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Summary:

Tesla Motors had a tough call to make this week: Anger customers with a price hike on pre-ordered Roadsters that were supposed to be “locked in,” or risk lower profit margins that might scare off future investors. The Silicon Valley luxury electric automaker opted for the […]

Tesla Motors had a tough call to make this week: Anger customers with a price hike on pre-ordered Roadsters that were supposed to be “locked in,” or risk lower profit margins that might scare off future investors. The Silicon Valley luxury electric automaker opted for the former, notifying the 400 people who have deposited $50,000 apiece for undelivered 2008 Roadsters that they will have to pay extra for previously standard options — things like a metallic paint job or a navigation system.

Tesla spokesperson Rachel Konrad explained that the company faces increasing pressure to beef up its profit margins. “The margins are really important on this car for the next group of investors,” she told Wired, “whether it’s public shareholders in an IPO, the federal government looking at federal loan candidates or the next group of venture capitalists.”

Really important. Absolutely. So, will this big bold move give Tesla the boost it needs to get through the credit crunch and on with mass-market production? Probably not. From the numbers posted by Roadster owners (and would-be owners), it looks like the price hikes will bring in only a few million dollars for a company that claims to need $200 million in loans to produce a long-promised sedan priced for the mass market — the supposed key to Tesla’s profitability. If the 400 affected customers fork over at least $6,700 to get all of the previously standard options (not at all guaranteed, since they can skip the special features), it will bring in only about $2.7 million in additional revenue. Not exactly a needle-mover. Would that give you the confidence to invest?

  1. “If the 400 affected customers fork over at least $6,700 to get all of the previously standard options (not at all guaranteed, since they can skip the special features), it will bring in only about $2.7 million in additional revenue. Not exactly a needle-mover. Would that give you the confidence to invest?”

    It’s not about bringing in the money for mass market production – it’s about showing you can at least break even on what you are selling and hopefully turn a small profit. Clearly someone has worked out that they would not make enough to cover operating expenses on their existing backlog and so something had to be done. $6000 dollars may not make a lot of difference on 400 cars, but on 4000, 40000? It’s about showing investors that you now have a grip on your costs and know the true cost of doing business.

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  2. Josie Garthwaite Wednesday, January 21, 2009

    @Dave, you make a good point. While this pricing change applies only to 2008 Roadsters, it could be the first of several important decisions based on true costs.

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  3. @Dave

    Good points but you can’t change the goal post when you realize that you are on the losing end of the game. I don’t see any other car company (or a computer company) raising prices if some component pricing shifts.

    I think Tesla’s latest move shows — they are a company long on ideas, but short on execution or even developing a proper plan. The company just has poor management and perhaps near-average business skills. don’t believe the hype on this one!

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  4. Tesla was told by the US Govt. that they have such a bad business that they are not going to get funded. Tesla is just doing this as a last ditch attempt to get the federal loan before they go out of business. There are no “other investors”, they have asked everybody from Dubai to Sand Hill Road and everybody has turned them down because they screwed up their decisions so bad already. Musk has the money and Musk screwed the whole thing up. His staff should revolt and demand that he put the rest of his cash in the company.

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  5. The nail in Tesla’s coffin is the fact that the battery pack puts out enough EMF radiation to give you plenty of cancer. Their pack is equal to strapping a bag of cell phones to your head. This was a known problem with the GM EV1 and they fired the engineers that complained about it.

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  6. [...] couple more articles: Tesla Snubs Customers for A Couple Million Dollars on Delayed Roadsters Earth2Tech "Tesla Admits Huge Losses on First Cars, Boosts "Option" Prices to Recoup" [...]

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  7. [...] "They’re probably a lot closer to the edge than they want you to think." From this article: Tesla Snubs Customers for A Couple Million Dollars on Delayed Roadsters Earth2Tech From the numbers posted by Roadster owners (and would-be owners), it looks like the price hikes [...]

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  8. One of the dumbest moves ever by a start up. Musk just stuck his hand into the pockets of committed Tesla buyers who have already been good enough to LOAN him $50,000 each interest free.

    Want to make more profit? Sell more cars/parts!

    Who is this Parker Lee idiot trying to start rumours about battery packs giving off EMF? If it has a radio frequency generating device in it (the processors in the BMS) then it will have been EMF tested that’s the law. A cell phone gives off high levels of EMF because it is a 500mW transceiver. A BMS microprocessor is not a transmitter so you’re talking ignorant BS

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  9. realistic_idealist Friday, January 23, 2009

    uh hmm… ha ha… sigh

    MUSK STRIKES AGAIN!

    Today’s lesson: History Repeats Itself.
    -It’s ironic that Nikola Tesla’s own misleadings with business and entrepreneurial tact would reflect so kindly upon a company bearing his name half a century later.

    Don’t Quit Your Day Job
    -Elon Musk should stick to his physics degree and just keeping shooting things into space, because as everyone knows “what goes up, must come down,” and this (ASS)tronomical failure in his part as a businessman displays the realities of why not all of us are fit to lead and how easy it is to destroy the hope of so many (cue Martin’s return a-la Steve Jobs post-firing).

    And A Personal Opinion
    -The Roadster is a proof-of-concept. The company proved they could build it. They should not try to immortalize it as the saving grace of the electric car industry forever remembered by its features and trim-options, but instead move on to a Second Generation Roadster as an up-sale, not that silly Sports version that’s a spit-ball faster than the original.

    …it’s time for someone to register TeslaSucks.com

    “Let the future tell the truth, and evaluate each one according to his work and accomplishments. The present is theirs; the future, for which I have really worked, is mine.”
    -Nikola Tesla

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  10. [...] the valuation it wanted. Now it’s betting everything on a DOE loan, and has even stooped to jacking up prices on already delayed Roadsters. [...]

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