Ok, now I got "how smart am I" out of the way. Tesla can have stumbles as a product and we can forgive them because they're blazing a trail and early adopters understand that comes with the territory. I for one did not care too much about the NY Times article. It was such an extreme use case (traveling all that distance in freezing cold) that would solve itself within 18 - 36 months. It would not have impacted my buying decision. The response from Elon gave me more pause. "Wow, there's such a defensive attack response from this company. What happens to me if I buy one and it's a lemon? It can happen. Do I feel like they'd be supportive or blame me for everything that went wrong?" More troubling than it needed to be.
This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car"
What really matters is if I were in the market for a new car in the next 12 months up until pre NYTimes Tesla would have been my top choice. Post NYTimes I would have asked a lot more questions if I was going through the buying process. Now I would not buy a Tesla for at least 12 months as I want more proof points around what exactly is the culture of this company.
Elon will publicly apologize for this within 30 days is my best guess.
>This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car"
I think this shows that Tesla just doesn't get the market they're aiming for.
With their prices(around $60,000 MSRP for the Model S, and $90,000 for the Roadster), they're looking at car enthusiasts and rich people. They're looking at an informed audience that will see through(or are capable of paying people to see through) the marketing to the direct impact on their bottom line. They're informed customers, and don't need this kind of marketing. The key points here was that they've gotten a bank to issue loans on the cars. That's all they needed to announce, not the terms or the nebulous "Total cost of ownership" calculation.
It sounds like the problem is "the cause". If Tesla is successful, it will be because they focused on making a good car rather than relying on the cause to attract buyers. Yet there is this large cheering section that want the car to succeed, but probably aren't considering buying the car.
Take a look at some of the Reddit threads about the expected profits, and you highly see upvoted comments talking about the NY Times debacle as though it is something that Tesla "won".
I can't know whether Elon Musk is actually caught up in the cause of electric cars, but it increasingly passes for a explanation of strange decisions.
The only thing that irks me here is how the cost of fuel is deducted from the cost of the lease:-
If I'm paying $1200/mo for a lease, and any fuel / maintenance costs are on top of that amount. If I get an S-Class for $1200/mo, the fuel would be (for example) $200/mo on top, the total being $1400/mo. Increment accordingly for maintenance.
Tesla S is $1200/mo. I don't need fuel, hence I don't pay anything on top. It doesn't magically become $1200 - $200 = $1000/mo. You're still paying $1200/mo. Plus the cost of maintenance and electricity.
A manipulation that I don't see the point of, at that. Tell a people who can only afford a $600/mo payment that the TCO is under that, and it might get them to come into the dealership, but the real monthly cost will come out before the car could be sold.
If they pitched the calculator on the "true cost of ownership" page as a "here's a way to estimate the hidden costs of a gasoline car that make the Tesla more competitive than you'd think" they could make the same pitch but without the smell of a bait and switch. But even at that, it's not apples to apples (if you buy an S Class, nobody has to guarantee that there will be a market for reselling it in three years).
I even own a Tesla S and think the advertising of this program is terrible. I can't side with Elon on this. They definitely need to add some kind of qualifier like "$500 / month with savings." or "TCO equivalent to a $500 / month lease on a normal car."
15k/year assumption in the fuel savings calculator vs the 12k/year buyback program rate is hopefully an oversite rather than on purpose...
As an owner what do you think of the car? Do you regret being an early adopter and would you recommend waiting?
I'm gambling that they're eventually going to release one within my price range in the next five years. This financing program would make getting into a Tesla doable but I am not a big fan of leasing.
When someone who truly revolutionized online money with PayPal says they have a revolutionary new deal, they had better not come at me with smoke and mirrors like this. When Elon Musk sat in front of a camera and talked about a revolutionary new financing opportunity where I could get an $80k car for $500 a month I was stoked. I was a lot less stoked when I found out that the "$500 a month" payment was actually as large as my mortgage payment. I've always been enthusiastic about what Elon Musk has done, but this irks me. It's pretty shady when you subtract the value of the Model S at three years in your calculations, but you don't subtract the resale value of any other cars in the comparison. Just because other cars don't have "guaranteed" resale values doesn't mean they have zero resale value.
including PayPal, although they seem to have lost their direction since he left.
Looking at it, it's Tesla that failed to emphasise these benefits properly.
For a firm that is supposed to be innovative and disrupting the industry, this "deal" looks like standard car salesman fud. The only innovative thing is the buy back scheme, which is a little lost beneath the $500 stuff.
They'd be better off saying; look, the Tesla S will cost you ~£1,000 per month, but based on what you've entered the best alternative you could have would be $600/mo car, with $400/mo fuel cost (maybe pick some example cars in that price range to compare against directly). And emphasise the ability for you to get a premium car for your money.
In fact; this true cost of ownership thing could have worked if they hadn't stamped a big $500 on the front of it.
I understand why they have done it this way - fuel costs aren't a fixed cost for most people (by which I mean, you probably couldn't recall offhand exactly what you pay per month, or when you pay it) and so is a cost which people don't appreciate as much as their credit lines. But, still.
No fuel costs? What about the eventual battery pack replacement? That's not cheap.
Similarly the buyback is only for a very short window of ownership. It'll be interesting to see how they remind owners of this window - will it be months in advance, or will it be "Hello, as of today..."?
>- the savings from fuel/maintenance/etc are very real, not wishful thinking. The math is true for total cost of ownership
No, it's really not.
If I'm paying $1200/month for a BMW, and the cost of gas+maintenance is $400/month(ballpark), then my total cost per month is $1600.
If I'm paying $1200/month for a Tesla, and the cost of maintenance comes out to $200/month, then my total cost per month is $1400. The cost of gas should not be subtracted from the Tesla's cost, because that cost is $0. It can be used as a comparison point between the BMW and the Tesla, in which case the BMW does cost $200 more per month than the Tesla, but it absolutely cannot be subtracted from the Tesla's cost.
Here's something I can't figure out. I saw a list price of the Model S 60Kw as $62,400. The article says you pay $1,097 for 63 months for that model, and you can sell it back at 43% of the original price. Okay, at 36 months, you've paid $39,492 in payments. Assuming Tesla buys back at 43% of the $62,400 price, or $26,832 and you get that money, then all you are out at the end of 36 months is $12,660 or an effective $351/month (but only realized after three years).
After making $39,492 in payments, you still owe $22,908 on the car (well, not exactly, because I'm not accounting for the down payment or for interest on the loan, here—but you don't own the car free and clear). So that $26,832 doesn't all go straight into your pocket if you sell the car back.
That's why, in order to get to the $346 figure I'm seeing on loading up the page with the default options for the 60kWh model, most of the "savings" comes from stuff other than the buyback (primarily the business tax benefit and fuel costs). The guaranteed resale value portion is only credited a $40/month benefit.
No, your math is right. The $500 per month figure is for the 85 kWh car, which is more expensive. Tesla's "calculator" gives roughly the same figure as you for the 60kWh car. That doesn't mean it's comparable to a car payment of $351/month though. If you did equivalent discounting to a car that only had a $351/month payment (maybe some sort of Kia?) then that would come out to be in the ball park of $150/month, but you don't see Kia advertising their cars like that.
I'm a huge fan of the Model S and will be putting in an order for one as soon as I can decide which version to get. But I too think their whole financing announcement was really lame. Seems very beneath them for having such an amazing product to offer.
Not to dismiss this but have you EVER seen an honest financial product or advertisement for such?
I mean to get that result you'd have to throw bankers and marketeers in jail for bad behavior and that's never going to happen, so what exactly is their downside?
TIn several European countries that I've lived in, you would not be allowed to make claims of this kind in your advertising - it's regarded as abusive of the consumer. The first amendment gives advertisers wide latitude with the kind of claims they make, and even fairly blatant exaggeration is OK as sales talk is expected to involve a degree of 'puffery'. I like the first amendment but as a consumer I sometimes find the almost universal use of bait-and-swtich tactics in American advertising extremely tedious.
In this case I think Tesla went too far with their claims and the market (both on Main and Wall street) is punishing them accordingly. The buyback guarantee was a good idea, as is the lease scheme. Of course they want to make the price seem attractive, but I think they could have been frank about a $1000/month lease cost and got the same amount of business or even more. A surprising misstep.
Depends on the state. Some states cap the sales tax on an auto purchase. IIRC, in SC it's capped at $350. Then of course you get the property tax bill about a month later assuming you didn't transfer tags.
> The sad part of this price comparison quagmire is that Tesla doesn’t need to do it. Its Model S is, flatly stated, very cool.
Totally agreed. I'm really disappointing that this BS is coming from what (up to this point) many of us have perceived as a trustworthy company. We all know Teslas are expensive but that they'll get more affordable with future models. There's no reason to pull this kind of stunt. Elon, you're better than this.
There is ample reason to "pull this kind of stunt". Exhausting the easy part of the market. Hence he needs to expand the market. I do find his choice of market comparison to be a bit suspect, there are other cars in this price range who have much higher residuals.
Elon has simply come to the realization that the low hanging fruit isn't going to pull his company along far enough to get to the next expensive car, the X. That everyman car is still beyond that point and he still has to get there.
As for the lease costs, remember its your tax dollars contributing towards someone's ownership of this vehicle. While some will claim its the cost of progress I see no reason progress to rewarded excessive costs of progress.
There should have been a restriction on the price of the car it was applied too, no need to subsidize luxury rides. There are many alternatives below 40k that if bought in sufficient numbers would do more for adoption
This is such a common sentiment, but why? Elon Musk has helped create a number of awesome things, but that does not make him a virtuous person. His handling of the NYTimes debacle strongly suggested the opposite, in fact
I suspect it's largely because he's the figurehead for the new-age EVs which are making many people giddy with excitement in much the same way that iPods did a few years ago.
But it should also be noted that they don't advertise it as the price of a Tesla but the cost, or "the true cost of owning a Tesla". Cost and price are 2 different things.
My problem though is that I don't think that they got the math right.
It's like saying: you spend 3000$ every month. A trip to Las Vegas would cost you an additional 1000$. But if you don't go to Las Vegas you are saving 1000$ and now your "true" spending is only 2000$ this month.
What they should have said is: non EV - car X has a monthly price of 1200$ and Tesla Model S also has a monthly price 1200$.
For car X you have some additional monthly costs of 1000$ but for the Tesla, the additional costs are only 300$. So the total cost for you would be 2200$ for having car X and only 1500$ for Tesla.
Or something like that.
I wonder if anyone at Tesla considered the idea of guaranteeing the gas savings? At it's simplest the buyer just gets some money back if the cost of gas goes way down.
Tesla could use futures to fund the guarantee at possibly a low cost?
The also valued an hour of stuck in traffic at $100. Imagine if we didn't sleep that much, or we ate while working, several hundred $ more a day. Because that's just how it works :)
"Excessive wear and use" gives them a license to renege on their promise to buy your car for 43% of the value after 3 years. Considering the truth stretching Tesla did with this advertisement, I'd trust them to take advantage of any miniscule opp to screw you.
Fisker is toast, what's the over-under on HN's favorite electric car boondoggle getting pinched? What greenism acolytes don't appreciate is that deflation lowers the price of goods and services--including car and fuel prices!
Value is conserved and deflation will burn the green industry in a bright white light like ice cold water on lithium. Green energy's only hope is that Bernanke's replacement starts handing out trillion dollar tokens on street corners.
All these bright minds and no one takes the time to model assumptions of perpetual compounding growth of the economy! It's not linear, duh!
the media seems intent on sinking Tesla. While I agree with the conclusion that they should stick to car instead of loan technology, the tagline under the 500$ seems enough to me to indicate it is a cost of ownership figure. These practices are certainly not more deceptive than what is seen elsewhere in the auto industry
This is silly and borders on conspiracy theory. It would be suspicious if Tesla is being attacked over technicalities or falsehoods, but all of the criticism in this article is true, representative, and on the money.
It's not just Car & Driver, there have been recently discussions on HN also where it's been shown many times over that the $500 figure is straight out to lunch and grossly misleading.
Why is it that some of us here feel the need to constantly worship at the feet of demigod Musk, He Who Does No Wrong, and anything negative said about him is dismissed as slanderous propaganda by Big Automobile? What is this, the USSR?
I appreciate what Elon Musk is doing to advance electric cars and wean us off of oil, but he is a shrewd businessman subject to the fallibilities of all shrewd businessmen. He is neither a messiah nor a saint.
Many of the complaints are absolutely legitimate and have nothing to do with sinking tesla. For example:
" the fuel savings calculator nestled among these references to the buyback program defaults to driving 15,000 miles per year. Nowhere on the page does Tesla mention that the buyback program explicitly limits mileage to 12,000 per year, and that any miles in excess are charged at $0.25 apiece ... they’d have to pay an additional $2250 in mileage penalties."
This is the type of thing you expect from a scummy used car dealer.
It's not a cost of ownership figure. By definition, if you're paying Tesla or Wells-Fargo $1,200 a month for your car, your cost of ownership is at least $1,200 a month.
[+] [-] jusben1369|13 years ago|reply
Ok, now I got "how smart am I" out of the way. Tesla can have stumbles as a product and we can forgive them because they're blazing a trail and early adopters understand that comes with the territory. I for one did not care too much about the NY Times article. It was such an extreme use case (traveling all that distance in freezing cold) that would solve itself within 18 - 36 months. It would not have impacted my buying decision. The response from Elon gave me more pause. "Wow, there's such a defensive attack response from this company. What happens to me if I buy one and it's a lemon? It can happen. Do I feel like they'd be supportive or blame me for everything that went wrong?" More troubling than it needed to be.
This now takes them into entirely new territory. This goes to the one feature that's critical to the success: credibility and trust. Carandriver says it best when they basically say "Why are they pulling these shenanigans? They don't need to. It's an awesome car"
What really matters is if I were in the market for a new car in the next 12 months up until pre NYTimes Tesla would have been my top choice. Post NYTimes I would have asked a lot more questions if I was going through the buying process. Now I would not buy a Tesla for at least 12 months as I want more proof points around what exactly is the culture of this company.
Elon will publicly apologize for this within 30 days is my best guess.
[+] [-] cube13|13 years ago|reply
I think this shows that Tesla just doesn't get the market they're aiming for.
With their prices(around $60,000 MSRP for the Model S, and $90,000 for the Roadster), they're looking at car enthusiasts and rich people. They're looking at an informed audience that will see through(or are capable of paying people to see through) the marketing to the direct impact on their bottom line. They're informed customers, and don't need this kind of marketing. The key points here was that they've gotten a bank to issue loans on the cars. That's all they needed to announce, not the terms or the nebulous "Total cost of ownership" calculation.
[+] [-] rz2k|13 years ago|reply
Take a look at some of the Reddit threads about the expected profits, and you highly see upvoted comments talking about the NY Times debacle as though it is something that Tesla "won".
I can't know whether Elon Musk is actually caught up in the cause of electric cars, but it increasingly passes for a explanation of strange decisions.
[+] [-] larrys|13 years ago|reply
If we can assume he knows nothing about this ad then we can assume he will fire the people (and/or agency) involved in this advertising black eye.
[+] [-] dancesdrunk|13 years ago|reply
If I'm paying $1200/mo for a lease, and any fuel / maintenance costs are on top of that amount. If I get an S-Class for $1200/mo, the fuel would be (for example) $200/mo on top, the total being $1400/mo. Increment accordingly for maintenance.
Tesla S is $1200/mo. I don't need fuel, hence I don't pay anything on top. It doesn't magically become $1200 - $200 = $1000/mo. You're still paying $1200/mo. Plus the cost of maintenance and electricity.
Talk about manipulating numbers.
[+] [-] majormajor|13 years ago|reply
If they pitched the calculator on the "true cost of ownership" page as a "here's a way to estimate the hidden costs of a gasoline car that make the Tesla more competitive than you'd think" they could make the same pitch but without the smell of a bait and switch. But even at that, it's not apples to apples (if you buy an S Class, nobody has to guarantee that there will be a market for reselling it in three years).
[+] [-] kamaal|13 years ago|reply
I mean is electricity free in the US?
[+] [-] gcb0|13 years ago|reply
[+] [-] nwzpaperman|13 years ago|reply
[+] [-] spullara|13 years ago|reply
15k/year assumption in the fuel savings calculator vs the 12k/year buyback program rate is hopefully an oversite rather than on purpose...
[+] [-] Yhippa|13 years ago|reply
I'm gambling that they're eventually going to release one within my price range in the next five years. This financing program would make getting into a Tesla doable but I am not a big fan of leasing.
[+] [-] CountHackulus|13 years ago|reply
[+] [-] olympus|13 years ago|reply
including PayPal, although they seem to have lost their direction since he left.
[+] [-] ricardobeat|13 years ago|reply
- the savings from fuel/maintenance/etc are very real, not wishful thinking. The math is true for total cost of ownership
- no downpayment due to the tax refunds
- guaranteed buyback, not something you'll find anywhere else
In the absolute worst case it's a standard lease + buyback guarantee, so how can it be "expensive"?
[+] [-] ErrantX|13 years ago|reply
Looking at it, it's Tesla that failed to emphasise these benefits properly.
For a firm that is supposed to be innovative and disrupting the industry, this "deal" looks like standard car salesman fud. The only innovative thing is the buy back scheme, which is a little lost beneath the $500 stuff.
They'd be better off saying; look, the Tesla S will cost you ~£1,000 per month, but based on what you've entered the best alternative you could have would be $600/mo car, with $400/mo fuel cost (maybe pick some example cars in that price range to compare against directly). And emphasise the ability for you to get a premium car for your money.
In fact; this true cost of ownership thing could have worked if they hadn't stamped a big $500 on the front of it.
I understand why they have done it this way - fuel costs aren't a fixed cost for most people (by which I mean, you probably couldn't recall offhand exactly what you pay per month, or when you pay it) and so is a cost which people don't appreciate as much as their credit lines. But, still.
[+] [-] vacri|13 years ago|reply
Similarly the buyback is only for a very short window of ownership. It'll be interesting to see how they remind owners of this window - will it be months in advance, or will it be "Hello, as of today..."?
[+] [-] cube13|13 years ago|reply
No, it's really not.
If I'm paying $1200/month for a BMW, and the cost of gas+maintenance is $400/month(ballpark), then my total cost per month is $1600.
If I'm paying $1200/month for a Tesla, and the cost of maintenance comes out to $200/month, then my total cost per month is $1400. The cost of gas should not be subtracted from the Tesla's cost, because that cost is $0. It can be used as a comparison point between the BMW and the Tesla, in which case the BMW does cost $200 more per month than the Tesla, but it absolutely cannot be subtracted from the Tesla's cost.
[+] [-] adestefan|13 years ago|reply
[+] [-] spc476|13 years ago|reply
Am I missing something here? Is my math off?
[+] [-] majormajor|13 years ago|reply
That's why, in order to get to the $346 figure I'm seeing on loading up the page with the default options for the 60kWh model, most of the "savings" comes from stuff other than the buyback (primarily the business tax benefit and fuel costs). The guaranteed resale value portion is only credited a $40/month benefit.
[+] [-] olympus|13 years ago|reply
[+] [-] Lightbody|13 years ago|reply
[+] [-] vl|13 years ago|reply
Is there a question though?
Max battery + all options including wheels and leather, except "pain armor" and probably "rear facing child seats".
Roof is tricky, don't know it it's a good idea or not.
[+] [-] ck2|13 years ago|reply
I mean to get that result you'd have to throw bankers and marketeers in jail for bad behavior and that's never going to happen, so what exactly is their downside?
[+] [-] anigbrowl|13 years ago|reply
In this case I think Tesla went too far with their claims and the market (both on Main and Wall street) is punishing them accordingly. The buyback guarantee was a good idea, as is the lease scheme. Of course they want to make the price seem attractive, but I think they could have been frank about a $1000/month lease cost and got the same amount of business or even more. A surprising misstep.
[+] [-] edouard1234567|13 years ago|reply
[+] [-] smackfu|13 years ago|reply
[+] [-] matwood|13 years ago|reply
[+] [-] dpe82|13 years ago|reply
Totally agreed. I'm really disappointing that this BS is coming from what (up to this point) many of us have perceived as a trustworthy company. We all know Teslas are expensive but that they'll get more affordable with future models. There's no reason to pull this kind of stunt. Elon, you're better than this.
[+] [-] Shivetya|13 years ago|reply
Elon has simply come to the realization that the low hanging fruit isn't going to pull his company along far enough to get to the next expensive car, the X. That everyman car is still beyond that point and he still has to get there.
As for the lease costs, remember its your tax dollars contributing towards someone's ownership of this vehicle. While some will claim its the cost of progress I see no reason progress to rewarded excessive costs of progress. There should have been a restriction on the price of the car it was applied too, no need to subsidize luxury rides. There are many alternatives below 40k that if bought in sufficient numbers would do more for adoption
[+] [-] m4x|13 years ago|reply
This is such a common sentiment, but why? Elon Musk has helped create a number of awesome things, but that does not make him a virtuous person. His handling of the NYTimes debacle strongly suggested the opposite, in fact
I suspect it's largely because he's the figurehead for the new-age EVs which are making many people giddy with excitement in much the same way that iPods did a few years ago.
[+] [-] davidiach|13 years ago|reply
It's like saying: you spend 3000$ every month. A trip to Las Vegas would cost you an additional 1000$. But if you don't go to Las Vegas you are saving 1000$ and now your "true" spending is only 2000$ this month.
What they should have said is: non EV - car X has a monthly price of 1200$ and Tesla Model S also has a monthly price 1200$. For car X you have some additional monthly costs of 1000$ but for the Tesla, the additional costs are only 300$. So the total cost for you would be 2200$ for having car X and only 1500$ for Tesla. Or something like that.
[+] [-] marcamillion|13 years ago|reply
Come on Musk, you set the high bar for yourself. We expect better.
[+] [-] tocomment|13 years ago|reply
Tesla could use futures to fund the guarantee at possibly a low cost?
[+] [-] OGinparadise|13 years ago|reply
The biggest opportunity to screw you is this http://blog.caranddriver.com/wp-content/uploads/2013/04/Tesl...
"Excessive wear and use" gives them a license to renege on their promise to buy your car for 43% of the value after 3 years. Considering the truth stretching Tesla did with this advertisement, I'd trust them to take advantage of any miniscule opp to screw you.
[+] [-] nwzpaperman|13 years ago|reply
Value is conserved and deflation will burn the green industry in a bright white light like ice cold water on lithium. Green energy's only hope is that Bernanke's replacement starts handing out trillion dollar tokens on street corners.
All these bright minds and no one takes the time to model assumptions of perpetual compounding growth of the economy! It's not linear, duh!
[+] [-] stcredzero|13 years ago|reply
Planetary Resources. Colonization of Mars.
[+] [-] vincefutr23|13 years ago|reply
[+] [-] potatolicious|13 years ago|reply
It's not just Car & Driver, there have been recently discussions on HN also where it's been shown many times over that the $500 figure is straight out to lunch and grossly misleading.
Why is it that some of us here feel the need to constantly worship at the feet of demigod Musk, He Who Does No Wrong, and anything negative said about him is dismissed as slanderous propaganda by Big Automobile? What is this, the USSR?
I appreciate what Elon Musk is doing to advance electric cars and wean us off of oil, but he is a shrewd businessman subject to the fallibilities of all shrewd businessmen. He is neither a messiah nor a saint.
[+] [-] niggler|13 years ago|reply
" the fuel savings calculator nestled among these references to the buyback program defaults to driving 15,000 miles per year. Nowhere on the page does Tesla mention that the buyback program explicitly limits mileage to 12,000 per year, and that any miles in excess are charged at $0.25 apiece ... they’d have to pay an additional $2250 in mileage penalties."
This is the type of thing you expect from a scummy used car dealer.
[+] [-] twoodfin|13 years ago|reply