Re sale moratorium - down payments

[Tinker71]

Ford announced that F150 lightning owners will need to agree not to re sell their trucks for a year. Apparently they did the same thing with their Mustang GT and it held.

So the WAS for the day is would Tesla do something like that? If they did, what affect would it have on converted reservations?

In the next 3? month or so Tesla is going to start converting pre orders into sales with significant deposits. How much will the deposits be and how deep into the reservations are they going to require deposits?

Being mid pack 654,000 (219000 for CT2) I am fascinated by conversion rate. Assuming ramp up late 2022 this has more of a bearing on my receipt than anything else. Flushing out multiple orders will be huge. With a resale moratorium the people that ordered robo taxi fleets will drop out. (assuming FSD is not level 5 by release), the resellers would drop out, then we have people that left for the competition. and last people that just could not afford to convert.

What would the conversion rate be now? How different will the conversion rate be between early and late reservation holders?

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[CyberGus]

Tesla don't play no reindeer games.

They don't even play in the same sandbox.

 

[Tinker71]

Tesla don't play no reindeer games.

They don't even play in the same sandbox.

I would generally agree they avoid most shenanigans by bypassing the dealer. They are taking advantage of high demand and raising prices pretty quick. How fast prices fall when production is ramped up is going to be very interesting. As someone already pointed out this happened in 2019. Personally I would be more than annoyed if I paid $65k for a LR Y and they dropped the price to $55k 2 years later.

I am always astounded how much people will pay to be in the front of the line. For the manufacture it would be hard to watch your sales price that you may or may not have held for 3 years going for 50% more to someone else.

 

[Jhodgesatmb]

Tesla doesn't do deposits. They send you a note or call you and give you a VIN and a timeframe to have the money and you go get the car. With our Model 3 they said 4-6 weeks but they called and said the car was ready in 3. We drove over to Fremont and had everything done in less time than it took to drive there (about 45 minutes).

I have never heard of Tesla forcing people to agree not to sell their cars for a certain amount of time, but I like the idea. If someone wants to invest in Tesla they should buy stock. If they want to drive/own a Tesla they should buy one.

 

[Klaxon]

I remember the Youtube video where one person was ordering 50 CTs just for fun. If he cancelled some of them are those numbers still counted or removed from the list? Probably the list has a lot of voids now?

 

[Mikutow]

This is interesting because the pre-order requirements were/are so insanely low that many people just threw down 100 bucks for the hell of it. My guess is that if Tesla simply announced a new $1000 non refundable deposit requirement you would see thousands of orders drop off and get a more realistic production estimate. They most certainly will do this once they have the finals spec and prices laid out just so they actually know what to expect.

-Side note - I am extremely worried they will raise the prices they initially quoted. When the CT was first announced it was really the first look anyone had at an electric pickup. The design was avante garde and they had no idea if anyone would order it at all, so the initial prices were base on that. Now they know people want it, and the competitors are all releasing trucks at higher price tiers. It would be a miracle if they kept pricing the way it was initially and probably a stupid thing to do. IF they do decide to raise the prices and eliminate the single motor version, we will most certainly see even more order cancellations.

 

[Throwcomputer]

When the CT was first announced it was really the first look anyone had at an electric pickup. The design was avante garde and they had no idea if anyone would order it at all, so the initial prices were base on that. Now they know people want it, and the competitors are all releasing trucks at higher price tiers.

If they took this approach to pricing, they would have priced them twice as high in 2019 at launch if they expected minimal orders/low production numbers. This mentality would mean they expected it to be a niche high end toy.

They launched with affordable pricing because they want to take over the truck market and wanted to beat pricing on similar trucks. They want as many truck people to have them as possible. So you can't drive for 2 minutes in truck land and not pass one.

Jacking up the prices would sure make them more money (per vehicle), but it would also drastically reduce their bite out of the market share they are targeting (total sales). They make more money in the long game by keeping prices where they announced, or at minimum still coming in below all competitor ev truck prices due to the combination of two things.. high profit margin per vehicle that they already have and way higher volume of sales than if they were to jack up the prices and sell less of them.

 

[Tinker71]

I remember the Youtube video where one person was ordering 50 CTs just for fun. If he cancelled some of them are those numbers still counted or removed from the list? Probably the list has a lot of voids now?

The tracker is only as good as the data points we add. In the case of the 50 orders, the reservation # increased by 50 and is just that much more skewed.

 

[Throwcomputer]

EDITED (This entertainment exercise has been peer reviewed...to correct my crappy simple math ):
Lets do simple math using broad guesses based on the reservation tracker. Mainly because I'm curious how the economics of jacking up the prices that everyone is talking about affects the bottom line for Tesla.

Ignoring the quad motor as we don't know pricing yet, and I think their tracking of quad reservations is BS since you literally can't make a reservation for quad motor yet... this means the average sale price of a CT across all 3 original trims at announced prices is : $58,226.

Tesla's per vehicle profit margin is currently 28.8%. Lets say the CT has tighter margins due to the improved specs announced this year and just round down to a solid 25%

The reservations currently estimated in the entertainment value only tracker is currently at 1.269 million reservations (ignoring quad motor). For shits and giggles and simple math, we'll just round that down to 1 million reservations turn into actual sales or just shy of 25% conversion.

This means their total sales on 1 million delivered CTs from reservations == 58.226 Billion.
Their total profit accounting for our wild guess 25% per vehicle margin == 14.556 Billion.


Now raise the avg cost per vehicle a conservative $10k to $68,226. This would result in maybe conservatively 15% less reservation conversions? 850,000 vehicles. Per Vehicle profit margin lets just undo the rounding back to 28.8%.

Their total sales now becomes 57.992 Billion.
Their total profit on 28.8% per vehicle is now 16.701 Billion.

What about if they raised the prices $20k? I'd say that would knock another 25% off the original reservations turned sales so we'll just say 50% of reservations actually buy.. or 663,500 vehicles @ $78,226 avg price. Since in our wild guess example above had raising prices 10K changing the 25% profit margin 13% higher to 28.8%. Another 10K raise in prices makes it 26% higher profit margin.. or 31.5% per vehicle.

Their total sales now becomes 51.902 Billion.
Their total profit on 31.5% per vehicle of those sales is now 16.349 Billion.

So yeah.. raising prices only gets you so far and so much more money until it starts really eating into the amount of people purchasing the truck. When you are selling 1 million trucks a year, you are the top dog in full sized truck market (2020). 650k/yr you're in 3rd. Any higher increase in avg per vehicle price and you are dropping fast off the leader list for market share.

I think they would be able to maintain that high 1mil/yr units sold figure over more years at the original launch price than they would be able to maintain the other yearly units sold figures at higher per vehicle prices. That is where the cheaper prices starts to really cover the gap in any short term gains of drastically raising the sticker price.

 

[Cybertruckee]

Ford announced that F150 lightning owners will need to agree not to re sell their trucks for a year...

Seriously? Is that even legal? Or how can they impose that? Ownership is absolute if don't have anymore remaining monetary obligations to Ford.

Although I understand why they want to do that.

 

[Dirt Worker]

I've said this before, we are being listened to. If enough people talk about price, it encourages the bean counters too reevaluate. I keep my price at a competitive rate, if I hear that I am the lowest price around I adjust. The reason I reserved a CT tri-motor over Duramax was it is a good value at $70,000. In hind sight, I should have still purchased the GMC instead of nursing the old rig for who knows how many years. When the CT was revealed, I could have picked up a 3500 for 65k and now I can't find one for less than 95k. I don't blame Tesla for the delays. These are unprecedented times and I miss the "precedented times" (South Park). I do appreciate having this place too vent while hearing Etta sing the blues.

 

[Jhodgesatmb]

This is interesting because the pre-order requirements were/are so insanely low that many people just threw down 100 bucks for the hell of it. My guess is that if Tesla simply announced a new $1000 non refundable deposit requirement you would see thousands of orders drop off and get a more realistic production estimate. They most certainly will do this once they have the finals spec and prices laid out just so they actually know what to expect.

-Side note - I am extremely worried they will raise the prices they initially quoted. When the CT was first announced it was really the first look anyone had at an electric pickup. The design was avante garde and they had no idea if anyone would order it at all, so the initial prices were base on that. Now they know people want it, and the competitors are all releasing trucks at higher price tiers. It would be a miracle if they kept pricing the way it was initially and probably a stupid thing to do. IF they do decide to raise the prices and eliminate the single motor version, we will most certainly see even more order cancellations.

Interesting comment: "The design was avante garde and they had no idea if anyone would order it at all, so the initial prices were base on that". Generally speaking, when you think you can only sell 50K things the price is going to be very high. When you think you are going to sell 500K the price is going to be much lower. Maybe that is how Tesla could maintain the quoted prices and make the vehicles so much more functional. Just a thought.

 

[Crissa]

Seriously? Is that even legal? Or how can they impose that? Ownership is absolute if don't have anymore remaining monetary obligations to Ford.

Although I understand why they want to do that.

That's not how contracts work.

-Crissa

 

[Jhodgesatmb]

Lets do simple math using broad guesses based on the reservation tracker. Mainly because I'm curious how the economics of jacking up the prices that everyone is talking about affects the bottom line for Tesla.

Ignoring the quad motor as we don't know pricing yet, and I think their tracking of quad reservations is BS since you literally can't make a reservation for quad motor yet... this means the average sale price of a CT across all 3 original trims at announced prices is : $73,905.

Tesla's per vehicle profit margin is currently 28.8%. Lets say the CT has tighter margins due to the improved specs announced this year and just round down to a solid 25%

The reservations currently estimated in the entertainment value only tracker is currently at 1.269 million reservations (ignoring quad motor). For shits and giggles and simple math, we'll just round that down to 1 million reservations turn into actual sales or just shy of 25% conversion.

This means their total sales on 1 million delivered CTs from reservations == 73.905 Billion.
Their total profit accounting for our wild guess 25% per vehicle margin == 18.476 Billion.


Now raise the avg cost per vehicle a conservative $10k to $83,905. This would result in maybe conservatively 15% less reservation conversions? 850,000 vehicles. Per Vehicle profit margin lets just undo the rounding back to 28.8%.

Their total sales now becomes 71.319 Billion.
Their total profit on 28.8% per vehicle is now 20.539 Billion.

What about if they raised the prices $20k? I'd say that would knock another 25% off the original reservations turned sales so we'll just say 50% of reservations actually buy.. or 663,500 vehicles @ $93,905 avg price. Since in our wild guess example above had raising prices 10K changing the 25% profit margin 13% higher to 28.8%. Another 10K raise in prices makes it 26% higher profit margin.. or 31.5% per vehicle.

Their total sales now becomes 62.305 Billion.
Their total profit on 31.5% per vehicle of those sales is now 19.626 Billion.

So yeah.. raising prices only gets you so far and so much more money until it starts really eating into the amount of people purchasing the truck. When you are selling 1 million trucks a year, you are the top dog in full sized truck market (2020). 650k/yr you're in 3rd. Any higher increase in avg per vehicle price and you are dropping fast off the leader list for market share.

I think they would be able to maintain that high 1mil/yr units sold figure over more years at the original launch price than they would be able to maintain the other yearly units sold figures at higher per vehicle prices. That is where the cheaper prices starts to really cover the gap in any short term gains of drastically raising the sticker price.

I am unsure where you got the average price over all 3 trims at $73,905 when the 3 trims were announced at $40K, $50K, and $70K, so if nothing else you should revise your analysis to use an average price of $53K. Anyway, I am going to continue to believe that Tesla will charge me the price I reserved at, which is $69,900 plus $7,000 for FSD. You are welcome to pay more.

 

[Tinker71]

Lets do simple math using broad guesses based on the reservation tracker. Mainly because I'm curious how the economics of jacking up the prices that everyone is talking about affects the bottom line for Tesla.

Ignoring the quad motor as we don't know pricing yet, and I think their tracking of quad reservations is BS since you literally can't make a reservation for quad motor yet... this means the average sale price of a CT across all 3 original trims at announced prices is : $73,905.

Tesla's per vehicle profit margin is currently 28.8%. Lets say the CT has tighter margins due to the improved specs announced this year and just round down to a solid 25%

The reservations currently estimated in the entertainment value only tracker is currently at 1.269 million reservations (ignoring quad motor). For shits and giggles and simple math, we'll just round that down to 1 million reservations turn into actual sales or just shy of 25% conversion.

This means their total sales on 1 million delivered CTs from reservations == 73.905 Billion.
Their total profit accounting for our wild guess 25% per vehicle margin == 18.476 Billion.


Now raise the avg cost per vehicle a conservative $10k to $83,905. This would result in maybe conservatively 15% less reservation conversions? 850,000 vehicles. Per Vehicle profit margin lets just undo the rounding back to 28.8%.

Their total sales now becomes 71.319 Billion.
Their total profit on 28.8% per vehicle is now 20.539 Billion.

What about if they raised the prices $20k? I'd say that would knock another 25% off the original reservations turned sales so we'll just say 50% of reservations actually buy.. or 663,500 vehicles @ $93,905 avg price. Since in our wild guess example above had raising prices 10K changing the 25% profit margin 13% higher to 28.8%. Another 10K raise in prices makes it 26% higher profit margin.. or 31.5% per vehicle.

Their total sales now becomes 62.305 Billion.
Their total profit on 31.5% per vehicle of those sales is now 19.626 Billion.

So yeah.. raising prices only gets you so far and so much more money until it starts really eating into the amount of people purchasing the truck. When you are selling 1 million trucks a year, you are the top dog in full sized truck market (2020). 650k/yr you're in 3rd. Any higher increase in avg per vehicle price and you are dropping fast off the leader list for market share.

I think they would be able to maintain that high 1mil/yr units sold figure over more years at the original launch price than they would be able to maintain the other yearly units sold figures at higher per vehicle prices. That is where the cheaper prices starts to really cover the gap in any short term gains of drastically raising the sticker price.

All good. Remember Tesla can also lower prices. I am really glad they will make the quad plaid first. They can get some low hanging fruit and keep prices down on the rest of the orders.

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