5 ms·

This strikes me another aggressive price discrimination move. The RWD Long Range 3 has been out the longest, so there should be 0 'pent up demand' for it. By ge

by rconti 8y ago

This strikes me another aggressive price discrimination move. The RWD Long Range 3 has been out the longest, so there should be 0 'pent up demand' for it. By getting rid of the RWD LR option and pushing all LR buyers into the AWD version (and Performance), they squeeze extra money out of buyers at the top end (assuming the profit margin is the same or higher on AWD models). Then, they bring in this new mid-range model to try to shave off a few more short-range (SR) holdouts and push them into a more expensive model; maybe you weren't willing to pay $9k for the bigger battery (plus $5k for premium) but you can be talked into $5k for a bigger battery (plus $5k for premium, I presume). It's also interesting how often they've changed the price on the AWD model; it's jumped up and down a thousand a bunch of times. There's no reason this couldn't be replicated by a manufacturer with a traditional dealer model, except the dealers would tend to be annoyed at having on-lot inventory that fluctuates in 'value', although I think traditionally dealers don't actually pay for their inventory until it sells, regardless. And obviously price messaging is harder in a dealership model. The $35k Model 3 was always going to be the hardest to produce profitably; we're either not there yet, or Tesla sees no reason to produce the lowest profit margin vehicle until they absolutely have to. The backlog of US orders must be low enough that they may as well squeeze the remaining holdouts -- although the demand certainly doesn't seem to be tailing off too quickly.

kennysmoothx 8y ago
I agree with you entirely. The RWD LR model 3 was my go-to and the one I was considering. With this change, they have now essentially replaced that model with one that has 50 mile less range with very little savings on price. Now the long range version looks so much less appealing as the price is now over $60k for an AWD upgrade I have absolute no use for.
- andrewmunsell 8y ago
  If you're seriously considering it and want to purchase it now, Elon has said that both FSD and RWD LR are available "off menu" for the next week.
- rconti 8y ago
  Well, if the numbers are correct, the LR RWD was $49k and this MR is $45k, so that's 4000 less.. and the LR battery upgrade was $9000 more than the SR is supposed to be, so they're effectively splitting the difference. But I agree, it doesn't sound like a lot. (I'm assuming the $45k price assumes the $5000 premium upgrades that the LR forces you to buy at this point in time as well). As another comment mentioned, you can still get the LR RWD this week. We've got one, very happy with it.
cptskippy 8y ago
Price discrimination is charging customers different prices for the exact same thing. The SR has a physically different battery. The LR and AWD have different motor configurations. So not it isn't price discrimination. We actually bought the RWD LR two days ago. The process for purchase is using their website to select the options you want while the sales associate sits there quietly waiting to answer questions. Color choice was the only non binary option. There was no "premium" option you describe. Autopilot and full autonomous driving were optional and the associate said all cars are fully equipped to support both and they can be added at a later date. Having 3 power train configurations is added complexity they might just be trying to avoid while also milking those who think they need LR for another 5k. They told us up front the notugly rims were a % reduction in performance and cost extra. They're not trying very hard to separate fools from their money. If I had to hazard a guess, I would say that the hardware to support full autonomous driving might no longer be included in vehicles and they'll be shipping with just what is necessary for Autopilot, assuming there's a difference.
- rconti 8y ago
  I'm not sure what the term is, then. I checked "price segmentation" but it has the same definition. Anyway, I think you know what I'm trying to say. Push people into buckets that benefit the company by moving higher end customers upmarket, and current SR abstainers into a more-expensive-but-cheaper-than-LR option (since they've elected not to buy LR thus far), without much likelihood of LR RWD folks moving 'downmarket' to the MR. There was no "premium" option because you can't get a car without it, but premium is $5000. $35k+5k premium+9k LR battery = $49k. Presumably the MR is the same; $35k+5k premium+5k MR battery = $45k. We've got the ugly rims; I figured for the money I can get something I like better. But, my wife likes them, and I'm not in a hurry to spend the money, so on the car they stay :)
  - kbob 8y ago
    The ugly wheels actually have ugly plastic covers. If you take the covers off, they're nice spoked alloy wheels underneath.
r00fus 8y ago
s/price discrimination/market segmentation/ Price discrimination means posting a price, and then offering discounts/markups to different groups in the same timeframe to maximize profits (while also trying hard not destroying future profit potential - your customers need to not rebel). Market segmentation is more around defining different products with different prices at different times. At any given time, the same people will pay the same price for the same product.
omarforgotpwd 8y ago
Yesterday the $35k Model 3 was 3 - 6 months away. Now it is 4 - 6 months away. Situation has not changed much for those buyers that were waiting, but now they have the option of a midrange model they can order today and could qualify for the full tax credit.
nradov 8y ago
Traditionally franchise dealers rely on floor plan financing from a bank. They use it to purchase inventory and can roll it over continuously. Banks are usually happy to lend to dealers at low interest rates since the loan collateral is right there at the dealership and relatively easy to repossess if the dealer goes bankrupt.
- rconti 8y ago
  Good to know. My understanding had been that they used to buy before sale, but more recently it had been inventory they didn't have to pay for until later. It's probably not the same everywhere, anyway.

by rconti 8y ago

kennysmoothx 8y ago

I agree with you entirely. The RWD LR model 3 was my go-to and the one I was considering. With this change, they have now essentially replaced that model with one that has 50 mile less range with very little savings on price. Now the long range version looks so much less appealing as the price is now over $60k for an AWD upgrade I have absolute no use for.

andrewmunsell 8y ago
If you're seriously considering it and want to purchase it now, Elon has said that both FSD and RWD LR are available "off menu" for the next week.
rconti 8y ago
Well, if the numbers are correct, the LR RWD was $49k and this MR is $45k, so that's 4000 less.. and the LR battery upgrade was $9000 more than the SR is supposed to be, so they're effectively splitting the difference. But I agree, it doesn't sound like a lot. (I'm assuming the $45k price assumes the $5000 premium upgrades that the LR forces you to buy at this point in time as well). As another comment mentioned, you can still get the LR RWD this week. We've got one, very happy with it.

cptskippy 8y ago

Price discrimination is charging customers different prices for the exact same thing. The SR has a physically different battery. The LR and AWD have different motor configurations. So not it isn't price discrimination. We actually bought the RWD LR two days ago. The process for purchase is using their website to select the options you want while the sales associate sits there quietly waiting to answer questions. Color choice was the only non binary option. There was no "premium" option you describe. Autopilot and full autonomous driving were optional and the associate said all cars are fully equipped to support both and they can be added at a later date. Having 3 power train configurations is added complexity they might just be trying to avoid while also milking those who think they need LR for another 5k. They told us up front the notugly rims were a % reduction in performance and cost extra. They're not trying very hard to separate fools from their money. If I had to hazard a guess, I would say that the hardware to support full autonomous driving might no longer be included in vehicles and they'll be shipping with just what is necessary for Autopilot, assuming there's a difference.

rconti 8y ago
I'm not sure what the term is, then. I checked "price segmentation" but it has the same definition. Anyway, I think you know what I'm trying to say. Push people into buckets that benefit the company by moving higher end customers upmarket, and current SR abstainers into a more-expensive-but-cheaper-than-LR option (since they've elected not to buy LR thus far), without much likelihood of LR RWD folks moving 'downmarket' to the MR. There was no "premium" option because you can't get a car without it, but premium is $5000. $35k+5k premium+9k LR battery = $49k. Presumably the MR is the same; $35k+5k premium+5k MR battery = $45k. We've got the ugly rims; I figured for the money I can get something I like better. But, my wife likes them, and I'm not in a hurry to spend the money, so on the car they stay :)
- kbob 8y ago
  The ugly wheels actually have ugly plastic covers. If you take the covers off, they're nice spoked alloy wheels underneath.

r00fus 8y ago

s/price discrimination/market segmentation/ Price discrimination means posting a price, and then offering discounts/markups to different groups in the same timeframe to maximize profits (while also trying hard not destroying future profit potential - your customers need to not rebel). Market segmentation is more around defining different products with different prices at different times. At any given time, the same people will pay the same price for the same product.

omarforgotpwd 8y ago

Yesterday the $35k Model 3 was 3 - 6 months away. Now it is 4 - 6 months away. Situation has not changed much for those buyers that were waiting, but now they have the option of a midrange model they can order today and could qualify for the full tax credit.

nradov 8y ago

Traditionally franchise dealers rely on floor plan financing from a bank. They use it to purchase inventory and can roll it over continuously. Banks are usually happy to lend to dealers at low interest rates since the loan collateral is right there at the dealership and relatively easy to repossess if the dealer goes bankrupt.

rconti 8y ago
Good to know. My understanding had been that they used to buy before sale, but more recently it had been inventory they didn't have to pay for until later. It's probably not the same everywhere, anyway.