$77K ... No thanks

[ShelJW]

Well-earned for financial performance, sure, but let’s not kid ourselves, that extra $10,000+ Tesla has been collecting from all their new orders over the past year have not been used for extra research and development. Instead, it’s about to be transferred to their largest shareholder.

Perhaps you're unaware that Tesla has, in the past year, either opened or is about to open a Mega Factory in Texas, a Mega Factory in China and a Mega Factory in Germany....

You think those factories don't cost a few bucks?

"That extra $10,000 Tesla has been collecting from all their new orders over the past year have not been used for extra research and development"

Really???

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[ARK]

Perhaps you're unaware that Tesla has, in the past year, either opened or is about to open a Mega Factory in Texas, a Mega Factory in China and a Mega Factory in Germany....

You think those factories don't cost a few bucks?

"That extra $10,000 Tesla has been collecting from all their new orders over the past year have not been used for extra research and development"

Really???

(1) Stated reason for the price hikes was price pressure on parts, not new factories;

(2) if the company was pouring all it could into investments, desperate to get as much cash as possible to finance operations (like happened in 2018 when Musk really saved the company and doesn’t get enough credit for IMO), you wouldn’t see the company’s profit margins hitting records.

 

[ShelJW]

(1) Stated reason for the price hikes was price pressure on parts, not new factories;

(2) if the company was pouring all it could into investments, desperate to get as much cash as possible to finance operations (like happened in 2018 when Musk really saved the company and doesn’t get enough credit for IMO), you wouldn’t see the company’s profit margins hitting records.

I was simply commenting on your post which said you didn't see any of Tesla's additional money going into production... besides, Tesla is a "for profit" company...

It would almost be malpractice for a company which cannot keep up with production, which has ordered months into the future, to not increase prices, parts shortage or not!

Obviously, it's not just Tesla raising prices. We recently sold my sons 2017 BMW and guess what? We sold it for as much as we could get, which was nearly what he paid for it 2 years and 40,000 miles ago.

That's how free market works.

 

[ARK]

I was simply commenting on your post which said you didn't see any of Tesla's additional money going into production... besides, Tesla is a "for profit" company...

It would almost be malpractice for a company which cannot keep up with production, which has ordered months into the future, to not increase prices, parts shortage or not!

Obviously, it's not just Tesla raising prices. We recently sold my sons 2017 BMW and guess what? We sold it for as much as we could get, which was nearly what he paid for it 2 years and 40,000 miles ago.

That's how free market works.

I agree about the price increases being justified. Tesla has a great product and in a free market, strong demand should be able to drive price increases, nothing wrong with that - the world has seen what the alternative looks like and it’s not pretty. If someone doesn’t like the price, no one forcing them to buy it. As long as it’s not a monopoly, they have alternatives they can go to.

My ultimate thing with all this though isn’t to pick on Tesla, it’s to point out the very different reception Ford and Tesla have gotten for these price increases.

People correctly recognize a cash grab by the dealers when it comes to ADM and don’t like it. But with Tesla, seemingly great reluctance to acknowledge that the price increases aren’t really linked to inflation, supply issues, or need for further investment - Tesla sees they have a very hot product on their hand and are charging what they can get away with, just like the Ford dealers placing a five figure ADM on a Mach-E and still making the sale within days of the vehicle’s arrival.

EDIT: I’ll also add, I think Musk is very savvy when it comes to these things and goes out of his way to mask the fact that this is just Tesla charging what he thinks the market will bear.

 

[DennisD]

I agree about the price increases being justified. Tesla has a great product and in a free market, strong demand should be able to drive price increases, nothing wrong with that - the world has seen what the alternative looks like and it’s not pretty. If someone doesn’t like the price, no one forcing them to buy it. As long as it’s not a monopoly, they have alternatives they can go to.

My ultimate thing with all this though isn’t to pick on Tesla, it’s to point out the very different reception Ford and Tesla have gotten for these price increases.

People correctly recognize a cash grab by the dealers when it comes to ADM and don’t like it. But with Tesla, seemingly great reluctance to acknowledge that the price increases aren’t really linked to inflation, supply issues, or need for further investment - Tesla sees they have a very hot product on their hand and are charging what they can get away with, just like the Ford dealers placing a five figure ADM on a Mach-E and still making the sale within days of the vehicle’s arrival.

EDIT: I’ll also add, I think Musk is very savvy when it comes to these things and goes out of his way to mask the fact that this is just Tesla charging what he thinks the market will bear.

Corporations that build cars are usually in it for the long haul and make their decisions based on many factors but with one giant thought always on their mind and that is, repeat customers.

Tesla, along with every car manufacturer are making price increases due to the supply issue along with the shipping etc. If Tesla overprices their car, it is hard for them to adjust on a daily basis and adjust accordingly. Once again, they factor in many things but the one thing they try to do is lure the masses in to buy their cars.

A dealership, on the other hand can change their price midstream with very few people noticing said price change. The Dealership can also represent multiple brands and take from Peter to pay Paul at times.

Now I personally think that the Dealership's that charge these high ADM's will get caught gouging the consumer and their business will suffer in the end. When things fall back to Earth and go back to "normal", hopefully the Dealership's that didn't participate in raping the consumer will be the beneficiary of solid sales in the foreseeable future.

Yes, both Ford and Tesla have raised their prices. The main difference is that unless Ford wakes up to the Dealership's that are willing to "risk it all" for the short gain, Ford may lose in the end. Tesla, Apple, McDonalds (I could go on) are very careful to not let the perception of their product differ from State to State in regard to cost of their product.

Once again, Ford doesn't make a dime more if the Dealership's raise their price but Ford will lose big time if the "crowd" gravitates towards another company. If you have some time, take a look at what happened to the big 3 back in the late 70's when Japan introduced their product line.

Prices on cars (in the past) were artificially inflated knowing that many would be purchased at a lower cost than MSRP. People felt good about that. Now that many are paying over MSRP, people are having second thoughts and are looking to "feel good again" and not thinking they got ripped off by a con man and go to a price fixed model. It's all perception and if everyone pays a higher price for a certain car, the individuals don't have a sense of getting ripped off.

If you want to keep driving your MME and retain value, one best keep track of the knuckleheads that may taint their image with unscrupulous practices at a few dealerships. ?

Too big to fail doesn't exist anymore (See GM for an example)

 

[MisterSofa]

When and if you trade in or sell the Mach the ADM doesn’t mean anything in value. A 57k car isn’t going to worth 10k more in a few years. It’s still a loss. Patience is a virtue. Take the 10k and bet it on a longshot.

 

[devmach-e]

Unfortunately, there are many people doing "funny" math out there and convincing themselves that they are ahead by spending an extra 10K when gas prices go up compared to their counter parts.

What they don't factor in, is the sales tax along with money financed or money that could be used to invest (other than investing in a car 10k over MSRP).

Let's take the high price of gas and see what you could spend.

If gas were $6 per gallon, you could purchase 1666 gallons of gas on 10K.

If your car got 30 mpg, one could drive 50 thousand miles on that 1666 gallons of gas. If you drove the MME to 50K miles, you would still need to factor in the cost of electricity.

If your car/truck got 15 mpg, you could drive 25 k and break even.

If you waited to order an MME and purchased it at MSRP, you could EASILY wait and save more money. And that is factoring in the tax credit that you wouldn't get in 1 year. You would still be ahead by waiting and paying MSRP.

There is an entire market segment dedicated to people willing to spend more money than necessary on a vehicle. It’s called the luxury/upscale car segment.

 

[DennisD]

There is an entire market segment dedicated to people willing to spend more money than necessary on a vehicle. It’s called the luxury/upscale car segment.

I am fully aware of that. I was merely pointing out to another poster that if you are looking at "saving" money, one would be better to wait and order the exact car that they are wanting if they can obtain it for MSRP rather than 10K over.

 

[sid234]

I paid $2500 as ADM for my Mach-E last year, the dealer had it on the lot and held on to the car for 10days while we finished moving and we're able to trade in our old car. I thought it was worth it for the great service they provided, put the car on hold for me without even taking a deposit. I am sure they'd have sold it in a flash for more

 

[DrJay32]

I paid $2500 as ADM for my Mach-E last year, the dealer had it on the lot and held on to the car for 10days while we finished moving and we're able to trade in our old car. I thought it was worth it for the great service they provided, put the car on hold for me without even taking a deposit. I am sure they'd have sold it in a flash for more

Frankly, I‘d be willing to live with that if the dealer worked with me as you described. It’s these $10-20k markups that are sheer robbery.

 

[J-orange]

A good friend of mine started a very successful advertising agency in Portland, Oregon. He owns a King Air, lots of commercial real estate, homes in several states, and more cars than I can imagine ever possessing.

But he won't pay ADM, ever! Even though he easily could, he doesn't believe in it. He calls it the dealer's "F@ck You Fee". When I asked him, he told me wealthy people don't get rich and stay that way by paying more than they should for cars or anything else. He also pointed out that dealers add no value, they just add price, so you're not actually getting anything different for the extra money.

I'll never pay one cent of ADM and never do business with a dealership that charges it. I consider price-gouging customers an unethical business practice. Dealers that engage in such practices are shortsighted at best. My dealer takes the long view and refuses to charge ADM, no matter what the demand for their cars. That's why I go back there every few years.

This whole debate is probably going to be moot soon. That's because I expect the dealership model will soon go the way of the dinosaurs. Tesla and others have already abandoned the model; they have no dealers. Everyone who orders a Tesla pays the same price; there's no such thing as ADM. As it should be.

Dealerships only provide value with service and DIY parts (more so in the past pre-internet). If I don’t feel like I am getting good service and a fair price I can go to another relatively easily. With Tesla if your local service center is backed up or you had a bad experience, you might be going far to get service.

 

[aevans17]

My 2020 Explorer ST gets 20.7 mpg
Price per gallon Costco Premium $4.69 near my house
So my cost per mile = $4.69/20.7= $0.2266

My 2021 Mach E premium AWD miles per kwh = 2.5 in winter and as high as 4.4 in Spring/fall. Will use 3 as average.

Washington state electricity per kWh is $0.09.
So my price/mile = $0.09/3 = $0.03

My cost savings per mile over gas = $0.1966 which comes out to about 5.1 miles per dollar of additional markup.
$20,000 ADM - $7,500 tax credit = $12,500
$12,500/$0.1966 = 63,581 miles.

So an ADM of $20,000 is paid off in 63,581 miles. Not worth it to me but maybe worth it for others based on how much they drive and what they pay for electricity and maintenance on their ICE vehicle.

Similarly
$10,000 ADM = 12,717 miles
$8000 ADM = 2,544 miles
$1000 of additional tax/finance charges = 5,086 miles

 

[loudog3114]

I paid MSRP off the showroom floor a month ago. I guess the gouging isn't as prevalent in the northeast.

 

[DennisD]

My 2020 Explorer ST gets 20.7 mpg
Price per gallon Costco Premium $4.69 near my house
So my cost per mile = $4.69/20.7= $0.2266

My 2021 Mach E premium AWD miles per kwh = 2.5 in winter and as high as 4.4 in Spring/fall. Will use 3 as average.

Washington state electricity per kWh is $0.09.
So my price/mile = $0.09/3 = $0.03

My cost savings per mile over gas = $0.1966
$20,000 ADM - $7,500 tax credit = $12,500
$12,500/$0.1966 = 63,581 miles.

So an ADM of $20,000 is paid off in 63,581 miles. Not worth it to me but maybe worth it for others based on how much they drive and what they pay for electricity and maintenance on their ICE vehicle.

Similarly
$10,000 ADM = 12,717 miles
$8000 ADM = 2,544 miles

You need to add Sales Tax onto that as well. I know that some States don't charge a sales tax but in Nebraska where I live it is 7%. 20K would be $1,400 extra and 10K would be $700 extra. (and this is not figuring in if you pay interest on the added ADM if borrowing money)

Once again, to each their own but waiting to pay MSRP is still worth the wait according to the ole' bank account. (even with high gas prices)

 

[aevans17]

You need to add Sales Tax onto that as well. I know that some States don't charge a sales tax but in Nebraska where I live it is 7%. 20K would be $1,400 extra and 10K would be $700 extra. (and this is not figuring in if you pay interest on the added ADM if borrowing money)

Once again, to each their own but waiting to pay MSRP is still worth the wait according to the ole' bank account. (even with high gas prices)

Totally agree... I updated my comment to show that $1 of markup is ~5.1 miles and added a line for $1,000 of tax/finance charges = 5,086 miles. Good call out!

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