Published on October 24th, 2020 |
by David Havasi
October 24th, 2020 by David Havasi
Tesla recently reduced the price of the Model S, its flagship luxury sedan, to $71,000; a price drop of $3,000. Soon after that, Elon Musk tweeted that the Model S price would be reduced yet again, to $69,420. The tweet implied that this price reduction was in direct response to Lucid Motors announcing a starting price of $69,900 (after the $7,500 EV federal tax credit) for the base model of its electric luxury sedan, the Air.
There are a couple things worth noting in Elon’s tweeted retort. On the surface is the very deliberate (and some would say sophomoric) comic symbolism behind the new $69,420 price tag — “69” being … well … I’ll just say it, a sexual position; and “420” being slang for the possession/consumption of marijuana that led to something much more in Tesla world. “420” made its debut into Tesla’s lexicon with the whole “going public” snafu back in 2018 (which we won’t get into now).
Tesla used these same references with the pricing of its $69.420 ($69.42) “S3XY Short Shorts,” a piece of commemorative apparel which mocks the $TSLA “short seller” crowd’s ill-fated bet that Tesla would fail. The “short shorts” sold out almost instantly (but not before I bought two pairs — SCORE!!!), and I, for one, find all of this hilarious.
But beyond the sophomoric humor and the sweet taste of victory that this number sequence represents, there is also a much deeper, and fascinating, significance to the new Model S pricing — value.
To fully appreciate how significant this value is, we need to go back in time to 2012, when the Model S first came onto the automotive scene. Back then, the base price for Tesla’s lowest cost vehicle, the Model S 60 kWh, was around $70,000 (not including possible tax credits). It was rear-wheel-drive, had an EPA-rated driving range of 208 miles, and had a 0–60 mph time of 5.9 seconds.
There were a few additional options that could be added for additional cost. The “Technology Package” for $4,500 was widely viewed as a “must have” option and included a broad bundle of functions, such as:
- Convenience Lighting
- Automatic Keyless Entry with Auto Present Door Handles
- Homelink for garage door opening
- High Definition Back-Up Camera Display when in reverse (no parking sight lines)
- Xenon Headlamps
- LED Cornering Lights
- Fog Lamps
- Power Rear Liftgate
- Turn By Turn Navigation
- Chrome Accent on Rear Diffuser
Other options available at additional cost included the Smart Air Suspension, Panoramic Roof, Upgraded (Nappa leather) Seats, Premium Sound, etc.
Parking sensors would not become an option until the end of 2013 (for $500). First-generation Autopilot hardware would not show up in the cars until Fall of 2014, with functionality that would lie dormant until an eventual over-the-air software update activated the first Autopilot functionality in the cars about a year after that. All of these options, in the aggregate, would increase the price of the Model S 60 by several thousand dollars.
Now let’s look at the current “base” Model S you can buy today for $69,420 (hehehe *giggle* *giggle*). It is all-wheel-drive, has an EPA-rated driving range of 402 miles (almost double the range of its 2012 predecessor), and has a 0-60 time of just 3.7 seconds (over 2 seconds quicker than its 2012 predecessor). It also has a much higher top speed of 155 mph (for those who care about such things). On a side note, it’s wild to think that 3.7 seconds from 0–60 mph is now considered the “slow” version of the Model S.
On top of these improved performance specs, the list of additional (extra cost) options that I listed for the 2012 Model S 60 (that in the aggregate tacked several thousand dollars onto the price) are now standard on today’s Model S. Also, the tech hardware and overall refinement (e.g., the seats) found in the current Model S are far better than its 2012 predecessor. The $70,000 Model S of today is waaaay better than the $70,000 Model S of 2012.
Not to mention the catalogue of additional features that have been intermittently beamed into the car (and every other Tesla) via FREE over-the-air software updates throughout the years. The awesomeness of this can’t be overstated. Each Tesla literally gets dozens of new features, for free, beamed into them every year. I like to say it’s like getting birthday presents every couple of months. This hallmark of Tesla ownership is a unique and jubilant customer experience unlike anything that has ever existed in the automobile industry so far.
On the topic of “unlike anything that has ever existed,” all current Teslas have the hardware and sensors built in to eventually reach full autonomous self-driving, pending software validation and regulatory approval. The implications of this cannot be overstated. The arrival of full autonomy will completely redefine how we view transportation and how we value vehicles.
During Tesla’s “Autonomy Day” event, addressing the topic of buying a new car that doesn’t have the self-driving hardware that all Teslas now have, Elon Musk said this: “It’s financially insane to buy anything other than a Tesla. … It would be like owning a horse.” Please take a moment to allow that to sink in. Elon’s statement is profound for a number of reasons, one of them being its implications on how vehicles will be valued moving forward.
This leads us to the Model S value proposition compared to the current gas powered alternatives in the full-size luxury sport sedan realm. For example, the 2021 Audi S7 and Porsche Panamera S both start at over $85,000; a full $15,000 more than the new Model S starting price.
That’s before calculating the various cost-of-operation advantages that come with having an electric vehicle (i.e., much lower cost to fuel, much lower cost to maintain, much lower overall maintenance, etc.). Resale value for gas-powered full-size luxury sedans are notoriously awful as it is, but if you think their resale values are terrible now, just wait. A few years from now, trying to sell a car that is both gas powered and not capable of autonomy will be like trying to sell a VHS tape in a Netflix world. It’s an inferior, irrelevant technology that nobody will want anymore.
On the performance-oriented end of things, back in 2013, a fully loaded Model S P85+ (which was rear-wheel-drive, had a range of 265 miles, and had a 0–60 mph of 4.2 seconds) cost just under $130,000 ($128,420 to be precise). Today’s “Ludicrous” Performance Model S destroys the 2013 P85+ in every metric, for almost $30,000 less. Even the current “non-performance” Model S will handily outperform the P85+, at almost half the price! Almost HALF!
About a year from now, you’ll be able to get the “Plaid” Model S for just about $10,000 more than that P85+, with specs that are … PPFFFFF&^%$@!#!!! Double the range (520+ miles!) and over 2 seconds quicker (<2.0 seconds from 0–60 mph). A little bit of history repeating.
What’s the trend here? You get much more for your money now than you used to when it comes to Tesla. The cost reduction and improved value proposition for a Model S from 2012 to now has been astounding. Absolutely astounding. And Tesla’s “Battery Day” presentation gave many hints that there is much more to come in terms of cost optimization.
Please do not let this little retrospective “Osborne Effect” you into waiting years to get your first (or next) Tesla. This article is not meant to be a cautionary tale about dancing the line of pragmatic consumerism. This article is meant to be a celebration of how incredibly far Tesla has come, and where it is going. If you are in the market for a new car, then you should get a Tesla now. Don’t wait for some new design innovation to come around the corner, because there will always be a new innovation coming around the corner.
That’s one of the things that’s so exciting about Tesla. Tesla will always be innovating. They will always be improving their products. They will always be driving down cost. But the great news is their products are awesome now. They can meet your needs now. They will blow your mind now. Heck, Tesla vehicles built years ago are still mind blowing compared to the current offerings from other manufacturers. If you wait for the perfect time to buy a Tesla, when they’ve become the best they can possibly be, then you’ll be waiting forever. Don’t defer the awesomeness of Tesla ownership. Choose awesomeness now, enjoy the awesomeness for what it is, and if some new “must-have” awesomeness comes out sometime down the line, then maybe consider swapping out for that awesomeness. But until that time comes, live awesome now.
The Model 3 and Model Y have garnered most of the spotlight as of late because they are much more relevant to the broader auto market due their more affordable price, but it’s also worth acknowledging the amazing value that the Model S brings (and will continue to bring) to the premium luxury vehicle pace. Whether your budget is $40,000 or $140,000, the wondrous car of the future is here now, it’s a remarkable value proposition, and its name is Tesla.
Viva la rEVolution!
STOCK DISCLOSURE: During my employment at Tesla from 2012 to 2019, I was granted and optioned thousands of shares of $TSLA stock at ~$5/share (post split). Thus, I am long $TSLA with a multimillion-dollar stake in the company. Content created is not stock advice.
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