I think I have worked out how Texas may eventually price the Model Y. Think about it for a start,
there are two different versions of the Model Y being made in the US. There would be the
Fremont version, and the Austin version. Fremont using 2170 batteries, and Austin using 4680
batteries with structural battery pack, and in addition that the gigapresses creating
castings for the front and rear of the vehicle.
Now put yourself in the shoes of a customer, who is about to order a new model Y when both
factories are running. You obviously want to order the superior Austin version, but
how could you make sure that's the one you get? If you order and it s a gamble as to
which version you get, that would deter a lot of customers. Customers like certainty,
they don t want to guess on what they might receive. Its one of the reasons we still have
retail stores and not everything is ordered online.
But there is a simple solution to solve this, that also highly benefits Tesla. When you
go to order your new Model Y, you are presented with a new optional upgrade.
What is this optional extra? Of course the 4680 battery structural set up.
Now Fremont model Y seems to be transitioning to castings with the gigapress without creating
major downtime for the production line. But to transition to 4680 is simply not feasible
for the time being. At least according to Elon on the Joe Rogan show. I mean look at
how long the Model S line was down for.
Anyway, so you go to order your Model Y, and you are offered the optional extra 4680 battery
set up with structural battery pack, and the point I was trying to make before is that
the castings wont be an extra as Fremont will likely also have those in their Model Ys.
The price might be an extra $5,000. I think consumers would pay that much. The car will
also have a longer range, quicker 0 to 60 time, will handle better, and likely be a
safer car in general. There maybe a performance edition too, which
is the performance version with 4680 batteries. This might cost an additional $10,000, but
should have 0 to 60 times in mid 2s. Which is just absolutely insane.
I think it would probably make sense to scrap the performance version in Fremont though.
Just only use that line for Long Range perhaps.
The thing is, this all times in well with the US tax credit. If suddenly these Model
Ys are an additional $5,000 and consumers are getting a rebate of $10,000, then they
are still $5,000 cheaper than now, and offer so much more as a car. It allows Tesla to
increase their prices for a reason that sounds legitimate, to take advantage of tax credits,
without actually admitting they are raising prices of their cars to simply price gauge
the tax credit. We are regularly seeing the prices of the
models rising already, supposedly due to supply issues. But charging extra for the battery
pack will definitely help. Demand is so high as it is, Tesla probably could get away with
charging $55,000 for a structural battery Model Y. However, the thing is it would only
be $45,000 after the tax credit. It's possible Tesla would raise their prices
as high as $60,000 even. Increase the price a full $10,000 to receive 100% of the tax
incentives. Consumers would still pay that, particularly for a structural battery pack.
But with the extra supply that Texas will bring, it will be much easier to meet demand,
so possibly not enough consumers would be willing to pay quite that high.
This way Tesla can justify a price rise for the model Y, without reflecting too bad on
the brand. Of course the Austin Model Y, will eventually produce 4 times or so as many Model
Ys than Fremont. It could mean that the waiting list of the
Fremont version, might be longer, due to the fact that there is less supply available,
and the price is cheaper. But due to a longer waiting list, its extra incentive to purchase
the Austin version for the extra price too. Elon did say that in a few years eventually
Fremont will be upgraded to 4680. Perhaps that will happen if and when Tesla launch
their North East factory in the US. I think its highly possible now, that this might even
be the next factory that gets announced. There has been nothing officially announced for
Tesla s next factory yet, despite rumors circulating that it may be in the UK, India, Russia, and
of course potentially a model 2 factory in China.
We are also expecting a model 3 version from Austin too. But due to the popularity Tesla
have seen with the Model Y, they tend to focus on that model more, likely also due to a much
higher profit margin. But if Tesla will build model 3s out of Austin too, its not clear
whether it will require an additional factory.
I would say it likely Tesla do start building additional factories in Austin, like we saw
with Shanghai. A model 3 factory wouldn t be complete for at least another year, particularly
if its likely to do over a million units a year. By which that stage, we would expect
4680 batteries to have reached mass scale. We hope that the 4680 battery production can
scale faster than the car factories. Obviously any excess batteries can simply
go into energy storage, which is an industry Tesla are seriously neglecting, due to so
much focus going into their cars.
There is also some talk of Tesla having a back up line with 2170 batteries in Berlin.
I think this is not likely. It will show that Tesla don't have enough confidence in the
4680 line. It will also be a much less profitable product, than 4680 versions. On top of that
it could put off consumers not knowing if they will get 2170 or 4680 batteries, ok most
consumers may not understand the difference as much as us. Either way, I dont like the
idea of Tesla having 2170 line as well. I dont think it will happen. Tesla are moving
forward, and looking to the future.
It will however be difficult to have so many different model Y price points. We have the
Texas Mode in America, that need to be higher to take advantage of the tax credits. As a
result the Texas 4680 Model Ys can be able to be priced higher.
But how can Tesla justify the Berlin Model Y price being lower than the US? The US being
higher because of the tax credit. Or do they also raise the price of the model Y in Europe
too, when they start using the 4680 batteries. Rather than the 2170 versions from China.
I would say the Chinese 2170 Model Ys, will end up being the cheapest in the world, at
price point, not cost. It does just become a little complicated.
I guess its possible that when ordering from Asia or Europe you could also offer a $5,000
optional extra to upgrade to the structural battery pack. That way Tesla can offer the
2170 and 4680 Model Ys, priced accordingly. Obviously if you order the 4680 version it
comes from Berlin, and if you order the 2170 version it comes from China.
The problem you are then left with, is an equivalent of around $55,000 price point for
Model Y in Germany. I don't know if the demand can support that price point at the quantities
Tesla have at capacity. $55,000 is starting to become a really high price point too. But
it's amazing that so many people still purchase at the current price point too. The thing
is, that Europe won't have the $10,000 tax credit. But we might see other nations start
to offer more incentives for EV purchases. Particularly if the EVs are locally manufactured.
For example New Zealand have recently offered around US$5,000 off any new EV.
If more European nations offer more incentives, then possibly Tesla could also have a raised
Model Y price in Europe.
I think the Fremont Model Y might end up being $55,000 up from around $52,500. Then the Texas
version will start at $60,000. But then take $10,000 tax credit off those prices.
On the other hand, perhaps Fremont could changeover the Model Y at Fremont to LFP, then they could
have a lower range version perhaps at $50,000. Which would have a huge profit margin still,
and only be $40,000 after tax savings.
I think Tesla just need to be careful to not look greedy as if they are taking tax payers
money, that is being used to offer consumers lower priced EVs, and instead just used to
give auto makers higher profits. Tesla's technology is outstanding, but they still need to maintain
their image in the eyes of the consumer. They do have a very good brand currently and never
want to risk damaging that, particularly by looking like they are taking advantage of
tax incentives. On the other hand, look who the competition
are and what atrocities they have caused. Oil spills are not a good brand image either.
Anyway, it's not the easiest product to price with so many variables, will be interesting
to see how Tesla manage it.
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