Wow! You're getting a great deal with your Tesla!! Apparently you can purchase a car that costs $140K to make for $92K. Hope you can wait 37 hours between charges, or have the extra $3K for the high speed charger:
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Tesla Admits Huge Losses on First Cars, Boosts "Option" Prices to Recoup
$48,000-Per-Car Imbalance Between Cost and Tesla Price Led to Management Ousters
By John O'Dell, Senior Editor
Attempting to diffuse customer dismay over a substantial down-grading of the wheels and charging apparatus supplied with cars that have been backlogged for as much as two years, Tesla Motors' Chairman Elon Musk said in an e-mail today that when the nascent electric-car maker first set its roadster's price at $92,000, it had no idea that actual production costs would run closer to $140,000.
It was that "alarming discovery," Musk said in his e-mail, that led to the almost complete change of senior management at the Northern California-based company last year.
The company had expected production costs to be about $65,000 per car,
Subsequent changes in manufacturing approaches, the car's drivetrain, heating and air conditioning system, wiring and even the supplier of body panels has helped lower costs tremendously, but each still costs Tesla "between $90,000 and $100,000" to build, Musk said.
Add overhead, including payroll, marketing and facilities costs and the auto maker still is losing a substantial sum on each vehicle it is selling, even with its price hikes last year to $98,000 and then $109,000.
To turn things around, Tesla recently told customers who have placed $50,000 deposits on cars - some as long ago as early 2007 for vehicles with a stated price of $92,000 - that they can still get their cars at the original price, but not with the high-speed charging cable and custom alloy wheels they thought they'd be getting.
A price hike for those items, he said, will help make the company profitable sooner - and showing that profitability is likely is a requirement for obtaining the $350 million in federal loans the company says it must have to proceed with its next venture, a battery-electric sedan expected to retail at just under $60,000.
So now Tesla is charging an additional $3,000 for the original turbine-blade wheels (see photo above) and $3,000 for the high-speed charging cord, which will recharge the roadster's battery pack in three hours.
If the extra $6,000 is too much, the car will be delivered with different wheels and a standard 100-volt "mobile" charging cord that serves, effectively, as a trickle charger.
It would take 37 hours to recharge a drained Tesla battery pack with the new "standard equipment" cord.
In his e-mail to customers, Musk (left) said the changes would affect 400 customers who pre-ordered their cars and are scheduled to receive them between now and October.
He said the company expects to get production costs down to about $80,000 a car by summer, with exchange rates raising or lowering that somewhat as currency values fluctuate.
"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," Musk wrote.
To avoid a retroactive price hike - although the delivery charge has been upped by $1,000 - the company opted for what Musk calls a policy of raising "the price of the optional elements" while providing "new options and a new model ," the $128,500 Roadster Sport, "to help improve the average margin per car."
Present projections, he wrote, show "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."
The cars ordered at prices of $92,000 and $98,000 will have been delivered by then, at a rate averaging 30 a week, he said.
The plan "strikes a reasonable compromise between being fair to early customers and ensuring the viability of Tesla," Musk wrote in his concluding paragraph, reminding early buyers now faced with an extra $6,000 in charges for the "options" they thought they were getting that they also will receive a $7,500 federal tax credit for purchasing the alternatively powered car.
Of course, they'd have gotten the tax credit even if Tesla hadn't decided to up the ante.
Tesla spokeswoman Rachel Konrad said the company isn't afraid of a slew of breach of contract lawsuits because "we were very careful" from the beginning to say in all contracts "that prices can change."
All well and good, and we really want Tesla to succeed and move on to its next project - the Model S battery-electric sedan.
But we still can't help thinking that the company is asking its biggest supporters, they people who plunked down a lot of cash and have waited months, even years, to get something for it, to underwrite -and forgive it-- its early mistakes.
And while Konrad says that "many" of the affected customers already have e-mailed the company to say they understand, and that Musk's e-mail provided a "helpful explanation" of what's going on, it still sounds like a price increase to us.
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