Photo: HyperChange/Sawyer Merritt
One of the things Tesla advocates and investors praise the most about the company is an alleged clear price policy. In other words, they claim that what you see on the website is what you end up paying. That would be fantastic if it were true. Recent episodes show it is far from it.
Ironically, it was one of Tesla’s most devoted fans who made it clear in a tweet. Sawyer Merritt said on March 10 that FSD (Full Self-Driving) shortened waiting queues. The company’s website indirectly confirmed that your delivery time was cut by seven months if you ordered a vehicle with the ADAS. Merritt then tried to explain why that was a great idea – for Tesla, obviously.
According to this fervorous advocate, “take rates have been decreasing.” Considering that FSD “is pretty much pure profit” for the company, forcing customers to order the software to receive their cars faster was “one way for them to encourage people to upgrade.” That’s certainly a mild way to classify what Tesla is doing.
To begin with, FSD is not a finished product: it is beta software. Why should anyone pay for something that is still under development? To make matters worse, Tesla gets to decide whether its customers will have access to it or not depending on a Safety Score. Experts claim it has nothing to do with safety. On the contrary: it makes people drive more dangerously.
Tesla is not candid about the option of speeding delivery times: it is just something people end up “discovering,” especially after an advocate talks about it. On top of everything, it costs $12,000. Remember that Merritt himself frames that as “pure profit.” We prefer to label them as something very close to markups: there is no direct benefit for customers, only for the company selling the vehicle.
When Rivian said it would increase its vehicle’s prices by $12,000, Tesla advocates and investors seized the opportunity to attack the competitor. In their opinion, Rivian was hurting the trust these early customers put in the company, which would prove only Tesla deserved trust despite failing to deliver its electric pickup truck as scheduled.
A while later, when RJ Scaringe said he would honor the prices for reservations made until March 1, they mocked him by saying Rivian was burning cash. The coincidence between Rivian’s price increase and FSD is another irony in this whole story.
On November 22, 2019, Elon Musk promised the cheapest Cybertruck would cost $39,900. The electric pickup truck would now have more than 1.2 million pre-orders. Will the people who criticize Rivian for increasing its prices also demand that Tesla honors the Cybertruck’s original prices for all these reservation holders?
If they want to be coherent, these guys are wasting time: they could be bashing Tesla right now. In December 2021, Tesla told customers who ordered derivatives it decided to kill that they would have to pay updated prices for FSD. Some of them had reserved their cars when FSD cost $7,000. Tesla eventually told them they would have to pay $10,000. Should there be anyone still waiting for these cars, the company will inform them they have to pay $12,000, or 71.4% more than when they first ordered their vehicles.
We would not even need Putin’s war against Ukraine and the supply crisis the world is facing for these things to happen. What these two events did was make it even more evident that Tesla’s pricing policy is not as transparent as its apologists like to say.
With the excuse of higher raw material costs, Tesla raised the price of its vehicles two times in a single week – the last one. How bad must price planning be for you to have to do it twice in an interval of seven days? If you made the calculations to buy your car on Monday, it would already be more expensive by Friday.
That’s something you usually only experience in economies with high inflation. With the U.S. facing the biggest price hike in decades, Tesla would not need any other excuse to dodge honoring the $39,900 price for the Cybertruck. While it does not arrive, Tesla could try to be more transparent when increasing prices twice in seven days. It wasn’t: the prices simply change on the website without any sort of warning.
Imagine that you have ordered a Tesla without FSD. The company raises prices as if there was no tomorrow and you have to wait seven months to get your car. What if the price hikes make an EV you thought you could afford much more expensive than you are able to pay?
If the idea is to be transparent, why not tell customers that paying for a Full Self-Driving software that does not self-drive and that most will not even be able to use is a way to get their cars faster? It would sound bad, right? Even if Tesla presents that possibility in different terms – more favorable than “pure profit” – it would not look right. We bet this is why the company does not do that. Good luck defending these practices, whether you own Tesla stocks or not – they normally do.
According to this fervorous advocate, “take rates have been decreasing.” Considering that FSD “is pretty much pure profit” for the company, forcing customers to order the software to receive their cars faster was “one way for them to encourage people to upgrade.” That’s certainly a mild way to classify what Tesla is doing.
To begin with, FSD is not a finished product: it is beta software. Why should anyone pay for something that is still under development? To make matters worse, Tesla gets to decide whether its customers will have access to it or not depending on a Safety Score. Experts claim it has nothing to do with safety. On the contrary: it makes people drive more dangerously.
Tesla is not candid about the option of speeding delivery times: it is just something people end up “discovering,” especially after an advocate talks about it. On top of everything, it costs $12,000. Remember that Merritt himself frames that as “pure profit.” We prefer to label them as something very close to markups: there is no direct benefit for customers, only for the company selling the vehicle.
When Rivian said it would increase its vehicle’s prices by $12,000, Tesla advocates and investors seized the opportunity to attack the competitor. In their opinion, Rivian was hurting the trust these early customers put in the company, which would prove only Tesla deserved trust despite failing to deliver its electric pickup truck as scheduled.
A while later, when RJ Scaringe said he would honor the prices for reservations made until March 1, they mocked him by saying Rivian was burning cash. The coincidence between Rivian’s price increase and FSD is another irony in this whole story.
On November 22, 2019, Elon Musk promised the cheapest Cybertruck would cost $39,900. The electric pickup truck would now have more than 1.2 million pre-orders. Will the people who criticize Rivian for increasing its prices also demand that Tesla honors the Cybertruck’s original prices for all these reservation holders?
If they want to be coherent, these guys are wasting time: they could be bashing Tesla right now. In December 2021, Tesla told customers who ordered derivatives it decided to kill that they would have to pay updated prices for FSD. Some of them had reserved their cars when FSD cost $7,000. Tesla eventually told them they would have to pay $10,000. Should there be anyone still waiting for these cars, the company will inform them they have to pay $12,000, or 71.4% more than when they first ordered their vehicles.
We would not even need Putin’s war against Ukraine and the supply crisis the world is facing for these things to happen. What these two events did was make it even more evident that Tesla’s pricing policy is not as transparent as its apologists like to say.
With the excuse of higher raw material costs, Tesla raised the price of its vehicles two times in a single week – the last one. How bad must price planning be for you to have to do it twice in an interval of seven days? If you made the calculations to buy your car on Monday, it would already be more expensive by Friday.
That’s something you usually only experience in economies with high inflation. With the U.S. facing the biggest price hike in decades, Tesla would not need any other excuse to dodge honoring the $39,900 price for the Cybertruck. While it does not arrive, Tesla could try to be more transparent when increasing prices twice in seven days. It wasn’t: the prices simply change on the website without any sort of warning.
Imagine that you have ordered a Tesla without FSD. The company raises prices as if there was no tomorrow and you have to wait seven months to get your car. What if the price hikes make an EV you thought you could afford much more expensive than you are able to pay?
If the idea is to be transparent, why not tell customers that paying for a Full Self-Driving software that does not self-drive and that most will not even be able to use is a way to get their cars faster? It would sound bad, right? Even if Tesla presents that possibility in different terms – more favorable than “pure profit” – it would not look right. We bet this is why the company does not do that. Good luck defending these practices, whether you own Tesla stocks or not – they normally do.
It looks like Tesla is officially (via its website) giving priority delivery to vehicles ordered with the $12k FSD option. Ordering a base Model Y with FSD cuts your estimated delivery time by 7 months from December 2022 to May 2022. https://t.co/h4Pu9o1Nlw pic.twitter.com/yShEX0IHpf
— Sawyer Merritt ???????? (@SawyerMerritt) March 10, 2022
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