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Tesla rolls out new Model S and X cars with software-locked batteries

By Polycount ยท 26 replies
Jan 30, 2019
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  1. Tesla's financial situation hasn't been at its best lately. The company has been forced to cut costs by raising prices for supercharging, reducing its workforce by seven percent, and discontinue the sale of its 75kWh Model S and X models.

    To make matters worse, the company has recently been hit with around $30,000 in fines for alleged OSHA workplace safety violations. Though that's a mere drop in the bucket for a carmaker the size of Tesla, it's certainly not ideal to be losing any additional money at this point.

    With all that said, all of these decisions seem to be intended to help Tesla right the ship and become more stable. And stabilization doesn't necessarily mean consumers have to suffer - indeed, Tesla has just opted to roll out two cheaper versions of its popular Model S and X cars.

    Starting now, Tesla's existing 100kWh Model S and Model X cars are now called the Model S and X "Extended Range," and their prices have been lowered by $1,000.

    Meanwhile, the new, cheaper Model S and X cars are considered the baseline and will feature software-locked batteries - a decision that enabled Tesla to drop their price by $8,000 to $75,750 for the Model S and $78,950 for the Model X (after incentives).

    The new "basic" Model S and X cars will feature 310 and 270 miles of range, respectively. Compared to their Extended Range counterparts (which house 335 and 295 miles of range) we're seeing a drop of around 25 miles each.

    Naturally, this range decrease will probably disappoint some, but for slightly more budget-conscious customers, it might be just the discount they need to hop on the Tesla bandwagon.

    Permalink to story.

  2. ShagnWagn

    ShagnWagn TS Guru Posts: 726   +559

    Ouch. Did I read it right that they all use the same battery? That is squeezing your customers. Paying extra to use something you already paid for?

    That's like them shrinking my gas tank if I don't fork over an extra $8,000...!
  3. Plutoisaplanet

    Plutoisaplanet TS Booster Posts: 94   +72

    Tesla doesn't seem to be struggling financially; they just reported another $400M of operating profit for the last 3 months of 2018. This is in stark contrast to losing money for years at a time. They're also holding onto $3.7B of cash and expect to pay off the first half of a $900M convertible debt in March. They haven't taken on any new debt for the past year.

    The reason for the layoffs is because they're improving manufacturing efficiency in the S & X (needing less manual labor) and in order to stay profitable. One reason for this timing is mostly because vehicle deliveries decrease seasonally in January/February. Along with that, they've delivered a large amount of higher-tier Model 3's in the second half of 2018 and are working on transitioning those deliveries internationally, so in the meantime Model 3 sales are generating less profit.

    What Tesla has been struggling with (hard) is keeping up with vehicle service. They went into detail about addressing this on their quarterly call: http://ir.tesla.com/
    Eldritch likes this.
  4. Uncle Al

    Uncle Al TS Evangelist Posts: 5,389   +3,776

    Tesla is quickly loosing it luster. In the next two years when so many electric cars from different companies hit the streets we may suddenly wake up one morning to find them shuttering their doors but it won't be that big a surprise as reckless as Musk is with his business ventures .....
    psycros likes this.
  5. Plutoisaplanet

    Plutoisaplanet TS Booster Posts: 94   +72

    Your logic also explains why Ford went out of business decades ago. Wait what?!
    CrazyDave likes this.
  6. MasterMace

    MasterMace TS Booster Posts: 83   +42

    So loose it went out of business like ford?
  7. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,237   +897

    Everything about Tesla is smoke and mirrors.
    FF222 and psycros like this.
  8. brucek

    brucek TS Maniac Posts: 166   +207

    I understand software locks on, say, software. It does not cost the business anything extra to have the additional features pre-loaded, and it may later prove convenient to both buyer and seller.

    But I don't understand how this applies to a physical battery. The unused batteries presumably cost Tesla real money that they are not getting paid for. And the buyer is now lugging around dead weight that is decreasing the functionality of the car.

    Unless Tesla believes that virtually everyone will eventually pay the $8,000, this sounds like a dumb decision that will eventually allow competitors to deliver better vehicles in that the costs and weight will be lower.
    IAMTHESTIG and ShagnWagn like this.
  9. Plutoisaplanet

    Plutoisaplanet TS Booster Posts: 94   +72

    I know, it's a new/strange concept. However the fact is that the Model S/X gets a gross margin of around 24%, which translates to $22k for the extended range version. It may be lower since we don't know the margin of every single configuration, but it can't be so far off that $8,000 actually hurts Tesla.

    The reality is that Tesla is playing with demand levers to attempt to get to that equilibrium of the highest profit. If Tesla only had the extended range version (starting at $93,000), they'd probably have much more supply than demand and make less profit. Imo Tesla should've reduced the range further for the standard range, for example 285 miles for $85k (making the extended range upgrade a 50 mile addition).
  10. Xclusiveitalian

    Xclusiveitalian TS Evangelist Posts: 786   +173

    Who the hell can afford a 75k+ car ?
    Theinsanegamer and psycros like this.
  11. Eldritch

    Eldritch TS Addict Posts: 128   +125

    A hell lot of people apparently.
    Hexic likes this.
  12. psycros

    psycros TS Evangelist Posts: 2,712   +2,507

    Its amazing how US car companies are all on the verge of no longer producing affordable vehicles for the masses. Ford is becoming a truck company almost exclusively because the margins are higher. Now rumors are flying that GM may drop their entire low-to-mid range model portfolio. Mind you, its not because family sedans aren't profitable but because they aren't *as* profitable as more expensive vehicles. That's American corporate logic for you - give away an entire market to foreign companies because the top executives aren't getting big enough bonuses. That's what good the bailouts did.
    IAMTHESTIG and Theinsanegamer like this.
  13. Humza

    Humza TechSpot Staff Posts: 286   +138

    In these tough times for Tesla, it seems the car maker is headed for the same fate as the inventor it was named after.
  14. Arneafer

    Arneafer TS Rookie

    It's cheaper to only produce one batterypack then to make 3 different once. Also locking some of the capacity will be good for the battery life as they can putt far larger upper and lower charge margins. Letting you try out the low range to see if you need the extra range is also a positive. I can't really see any big negatives with this.
  15. FF222

    FF222 TS Addict Posts: 180   +108

    Capitalism at its best
  16. Evernessince

    Evernessince TS Evangelist Posts: 3,994   +3,481

    Reminds me of the great depression, where companies that didn't make commodities were forced to make extremely expensive opulent products to cater to the rich. This product differntiation has been happening for the last 5 years at least. Food products have been getting smaller and there has been a growing divide in the quality of feminine products clearly segmented for those with and without money.

    America is overdue for a recession after all, given the extremely long economic growth streak going on 9 years now. It's actually more worrying that it's lasted so long as economies need that natural cooling off period. During periods of economic recession people save more and spend less, businesses focus on paying off existing liabilities, and it becomes a bit harder to borrow money.
  17. yeeeeman

    yeeeeman TS Addict Posts: 169   +136

    Hope someone hacks this stupid limitation.
    Burty117 and ForgottenLegion like this.
  18. MaXtor

    MaXtor TS Maniac Posts: 253   +191

    Maybe we'll eventually see more than Android devices on XDA. I can see it now. "[Guide] How to root your Tesla and unlock the full battery."
    Athlonite likes this.
  19. Capaill

    Capaill TS Evangelist Posts: 894   +497

    Agreed. I believe economies go through approximately 7 year cycles of highs and lows. Ireland's last high lasted around 11 years and was called the Celtic Tiger. It was artificially extended due to the rising house prices propping up our GDP. When it eventually crashed, it hit hard - house prices dropped by 50% within days. Home owners were left with a mortgage for a 700K house that was suddenly worth 350K. People started defaulting on payments, as they had just become unemployed, and the banking sector started to collapse. These market highs and lows are natural. The longer you make the high last, the harder that low is going to hit you.
    Evernessince likes this.
  20. Wizwill

    Wizwill TS Booster Posts: 101   +48

    Way back when, common wisdom used to be that in order to succeed in business, "find a need and fill it". In the relatively recent past, a new slogan has replaced it. "Create an addiction and supply it."

    Semi-literate smartphones, credit cards, streaming video and audio and a thousand other things suck up a lot of money and put it in other people's bank accounts. Most of these things are no better than what they replaced, just different. Truth be told, many of them aren't nearly as good as what they replaced, but nearly every one of them costs quite a bit more!

    There are additional costs as well. The loss of security and privacy; The time wasted answering a dozen robo sales calls every day. Of course there's my favorite, the marketing of opinions as news as opposed to the reporting of factual happenings.

    Yes, our brave New World!
  21. netman

    netman TS Addict Posts: 315   +98

    I wonder how much money it takes to bring down your car's gasoline engine, put an electric motor and a bank of batteries on and call it the day!
  22. Dr Roboto

    Dr Roboto TS Rookie

    I wonder if the battery packs have the same yield issues as CPUs/GPUs. Maybe what they find is that some battery packs just can't hold the same level of charge as others. a Telsa battery is really just a large package of 2000+ smaller AA sized batteries. Rather than incurring the cost to fix them, they can be resold in the "base models."
  23. Theinsanegamer

    Theinsanegamer TS Evangelist Posts: 1,547   +1,767

    9 years ago the effects of the housing crash were shifting into high gear. For normal people, the economy didnt recover until around 2012-2014.

    While I agree a recession is coming, Largely disagree that the economy is looking at another 2008 crash. People have just now caught up to the wages of 2008, there hasnt been this massive buildup that economists would believe, outside of costal cities, and those are going to get hit a LOT harder then the rest of the US in a recession, largely because areas hit hardest in 2008 never really recovered.
  24. QuantumPhysics

    QuantumPhysics TS Evangelist Posts: 1,237   +897

    My Jeep Grand Cherokee SRT was an $80,000 buy with its equipment. That's $1030 a month.

    My 2016 HELLCAT Charger was $75,000 but the term was different: $1060 a month.

    But these cars are still way less expensive than the audience buying your typical Mercedes/ BMW/ Audi or even the new Lincoln's , Cadillacs or other brands that are pushing their prices beyond $80,000.

    Tesla's problem is their leases don't make sense and their finances don't either. The Model X and Model S are way too expensive compared to German luxury - who have way more competitive leasing. I took one of my family members to buy one: couldn't find the equipment and color she wanted and the lease price was over $1200 a month.

    A $90,000+ Mercedes Sclass lease was cheaper.

    The Model 3, however, is cheaper, between $50,000 and $75,000 for a performance model (loaded) and it is more reasonable to lease or finance ($1000 a month lease or finance around $800 a month).

    If you don't have to pay for supercharging, it makes a lot of sense as a daily work car.

    If you have to pay for supercharging, it's still less than gas would cost.
  25. I'm not sure why everyone is freaking out about this.

    This was/is common practice with CPU makers. Make a chip with 4 physical cores, but disable 2 cores and sell it as a dual-core.

    It's cheaper for Tesla to have the same sized batteries and then lock them down at a software level the same way that Intel/AMD/Nvidia don't have to reinvent the wheel when releasing new chips.

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