They also announced on Twitter: "As a thank you to our Tesla owners, all existing Model S and Model X owners who wish to purchase a new Model S or Model X Performance car will get the Ludicrous Mode upgrade, a $20,000 value, at no additional charge"
I have a P85D. When Ludicrous Mode was announced, they offered it for $5000 as an upgrade.
I have no idea why it now supposedly costs $20,000.
Source: https://www.teslarati.com/tesla-drops-price-of-p85d-ludicrou...
Easy seen as such too. Compare the "Ludicrous Mode" for the Model X on the US website (US$20k) to the same thing on the Australian website (AUS$8.5k):
https://www.tesla.com/modelx/design?redirect=no#battery
https://www.tesla.com/en_AU/modelx/design?redirect=no#batter...
Note - you need to select "Performance" on the right side, for Ludicrous Mode to be shown.
Ludicrous mode is "20% faster acceleration" for both. So it very much seems like the extra cost on the US buyers is to match this marketing update.
That thing where Larry Ellison (Oracle) is now on the board of Tesla. This is the kind of crap he'd very much applaud. :(
https://www.tesla.com/en_AU/modelx/design?redirect=no#batter...
They should charge $15,000 for the first "10% faster" and then another $25,000 on top of that for the second 10%.
Hardly. Ludicrous Mode is all about acceleration and it's one of the few things that you can use every day without breaking any laws. People are almost never going to go over 100MPH on any US highway but all of them will need to accelerate from zero to sixty during their drives.
Which is fine. If you want to pay thousands of dollars for something that has no other purpose than to put a smile on your face, go ahead -- but that is clearly a luxury purchase and there is nothing wrong with charging a luxury price for it to anyone willing to pay that much.
Why is this a problem? In all luxury cars there are some options priced much higher than the actual cost (e.g. fancy wheels). They exist to bolster the car maker's margins and help sell the lower end versions at lower prices, so you and the average buyers profit. Nobody actually needs Ludicrous, so pricing it like this is in no way immoral.
It's only $20k in the US, and as other people have mentioned... it doesn't seem to have been $20k until this press release.
If you have no problem with that, then no worries. ;)
It's a problem because they are claiming it's a "$20,000 value" when it was sold for $5000 in the recent past and even right now, it costs far less than $20K in other countries.
I'm a huge Tesla fan (I have an S and an X already) but every time they distort the truth in such an obvious manner, it significantly erodes my trust in them. Case in point: I really like the 2020 Roadster's specs but Tesla/Musk have stretched the truth one too many times for me to put down the $50K deposit until it ships and I've let others find the first bugs.
They just can't leave their pricing structure alone. How does Tesla management not appreciate how unnecessarily confusing this is for consumers?
Second, the comparison isn't against dealers (which are awful), the comparison is against the ideal. All I'm saying is that Tesla is shooting itself in the foot with its inconsistency. Bringing up dealers is a whataboutism.
Heh no, you introduced that point yourself in a classic whataboutism move.
Tesla started the actual topic under discussion, which is updates to the Model S and X cars.
They need to calm the rate of change here. It's been all over the map in Q1.
However, I would take this any day over the opaque prices at a dealership.
Even if you're fixated on getting a Tesla, not many people have enough cash on hand to buy a Tesla straight out of their checking account. Nonliquid assets often take a while to turn into cash for large purchases. Every time Tesla raises prices or cuts low-cost products, they cause resentment among people in the process of buying their car. Every time Tesla lowers prices or substantially enhances their existing products, they cause resentment among people who have just recently bought their car. You never know when Tesla is going to announce a shakeup to their product line and make a fool out of anyone who bought their car the month before. It's sort of a corollary Osborne effect. I think the continuous delivery model for hardware enhancement is just asking for trouble. A "model year" approach with fixed hardware costs through the year and continuous software updates would make more sense.
The price matters between when you decide to commit and when you actually commit. If you accept a range of prices, the the price matters less than your timing in any potential discount or package benefit cycles.
It is difficult to care about (Tesla price guess here!) $45k vs $44k vs $46k, but is extremely easy to care about seeing the price drop $1k the day, or the day after you purchase it.
You forget Teslas are FSD capable. They can detect the urgency of the situation and price accordingly. A low speed shunt may be only $15. Avoiding a head on collision with a HGV? Only $10,000.
First understand that the Ludicrous upgrade is only available on the Performance Model S/X which is $99k/$104k to start. There are two possible upsells here, from TM3 to Model S, or from a more basic grade of S to an upgraded Model S.
There are very few people who set out to buy a $35k car and then consider the TCO of the TM3 as comparable and decide to go for it. I think the hypothetical TM3 shopper being upsold to a $99k S to get free Ludi is basically non-existant. Upselling AWD or maybe Model 3 Performance, but not a Performance S.
Now, someone setting out to buy a $78k Model S, and deciding to upgrade to a $99k Model S is conceivable. Getting the Ludicrous option thrown in maybe even makes that likely.
So what's the profit impact to Tesla for selling a baseline Model S for $78k with no discount, versus a Model S Performance with a Free Ludicrous upgrade?
Gross margin of the S is ~30%. For giggles I'll assume gross margin of the Ludicrous upgrade is 50%. The hypothetical customer taking advantage of this offer is spending $99k and earning Tesla a profit of $19,700 ($29,700 - $10,000) versus without the offer getting a $78k Model S and earning Tesla $23,400.
Lastly there is the theory that an existing Model S/X owner decides to buy a new Model S/X because now they can get a Ludi upgrade. Well, you probably don't know that Tesla already lets current owners upgrade their existing Model S/X with Ludi aftermarket for $7,500. You can even upgrade your battery for $20,000.
I'd say this alternative view is bunk. Tesla grows by selling to new owners, and has said they design their cars with 1,000,000 miles in mind. Tesla goes further than any auto manufacturer in history to maintain the value of their existing owners' investment through constant OTA upgrades, even including increasing motor output, decreasing braking distance, and they have a system design geared toward field upgradable hardware including batteries and autopilot hardware.
When was the last time you walked into a dealer with your late-model car and they had a list of upgrades they could sell you for it, to bring it inline with the same car on the showroom floor? Tesla has been doing this with their Model S at various times throughout its history.
Their success is not tied to existing owners replacing their Tesla with a new one. It's actually quite the opposite. Part of Tesla's core value proposition is that every owner should feel like they are driving the latest and greatest, and their incentive is aligned to keep you driving it as long as possible. It's part of why they don't have model years in the first place.
My assumption would be that the gross margin of the Ludicrous upgrade is closer to 90% than 50%.