The new Tesla Motors Inc. (NASDAQ: TSLA) model will have nearly all the features that $150,000 to $200,000 BMWs, Mercedes and Porsches have, along with most features of super cars like Maserati. Tesla has not said what the new car will cost, but there is every reason to believe it will be more than $150,000. Tesla has said its future is in less expensive cars. The new Tesla S model indicates otherwise.
The new Tesla has most of the features of a Porsche Panamera Turbo S. It has roughly the same acceleration and ultra-luxury features, and it operates four-wheel drive and carries a price tag of $180,000. One reason the Porsche costs so much is that it has a brand that allows it to charge so much. The other is that the Panamera Turbo has to cost a small fortune to build.
What car experts cannot guess yet is what the new Tesla S will cost to build. Being close to “driverless” has to be expensive. The necessary features have sensors, cameras and complex software to run. So, the expense to build the car has to be well above its predecessor’s.
Tesla might adopt the strategy that selling the car for very little over the cost to make it will drive demand, even beyond what any new Tesla would bring. However, Tesla has the problem of being a public company. Wall Street will have some real anxiety if it believes the margin on the cars is minimal.
Ultimately, the all-electric car business will be based on the buyer’s need for the novel, and perhaps some concern about the environment. Given those, most electric cars from major manufacturers will have to carry mid-level prices to catch a broad consumer base. Elon Musk, Tesla’s founder, has spent most of the past year talking about an affordable car. In the meantime, he has launched a product that, based on the cost to build it and the need for a large margin, likely will sell for close to or above $150,000. Hardly a price tag for the electric car of the future.
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