Tesla Increases Prices On Already-Ordered Roadsters - LotusTalk - The Lotus Cars Community
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post #1 of 55 (permalink) Old 01-20-2009, 09:25 AM Thread Starter
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Tesla Increases Prices On Already-Ordered Roadsters

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Originally Posted by Jalopnik.com

Tesla's informed customers who've placed $50,000 deposits down for their Roadsters, the price of options they ordered has gone up. Now they need to fork over more money or lose a shot at owning one.

Tesla's early adopters essentially invested their deposits into the company. For it, they were promised a car with a base price of just $92,000 for 2008 model year vehicles, a $17,000 value over the now-higher-in-price 2009 model. The approximately 600 people who ordered cars were asked to "lock in" their options by last November. Tesla has now "unlocked" those prices, upping the cost and forcing customers to re-select their options, or they'll lose their spot to buy one. By how much has Tesla bumped up the price?

According to Tom Saxton, a Tesla enthusiast, formerly "included" options like the SolarPlus Windshield, High Power Connecter and Forged Alloy Tesla Wheels now will cost you $6,700 combined. Other options have seen prices double, or more, from the original cost. This means the cost for a fully-loaded Tesla Roadster has increased by $9,350 for people who already ordered their cars.

Waiting customers are obviously not going to be pleased by this news considering everything else associated with being an early-adopter of the technology. But come on, Tesla probably just has to make up for their legal fees what with them running out of offices to close.

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post #2 of 55 (permalink) Old 01-20-2009, 09:57 AM
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Reminds me of what Lotus did!
post #3 of 55 (permalink) Old 01-20-2009, 10:02 AM
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Does anyone want in on the pool when they close the doors?
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post #4 of 55 (permalink) Old 01-20-2009, 10:25 AM
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Why am I not surprised by this? SDD, I don't know what day you'd pick when Tesla finally pulls the plug, but I'll take the under.

the1sen: why move forward with design when you can recreate a monstrosity from the past?
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post #5 of 55 (permalink) Old 01-20-2009, 10:46 AM
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its really easy... if the customers dont want to pay the extra $$$, just take their cars and have sorienne sell them on lambotalk for even more
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post #6 of 55 (permalink) Old 01-20-2009, 10:58 AM
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To be fair, (and I'm not a massive fan of Tesla) but this is pretty much the norm accross the board. All new car orders I've made have had the clause that the company reserve the right to increase prices and pass that on to any orders in process. Aston Martin, Porsche, Lotus, Ferrari, BMW... the only ones that have held true are Nissan with the GTR and the recent (minor) price increase in that they have confirmed in writing that the price will be held to that at time of order.

However in the UK any price change is a valid reason for order cancellation and the client can expect their deposit back in full. the other big reason is delivery date moving.
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post #7 of 55 (permalink) Old 01-20-2009, 11:22 AM
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Originally Posted by SweetDaddyD View Post
Does anyone want in on the pool when they close the doors?
My guess is that we will see Mercedes-Benz buy Tesla for their IP and technology.. just when this happens will really depend on the terms under which the last round of financing was completed (the 40 mil). We could seethings go drastically downhill as quickly as April-May but I would bet things will really go downhill at the end of the summer. Depending on how may cars they actually deliver we will see the remaining deposit holders starting to ask for their money back en masse when they realize that they cant really drive in nice weather until spring of 2010.
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post #8 of 55 (permalink) Old 01-20-2009, 11:31 AM
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Have tesla got any patents yet? they licensed at least one i know of, and have a couple of applications

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post #9 of 55 (permalink) Old 01-20-2009, 12:39 PM
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Tesla seems to get only one kind of PR lately, and it's not good. From the comments in one of the articles floating around on this right now.
I think Tesla is going to sell more Fisker's than Tesla's in the future, kind of like how the Dodge Neon sold more Civics than Honda could of ever hoped for.


"1-18-2009 @ 12:09AM

Ron Elliott said...
I am number 395. I am not a rich person dabbling in a plaything. I thought I was actually doing some good by supporting a company that was moving us to a more sustainable future. I put $50,000 of my own money down on this car in May of 2007. I withstood the delays. I held in there when it almost seemed the company was going bankrupt. Now, after locking in my options, they pull this on me. Elon Musk does not understand the power of evangelicals to the cause. Steve Jobs does. The same power that can bring people to the cause can turn the same power in a 180 degree turn against the cause. From this day forward, that's what I'm going to do. Elon should know that the people who have bought this car are not stupid. We know that the rolling stock has seen a price depreciation in the English pound from $2.04 to $1.44. He's making more money than he ever thought he would. This is a blatant slap-in-the-face-and-see-if-it-sticks move. I hope that enough people cancel their order so that the whole company goes bankrupt. Movements based on ideology hold companies to a higher plane than companies that do things just to make a profit.
I'd love to have the car, I can't have it now. I don't like the feeling of being screwed.
Ron Elliott"
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post #10 of 55 (permalink) Old 01-20-2009, 12:59 PM
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Quote:
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Does anyone want in on the pool when they close the doors?

Damn skippy!

torque (trk) n. - an excuse for the lack of momentum.
- let's bring back CanAm & Group B!
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post #11 of 55 (permalink) Old 01-20-2009, 01:02 PM
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I think its just an inevitable backlash against a company with a lot of media coverage, a smattering of spin doctoring and astroturfing.

Black Exige S / Elan M100. Don't run a smaller pulley without an upgraded fuel pump! http://www.goth.am ecu stuff.. New reflash box coming soon!
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post #12 of 55 (permalink) Old 01-20-2009, 01:17 PM
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With around 150 cars delivered the price of the same car has went from $92K to $135K. Ouch. That's a pretty big slap in the face to someone that has let you use their money interest free for two years who would of lost it all if bankrupcy was not delayed to sometime in the future. Kind of scary who is going to get caught holding the bag and who is going to get a car on what is looking more and more like a Ponzi scheme.

Even from their biggest cheerleaders, fanboys, and bloggers, they aren't really getting any support on this one. Reading around I've seen at least 4 cancelled orders and a few people trying to drum up class action support. Even fanboys have been citing the lack of integrity, character, ethics, etc. I think the only thing still keeping them going is simply Elon Musk's ego of delaying the "Telsa pulls the Plug" headlines on every auto and green blog out there.

The comments in the blog world, even among their supporters and customers are brutal. Chalk one more up for the "non car company car company" and the "not a car company, a silicon valley startup" So....how is taking pride in knowing nothing about cars working out for you guys?....

The New Tesla Prices - Tom Saxton's Blog

Prospective Tesla owners not happy about price increases on locked in cars - AutoblogGreen

$112,000 for the Power Cord; Tesla Roadster for Free | The Truth About Cars

DailyTech - Tesla Motors Raises Roadster Price, Angers Those Who Pre-Ordered

Tesla: Tesla Increases Prices On Already-Ordered Roadsters

Tesla raises prices on Roadster options, sparks controversy, anger among early adopters - Autoblog

.........

The New Tesla Prices - Tom Saxton's Blog
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post #13 of 55 (permalink) Old 01-20-2009, 01:29 PM
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I think its just an inevitable backlash against a company with a lot of media coverage, a smattering of spin doctoring and astroturfing.
Oh... I'm sure there's some aspect of that, everybody hated Preston Tucker too.

I still predict the company will go down in flames due partially to consumer confidence (in the economy) and partially due to overextending themselves (with new tech and a new model).

It might not be tomorrow, but how long will they last if the left-coast-nouveau-riche stop pouring serious dollars into them?

torque (trk) n. - an excuse for the lack of momentum.
- let's bring back CanAm & Group B!
- have you hugged your Exige today?
I'm currently working on my performance driving merit badge.
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post #14 of 55 (permalink) Old 01-20-2009, 01:32 PM
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Oh I agree with you guys, when i went up there it seemed more like an investment banker house than a car maker, seemed like the very slick sillicon valley finance operation.

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post #15 of 55 (permalink) Old 01-20-2009, 01:36 PM
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If that's the policy you have for customers, you will never make it in the business world.

I bet each customer lost is a customer that probably would have bought a Model S when it became available too. Double-whammy.

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post #16 of 55 (permalink) Old 01-20-2009, 01:49 PM
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FYI, from a letter sent to customers.

"A much fuller account of the history of Tesla is worth telling at some point, but for now I will just talk about the essentials of why we needed to raise prices on options. Fundamentally, it boils down to taking the tough steps that are difficult but necessary for Tesla to be a healthy company and not fall prey to the recession.

When the initial base price, for cars after the Signature 100 series, of $92k was approved by the board a few years ago, it was based on an estimated vehicle cost of roughly $65k provided by management at the time. This turned out to be wrong by a very large margin.

An audit by one of the Series D investors in the summer of 2007 found that the true cost was closer to $140k, which was obviously an extremely alarming discovery and ultimately led to a near complete change in the makeup of the senior management team. Over the past 18 months, observers will note that Tesla has transformed from having a senior team with very little automotive experience to one with deep automotive bench strength. We now have executives with world class track records running everything from design to engineering to production to finance.

To bring the cost of the car down, we have reengineered the entire drivetrain, which is now at version 1.5 and will be at version 2 by June. The body supplier was also switched out from a little company that was charging us nutty money and had a max production of three per week to Sotira, who supplies high paint quality body panels to Lotus, Aston Martin and others. In the process, we had to pay several million dollars for a whole new set of body tooling, as the old tooling had been made incorrectly. The old HVAC system was unreliable and cost almost as much as a new compact car, so also had to be replaced. The wiring harness, seats, navigation system and instrument panel also had to be modified or replaced.

After reengineering and retooling virtually the entire Roadster and completely restructuring our supply chain, we are now finally coming to the point where the variable cost of the car (to be clear, this excludes fixed cost allocation) is between $90k to $100k. With a lot of additional effort by the Tesla team and the help of our suppliers, we should be at or below $80k by this summer. There is some variability here due to exchange rate shifts. Although we gain an automatic currency hedge by selling in both Europe and the US, we are still vulnerable to the Yen, which is very strong right now.

Obviously, this still creates a serious problem for Tesla in the first half of 2009, given the $92k to $98k price of most cars delivered over this time period. The board and I did not want to do a retroactive increase of the base vehicle price, as that would create an unavoidable hardship for customers. Instead, apart from a $1k destination charge increase to match our true cost of logistics, we only raised the price of the optional elements and provided new options and a new model (Roadster Sport) to help improve the average margin per car.

The plan as currently projected, and which I believe is now realistic, shows a high likelihood of reaching profitability on the Roadster business this summer. By that time, we will be delivering cars that have a base price of $109k plus about $20k or so of options (having worked our way through the $92k to $98k early buyers) at a rate of 30 per week. We are fortunately in the position, rare among carmakers, of not having to worry too much about meeting 2009 sales targets, as we are already sold out through October and have barely touched the European market.

My paramount duty is to ensure that we get from here to there without needing to raise more money in this capital scarce environment, even if things don't go as well as expected. I firmly believe that the plan above will achieve that goal and that it strikes a reasonable compromise between being fair to early customers and ensuring the viability of Tesla, which is obviously in the best interests of all customers. Its also important to note that the price increases will affect 400 customers, all of whom will take delivery after Jan. 1 and receive a $7,500 federal tax credit. We made the pricing changes to ensure the viability of Tesla in the long term, regardless of government incentives, but we hope the credit will offset the increase for most customers.

There is one additional point that relates to the government loans that Tesla is seeking for the Model S program, a much more affordable sedan that we are trying to bring to market as soon as possible. A key requirement is that any company applying be able to show that it is viable without the loans. If we allow ourselves to lose money on the cars we are shipping today, we place those loans at risk. Mass market electric cars have been my goal from the beginning of Tesla. I don't want and I don't think the vast majority of Tesla customers want us to do anything to jeopardize that objective."

Elon Musk
CEO & Product Architect
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post #17 of 55 (permalink) Old 01-20-2009, 01:55 PM
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hvac cost almost as much as a compact car ?

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post #18 of 55 (permalink) Old 01-20-2009, 02:02 PM
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Definitely a change in their general perception from a year ago.
Comments from the above links...

These are all quotes from the comments sections of those articles. Not my words.


"How many nerds does it take to run Tesla?"
-NONE, because this one is going downhill all by itself!

frankbank said...

Does any of this really matter? why does Tesla qualify as green anything?

How many cars have they made? less than 1/3 the number of ABG tesla articles, I'll bet. Really, how many could they make - there is no real volume automotive expertise collected there - a VC-backed hobby shop - can never be relevant to petroleum displacement. Why does ABG waste the time on the tesla soap opera?

Are they green transportation or really just expensive electric toys, like an cool RC helicopter?

Ron Elliott said...

I have sent and email to Elon Musk. Here's what I said:
If you had actually explained to locked-in owners the reason why you needed to raise prices was to be profitable so that you could get funding from the government for the Model S, I’m very sure that everyone would have understood and supported you.

Instead, you sent out a deceptive email about new options that made locked-in owners confused about it being a price increase or not. You’ve created a lot of anger. Personally, my anger at first was about the price increase. But now, it has morphed into the way you have done this. Mr. Musk, you are showing a lack of integrity in the way you have done this price increase. Unfortunately, you are the CEO of Tesla and have now shown to your employees that it’s o.k. not to have integrity, as long as the end justifies means.

You are also showing a lack of respect for your customers. We are not stupid. We would understand why you had to do this if you had actually given us enough credit for having the intelligence to do so. You need to send a second email that apologizes for the email you sent. Own up to the fact that locked-in owners will get a price increase and give the reason for the price increase. People have not given $50,000 as a deposit for 2 years because they need an electric sports car. They have done it because they believe in the dream of advancing us all to an electric future for the automobile. The dream, and the people who have bought into it, are taking a blind leap of faith in Tesla Motors. Faith is the operative word. You are destroying the faith by not acting with integrity. We are your fanatics. We will bring the masses you need to make the Model S successful. Don’t disrespect us and underestimate our intelligence.

You need to put your very large ego aside for a moment and write that second email. If you don’t, you will have a P.R. disaster much larger than any you have had in the past.

Sincerely,
Ron Elliott


Chris said...

This is not a problem folks. Just cancel your order and buy a Fisker Karma. It's prettier, cooler, more practical in terms of moving people and luggage it has no range limitations and on to of all this: a lot cheaper!

This is quite interesting to read. Tesla's philosophy as a car maker/dealer was to do things differently and not to come off as the typical car dealership where they do try to nickle and dime you. And yet, here they are doing the SAME exact things they claimed they didn't want to do. How rich is that?


$3k for a heavy duty extension cord. I suppose it is not different that the parts and accessories markup that other high end car brands get.

Damn. Is that cord made by Monster ™ cables?


I just made a 12ga, 240-volt extension cord for an air compressor, and it cost about $60 including the receptacles.

Though I agree the Tesla Roadster isn't "saving the planet", they have had PLENTY of opportunities to do so. They easily could have started with a 4 door sedan with a 300 mile range for $50,000. Instead they make some sport car that didn't sell well due to its insane price point, fired 90% of their workforce, and are now asking Congress for $350,000,000...idiots...

Ferrari's, and to a lesser extent, Corvettes built their image and mistique on a racing background.

The Tesla is never going to have that kind of brand recognition going for it. It's always going to be the Elise with batteries.

quote:
And both the Ferrari and the Porsche are slower than the Tesla at 0 to 60 MPH...
....so a non-existent car is faster then those you can readily get... interesting

Really?

Car and Driver
Tesla Roadster: 0-60 in 4.4 sec
2009 Tesla Roadster - First Drive Review/Green Machines/Car Shopping/Hot Lists/Reviews/Car and Driver - Car And Driver

Porsche 911 Carrera: 0-60 in 4.1 sec
2009 Porsche 911 Carrera vs. 2009 BMW M3 - Coupes/Comparison Test/Reviews/Car and Driver - Car And Driver

Ferrari F430: 0-60 in 3.5 sec
Ferrari F430 - Road Test/Sports Car Central/High Performance/Hot Lists/Reviews/Car and Driver - Car And Driver

quote:
"Zero to 60 mph transpires in 3.9 seconds, claims Tesla, and we believe it.

Um YEAH! That 3.9 sec 0-60 was NOT tested. Any car company can claim any number for performance. Hard, independent numbers are the only one's that count. I don't care what C&D believes, they TESTED the car and it got 4.4 seconds (not exactly slow BTW). And, more importantly, Viditors claim that the Tesla is so much faster than the Porsche and Ferrari is blatantly false. Hell, the 911 Carrera is cheaper and was the RWD drive version and it was STILL quicker in TESTING (not claiming or believing) than the Tesla.

Base prices
Porsche 911 Carrera: $75,600
Tesla Roadster: $109,000


Good post.

I don't agree with the premise behind arguing over 0-60 times though.

0-60 times obviously don't tell the whole story about the comparative value in a gimmick electric roadster and a traditional sports car.

Especially, as you so succinctly pointed out, the alarming cost of the Tesla. $100k + is pure exotic car territory, and frankly, the Tesla can't compete in this market.

In the primary use for most (looking good) then the Tesla is probably competitive. If you want an actual performance comparison, lets see how the Tesla does for a day at a road course.

... before tesla folds?

they get bad reviews (range not being what they advertise), their prices are insanely high, their car is really just an elise with batteries, they had layoffs, now they raise the price.

i think these guys are doing it the right way:
ZERO MOTORCYCLES – The Electric Motorcycle Company - Homepage

a british magazine recently reviewed their bike and said it was actually BETTER than a normal bike because of its low weight, and it costs less than $8k.

You know, you'd figure fine print on a start-up company would be stupid in itself. I mean you're trying to build a good reputation right?


lawsuits for breach of contract??

Tesla could definitely face breach of contract lawsuits for this. Those who paid deposits made a bargained-for deal with Tesla. At the time of contract, the price was set at a certain point. It cannot change without there being a breach. If I had placed $50K on an order for one of these, Tesla would be in deep trouble. Just because they want to become profitable quicker does not give them the right in contract law to change the prices of contracts already entered into with customers. Tesla's only defense would be that somewhere in the contract there was mention of price increases for the final product. If not, Tesla's in trouble.

Why don't those idiots who reordered ones just get a Lotus Exige?

They'll poop their pants when they feel how that corners, and then poop their pants again when the figure out they can fill it up in about 2 minutes.

I really want a Lotus Exige S240


Brand new company, Brand new car, Brand new tech, and a rapidly changing economy. They're lucky the damn thing is still going to be built at all.
Right now I wouldn't give GE money up front, let alone Tesla motors...

quote:
Tesla is reported to claim that the price increases on the options are needed for the company to become profitable faster.
Now THAT will make them much happier to pay up more for the car.


That is slimy as hell. They are going to crap all over the people personally responsible for keeping the company afloat while receiving no car? I feel they will quickly learn the meaning behind the saying, "Don't bite the hand that feeds."

Wow, I've never heard of a mfg doing the classic "bump". The bad press/feeling generated by this isn't worth the tiny bit more revenue they'll get is it?

It's like these are Ebay sellers, and when you show up or call to finalize a deal, they suddenly add some cost, what a sham.

Haha, and I know a thing or two about measures to avoid BK, but $6M more isn't going to save them for too long, and not at the expense of pissing off the customers who so far, have loaned you money for free.

The option of demanding your deposit back, taking back your order and waiting for Lotus to come out with their own electric sports car however is free of charge.

Ha ha! Get your deposit back, thats funny.

I bet they'll tack on a $5,000 "rustproof undercoating" fee at the last minute, too.



@tonyola: You guys are so old school. It's an electric sports car, the invoice will clearly read
Li Battery Core Charge :: $9500

This, of course, is easily avoidable. Just bring your own dead 56KWh battery core.


as a sequel to my prior proposition for Hero Of The Day Section, I propose that there be a "Guild of Shame" where manufacturers or individuals (etc) are added to this guild as they bring shame to the motor industry.

To add insult to injury they should call it a fuel surcharge.

"Oh, you wanted valve caps? You didn't tell us that..."

This is a pretty low rent move. Better Tesla had come up with some additional options that they could dangle in front of customers to bulk up the bottom line. Folks who put a deposit down on a nonexistent car from a company that had never delivered a single car were already making a pretty big investment and accepting a great deal of risk.. That should be rewarded, not punished.


@Van Sarockin: this is an "additional option"
Option: Get Car
Price:$9,350




With $50k already in, and a bet of $6700, you stay in, whether you're drawing dead or merely drawing thin.

The odds may be against you, but with $50k in the pot, you can't muck your hand to save $6700.



Tesla set the price
Said cars were coming soon
Depositors rolled the dice
Because the car made them swoon

50 large they did put down
and all chose their favorite hue
But Tesla has a tainted crown
And said "more money we must accrue"

Now you don't want to make Ed Begley mad
Even though he is all green
He's gotten behind this electric car fad
But reneging on the deposit deal makes him mean

He'll ride his bike up to Silicon Valley
An angry sneer affixed to his face
And lead a violent protest rally
To smash up that Tesla place

The greens will riot as is their habit
When things don't go their way
They'll over turn a bio-fuel Rabbit
As vitriol they do spray

Then once again, they will return
To lunch on organic chick peas
To contemplate the thoughts of a fern
And await the next great cause célèbre

Tesla meanwhile will wonder
What went wrong with their grand plan
Find gullible celebs to plunder
Before they jet off to Cannes

It would have worked, if not for ol' Ed
Tesla only imagined it vaguely
Though some celebs are easily lead
Nobody ****s with the Beagley

I see that Elon Musk studied at the Bernie Madoff School of Business Administration.

Oh, yeah, did you want the polarized battery connectors or the big UL approved twist-on wire nuts?

Tesla should be ashamed. They have no right to complain about any other automaker when they pull this crap on people they had already made promises to.

Their cars were overpriced enough to begin with, at least hold the line.

I hope they fail.


Also the fact that they justified the need to increase the price as "necessary to become instantly profitable." Guess what Tesla, you got your cost estimate wrong and that's a business decision that you should have to live with. Those that agreed to your original price should get what they agreed to at the agreed upon price

They should've named the company "Musk" because something is stankin' about this situation.

tesla roadsters are nothing but novelty cars that will be sitting on cinderblocks in a couple of years anyways. who cares about another $6700 bucks. just drive your prius more lol save some money.

Really not smart. These things were going to sell by word of mouth at the country club, not traditional advertising. They should have written off a small loss on the first batch and considered it their marketing budget.

Now, they've pissed off their initial customers, who are going to say things like "well I like the car, but the company is a bunch of jack-bags..." to all of their friends.

i'd still rather have an exige

To everyone smirking about people "whining" about having to spend more money on these cars, remember that their deposits helped keep the company going. The company set the prices, if it was not enough that's the companies fault, not the customers. This company took peoples money and used it to run their business, I smell justified lawsuits. Which, ironically, will mean this move to bring about "instant profitiability" will actually cost them money.

and yet Fisker is coming out with their own electric/hybrid car at a much lower price with a lot more features....hmmm something tells me the executives of Tesla are spending the companies capital money on their own lavish Hollywood life styles...

"Tesla claims that the extra money is necessary to become instantly profitable."

Depends on how many people keep their deposit in Tesla's accounts; could also make the company, 'instantly filing for chapter 11'. They've got to be using deposit money to pay Lotus for manufacturing. Enough people walk with their deposits, Telsa won't be able to actual deliver any cars.









Good lord, in all the post I didn't see any of the cheerleaders and fanboys that joined our board a while back. Seems like they've even lost their support.

Elon Musk is a douchebag. Looks like more of the same piss poor customer service, theft and rip offs I get from his former company- Paypal. And now this jerk off is launching rockets over our heads? Save us all please.
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post #19 of 55 (permalink) Old 01-20-2009, 02:04 PM
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Location: ATL, GA
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Smicker, What about any talk of this being censored and removed from Tesla's blog?
Almost as weak as that follow up letter.

I'd keep the resume fresh.

Hopefully you don't treat you the same way as they treated everyone in Detroit. Or all these customers that have bankrolled them for the past few years.


Until this point I've always wanted them to succeed. (well not as much once they canned everyone in Detroit in the lamest way of any company ever). I'll go on record now after this as officially retracting any hope for their success, not under Musk's direction anyway. Such a different company now than before the former CEO got the axe. I supported the Martin Eberhard Tesla motor company, not the Elon Musk one.
At least other viable green options will be hitting the market soon. Practical ones that serve more of a purpose than Hollywood showboating and could possible have an actual positive impact on the environment at an affordable price.

Last edited by SweetDaddyD; 01-20-2009 at 02:12 PM.
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post #20 of 55 (permalink) Old 01-20-2009, 06:54 PM
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Quote:
Originally Posted by smicker View Post
FYI, from a letter sent to customers.

"A much fuller account of the history of Tesla is worth telling at some point, but for now I will just talk about the essentials of why we needed to raise prices on options. Fundamentally, it boils down to taking the tough steps that are difficult but necessary for Tesla to be a healthy company and not fall prey to the recession.

When the initial base price, for cars after the Signature 100 series, of $92k was approved by the board a few years ago, it was based on an estimated vehicle cost of roughly $65k provided by management at the time. This turned out to be wrong by a very large margin.

An audit by one of the Series D investors in the summer of 2007 found that the true cost was closer to $140k, which was obviously an extremely alarming discovery and ultimately led to a near complete change in the makeup of the senior management team. Over the past 18 months, observers will note that Tesla has transformed from having a senior team with very little automotive experience to one with deep automotive bench strength. We now have executives with world class track records running everything from design to engineering to production to finance.

To bring the cost of the car down, we have reengineered the entire drivetrain, which is now at version 1.5 and will be at version 2 by June. The body supplier was also switched out from a little company that was charging us nutty money and had a max production of three per week to Sotira, who supplies high paint quality body panels to Lotus, Aston Martin and others. In the process, we had to pay several million dollars for a whole new set of body tooling, as the old tooling had been made incorrectly. The old HVAC system was unreliable and cost almost as much as a new compact car, so also had to be replaced. The wiring harness, seats, navigation system and instrument panel also had to be modified or replaced.

After reengineering and retooling virtually the entire Roadster and completely restructuring our supply chain, we are now finally coming to the point where the variable cost of the car (to be clear, this excludes fixed cost allocation) is between $90k to $100k. With a lot of additional effort by the Tesla team and the help of our suppliers, we should be at or below $80k by this summer. There is some variability here due to exchange rate shifts. Although we gain an automatic currency hedge by selling in both Europe and the US, we are still vulnerable to the Yen, which is very strong right now.

Obviously, this still creates a serious problem for Tesla in the first half of 2009, given the $92k to $98k price of most cars delivered over this time period. The board and I did not want to do a retroactive increase of the base vehicle price, as that would create an unavoidable hardship for customers. Instead, apart from a $1k destination charge increase to match our true cost of logistics, we only raised the price of the optional elements and provided new options and a new model (Roadster Sport) to help improve the average margin per car.

The plan as currently projected, and which I believe is now realistic, shows a high likelihood of reaching profitability on the Roadster business this summer. By that time, we will be delivering cars that have a base price of $109k plus about $20k or so of options (having worked our way through the $92k to $98k early buyers) at a rate of 30 per week. We are fortunately in the position, rare among carmakers, of not having to worry too much about meeting 2009 sales targets, as we are already sold out through October and have barely touched the European market.

My paramount duty is to ensure that we get from here to there without needing to raise more money in this capital scarce environment, even if things don't go as well as expected. I firmly believe that the plan above will achieve that goal and that it strikes a reasonable compromise between being fair to early customers and ensuring the viability of Tesla, which is obviously in the best interests of all customers. Its also important to note that the price increases will affect 400 customers, all of whom will take delivery after Jan. 1 and receive a $7,500 federal tax credit. We made the pricing changes to ensure the viability of Tesla in the long term, regardless of government incentives, but we hope the credit will offset the increase for most customers.

There is one additional point that relates to the government loans that Tesla is seeking for the Model S program, a much more affordable sedan that we are trying to bring to market as soon as possible. A key requirement is that any company applying be able to show that it is viable without the loans. If we allow ourselves to lose money on the cars we are shipping today, we place those loans at risk. Mass market electric cars have been my goal from the beginning of Tesla. I don't want and I don't think the vast majority of Tesla customers want us to do anything to jeopardize that objective."

Elon Musk
CEO & Product Architect

tl;dr, nothing but garbage, lies and excuses anyway.

I can't imagine someone who had plunked down $50K back in 2007 actually reading more than three paragraphs of that BS email before punching the computer monitor. This Elon Musk character is a snake oil salesman.

Ron Elliott touched on what to me is the most irritating aspect of that crap email: Mr. Musk takes their loyal customers for a pack of fools. Anyone who pisses on my leg and tells me it's raining is instantly dismissed. I hope all the customers who were taken advantage of get their money back, and Tesla folds overnight.

the1sen: why move forward with design when you can recreate a monstrosity from the past?
FIL: Have you ever heard of a threesome? I know its her sister, but they are Swedish. That $hit is totally accepted over there.
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