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Tesla to raise prices on Model S

Buyers will soon shell out more for the luxury electric vehicle, just as Roadster buyers did in 2009.

By Claire_Martin Nov 26, 2012 11:39AM
Tesla Model S photo by TeslaRiding high off its 2013 Car of the Year awards from Motor Trend, Yahoo and Automobile Magazine, luxury electric-vehicle maker Tesla is raising the price tag on its Model S.

The details of the price increase won't be released for a few weeks. But so far Tesla has announced that orders placed before the increase won't be affected.

The current starting price for the Model S, $57,400, puts it on par with the likes of the BMW 5-Series. Buyers are eligible for a $7,500 federal tax credit.

One pricing tactic Tesla intends to use as part of the impending increase is to charge for amenities that currently come standard. The automaker did the same thing in 2009, realizing its profit estimates were off, when it raised the base price of its Roadster by $17,000. Many customers who had already placed deposits were forced to pay more.

"There will be a few 'options package' changes as part of the price increase (meaning some things that are currently considered standard equipment may become part of an optional package going forward)," a recent press release read. What those are remains to be seen.

Skeptics are questioning whether the automaker's price bump might be motivated by concerns over hitting its goal of producing 20,000 vehicles next year with 25 percent gross margins. "[A] move to raise prices could spur concerns that ... production or supplier problems have inflated costs enough that higher prices are required to hit desired margins," writes Eric Savitz of Forbes.

The car, which gets the gasoline equivalent of 90 mpg highway, was the first ever to receive a unanimous vote from Motor Trend's panel of judges. Reviewers have fawned over its engineering, design and aesthetics -- specifically its ability to pass as a luxury vehicle rather than an electric one.

Meanwhile, Nissan recently announced a price cut for the Leaf in Japan -- a new entry model with fewer standard features and wheel covers, which is expected to be offered in the U.S. The cheapest Leaf here sells for $35,200.

The fact that Leaf sales are down 16 percent so far this year may partly account for the price dip. The new Leaf will cost 11 percent less in Japan and have a 15 percent longer range.

[Sources: PC Magazine, Forbes, Los Angeles Times]
44Comments
Nov 26, 2012 2:16PM
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Is this a tactic to keep people from buying cars from the upstart company? Do the powers that be want to control the new company and safeguard the market share for the big 3 and imports? When a new idea springs forth those who run things go into action. Gaining control of the Tesla Company was only part of it. (like Tucker) Raising prices to sway people away from their cars is the other. The days of Henry Ford and the Wright brothers are over. Its too bad because they had their hearts in it and wouldn't let their inventions be watered down or destroyed by the likes of J.P. Morgan or The Rogenfelders. Henry Ford wanted his tin lizzy to liberate the masses not enslave them. Middle class people bought them and used them to push the social envelope farther than ever before. To all those liberal idiots that still try to spread the lie that the internal combustion engine was the worst invention ever created I say this; You have never really worked in your lives. You've never dug a trench or carried material. The problem with the I.C.E. was never that it polluted the air. 
Henry Ford was asked one day in 1918 what did he see in the future. Without hesitation he said "I see Alcohol stores on every corner". Gasoline pollutes. Alcohol doesnt. It also makes more horsepower and leaves the engines cleaner so they last longer. Alcohol is totally renewable and with our farmers being paid NOT to grow some crops its a no brainer. Alcohol is Gods gift to the internal combustion engine. All we have to do is kick out the monopolists that have forced us to use gasoline and voilla, clean burning fuel , totally renewable, for about 1.00 per gallon+ taxes. No more pollution, no more wars. We win win win.  
Dec 2, 2012 4:51AM
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gee, imagine that.  the gov't. gives a tax break, whether they should or not aside, and the profiteers take it away.  this is a bad side to free enterprize.
Nov 27, 2012 7:48PM
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Sounds like price gouging to me... 
Nov 26, 2012 6:15PM
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no federal tax credit should go to a car over 30k,  another tax brake to the elite
Dec 2, 2012 5:35AM
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Just a bait and switch move...?

Great way to run a car company..

with American government taxpayers loans...?

Take their deposit, then jack up the price..

 

Dec 2, 2012 9:57AM
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Let me give everyone some perspective before we go off the deep end.  I see a lot of haters out here.

 

1)  This is the first Model S price increace in 3 years.  It's $2500 on a base car of about 50K, or 5%.  For comparison, if this was  pack of gum for a buck, three years later the price went up to 1.05.  That's about half the rate of inflation over the three year period.  Included with the price increace, all cars now are upgraded to 12 way heated power seats.  About a $1,000 option.  (most car dealers change their prices annualy.  This is pretty fair)

 

2)  Tesla is NOT taking government money.  Telsa has a government loan which it is on track to pay back with interest.  This will be net income for the taxpayers.

 

3)  Tesla has cars sold out one year in advance.  Demand is NOT a problem.  They will have no problem selling at their projected levels.  It's a great car, read the press.

 

4)  Tesla is NOT an expensive car over it's life.  Purcahse a performanc car with 18 MPG for 45K.  Over it's life span of 200,000 miles it will consume over 45K of gasolene.  90K total investment.  A 60K Tesla will spend less than 8K in gas for a much lower total cost of ownership.

 

5)  Finaly, Tesla would love for you to own one of your cars, but Tesla can't sell you one.  Go check out one of their stores.  No dealers in cheap suits asking "what's in gonna take to get you in this car today?"  They have folks there that can answer your questions, take you for a test drive, but they can't sell you a car, period.  If you want to buy one, you do it on-line from home, or you can borrow their computer there.  But that's it.  No price gouging, adviserial negotiation, dealing with the closer, and F&I guys that try to sell you floor mats and undercoating.  None of the car ripoff you get from a dealer network.

 

Sincerly, A Happy Tesla Owner

Dec 2, 2012 7:26AM
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I read somewhere that one month they sold 125 Dolts and then further down the article, the goobermint bought most of them......  The goobermint subsidized them and then bought them. LOL  Man we are screwed!!!!
Dec 2, 2012 7:40AM
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What about the tax incentives oil companies are still privileged to. Why don't I hear

any comments regarding it?

Be happy we are still producing something in the USA!!! With out it you will be looking

for a job instead of complaining about nothing!!!

Dec 2, 2012 12:45PM
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The Tesla proves that an electric car does not have to be some weird looking thing like the Leaf. No wonder Leaf sales are down.  It's butt ugly and seems to only come in that ugly blue color.  At least that's all I've ever seen.  Same for the Volt, which looked great in its early experimental concept style as a two-door coupe but went to production looking like yet another weird electric car.
Dec 2, 2012 8:35AM
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While the cars are indeed very nice, this business tactic needs to result in less sales. Can you say "price elasticity of demand?" It is unconscionable that our federal government is spending our tax dollars to give $7500 to Tesla buyers (a case of the feds picking the winners and losers). If this is a good product, it will stand on its own in the market place. 

I hope they don't sell any cars, because I don't want my tax dollars spent to help the rich who can afford to buy them. If this seems counter to the standard Oblabla mantra of tax the rich...well IT IS!

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