Here's a tip: you should probably research the bill of materials before pricing the item you're building to sell. In an effort to calm down potentially irate early buyers, Tesla Motors
Elon Musk has issued an email confessing that it had no idea actual production costs for the $92,000 Roadster
would run closer to $140,000. The automaker is hoping the changes in "manufacturing approaches, the car's drive train, heating and air conditioning system, wiring and even the supplier of body panels" will lower production costs to somewhere between $90,000 and $100,000 soon, which certainly gives a little insight into the $128,500 starting price of the recently unveiled Roadster Sport
. In order to recoup some of the losses, Tesla is asking pre-orderers to pony up an extra six large for a high-speed charging cable and custom wheels -- both of which consumers were expecting to be included in their original purchase price. At any rate, the firm is aiming to get build costs down to $80,000 by summer, with profitability following close behind. And you thought the automotive problems began and ended in Detroit.
: Response from Tesla is after the break.
The options pricing change affects nearly 400 US customers who ordered 2008 MY Roadsters but have not yet taken delivery. These customers paid base prices betwen $92K and $98K. This does not affect EU customers or those who ordered Roadsters with the current base price of $109,000. Customers may cancel their orders for a full refund.
Tesla did *not* make this difficult but necessary decision to nickel-and-dime customers or to get a little extra cash to pay for operational expenses; we closed a $40 million financing round late last year that covers daily expenses. Rather, we increased options pricing to boost margins on every car sold to make the company more attractive to the next round of investors -- be they shareholders after an IPO, another round of venture capitalists, or the federal government in the form of low-interest loans. Everyone knows the gloomy fate of automakers that fail to make a profit on every car: they can't proverbially make it up on volume. Tesla's Roadster business unit is expected to be cash-flow positive by mid-2009.
Tesla did not change options pricing lightly, and we have been very frank with customers about our rationale. Tesla's early customers have been amazing evangelists for EVs generally and Tesla in particular; they've stayed with the company through thick and thin in many cases for well over two years, and we hope they remain our biggest enthusiasts and fans. Although many are still understandably upset, we have recieved very positive and supportive comments from others, who appreciate why we need to increase margins.