of the quarter...M60, 24 month lease and the discounting at the dealership level for example...Every offering creates buzz and exposure...This is why Chevy and other automakers rotate incentives month to month vs a flat discount year around, constant exposure...

This has been said many times before, many EV owners and more so for the wealthy have second vehicles with ICE...Why not offer an "urban" low range and cost Model S/X without any option to supercharge for those who never plan on taking it long distances? Heck put the T3's battery pack into the S, maybe it would net 130-150 miles of EPA range and sell it starting between $45K-$49995? Your guess is as good as mine but I believe 50K-100K T3 reservation holders would convert their $35K T3 order to a $50K order...You can build those cars now which takes away from the huge backlog of T3 orders...

 

[Fourdoor]

The 2017 MS60 is sold with a 75kwh battery. Through software, they derate the capacity. However, the production cost of the MS60 and MS75 is identical.

Exactly! It would be like another manufacturer going to the expense of putting leather seats in a car, and then putting cloth seat covers into the car that could only be removed by the car manufacturer... it doesn't cost the manufacturer any less to build but encourages the new car owner to spend more money at a later date to have the seat covers removed and reveal the nice leather seats.

If the car owner spends the money to upgrade later on Tesla wins... Tesla can sell the used S60 as an S60 or an S75, so if they are "fair" on trade in values (more trade in if you upgraded to S75) then they don't really gain anything extra on the trade in.

The S60 was a "stop-gap" measure to lure some people holding out for the M3 to jump up to the MS instead, but I suspect that anyone who bought an S60 probably left it as an S60 rather than paying more to upgrade to S75, so Tesla was cutting out any profit on the battery pack by selling S60's. Now that the M3 is closer to production they are getting ride of the S60 option.

I suspect that another reason to get ride of the S60 is that a loaded fully optioned M3 will cost more than a bare bones S60, and they don't want to have a price overlap between the two models.

Keith

 

[Sheldon]

... A 2017 MS60 sells for $69.2k and a MS75 for $75.7k

Both cost exactly the same to make, down to the penny...

I think it's simpler than that. The MS60 cost money to sell, the MS75 does not....

Looks like Tesla cut the price on the MS75 to match the old price of the MS60
insideevs: Tesla Slashes Price Of Model S 75 By $5,000 To Just $69,500
insideevs: Watch This Tesla Model S 60 Get Upgraded To 75 For $2,205

 

[jupitermoon]

Right!!
Another shrewd business model !
Like giving away free power for life through the Super Charger network.... (They rolled that back too...)

And least they have offered free supercharging....what did GM offer? Oh wait...they charge extra for DCFC charging and don't even offer fast charging except on their Bolt while lobbying against all charging standards except SAE....even though ChaDemo and Supercharging are more prevalent and available. Nice touch GM. Shows their commitment for sure.

 

[bro1999]

And least they have offered free supercharging....what did GM offer? Oh wait...they charge extra for DCFC charging and don't even offer fast charging except on their Bolt while lobbying against all charging standards except SAE....even though ChaDemo and Supercharging are more prevalent and available. Nice touch GM. Shows their commitment for sure.

Please show documentation that proves GM lobbied "against all charging standards except SAE".
And is GM supposed to support Tesla and their proprietary charging network? How does that make any sense at all for GM?

 

[Qinsp]

And least they have offered free supercharging....what did GM offer? Oh wait...they charge extra for DCFC charging and don't even offer fast charging except on their Bolt while lobbying against all charging standards except SAE....even though ChaDemo and Supercharging are more prevalent and available. Nice touch GM. Shows their commitment for sure.

The first Teslas had no DCFC ability. When they finally added it, it was $2000/2500 at first. Some EV makers charge $1700 for the higher capacity 7.7kW AC onboard.

Chevrolet in late 2010, sold their pragmatic solution for a 'go anywhere' EV under the Volt name. By putting a powerful generator on board, over 80% of commuters could drive back and forth on pure electricity, but also drive anywhere in America.

Chevrolet still sells a Go Anywhere EV that now covers 96% of commuters on EV alone, but now the generator uses less fuel when needed.

They also sell a BEV that covers close to 100% of commuters. If you desire to take long trips and love hanging out to watch a car charge, you can get an $750 option that permits you to be tortured when compared to the Volt.

I have never understood the drooling over DCFC. I would certainly order that option, but seriously, 30 Minutes Is Not Fast. It is a kludge to allow moving the car long distances at a leisurely pace. It should be called DCLS instead. "DC Less Slow".