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Customers will need to pay more for their reserved Tesla Roadster or lose the vehicle

The sexy and all-electric Tesla Roadster was the poster child for the green car movement when first announced. This was despite the fact that the electric sports car was far outside the realm of affordability for the masses.

The struggling Tesla Motors has put its foot in another pothole on the road to green car salvation by raising the price of many of the options on its vehicle. The problem is that an unknown number of Tesla reservation holders have received letters and phone calls telling them that the deposits of up to $50,000 placed for their new electric sports cars would no longer hold their rides for them.

The problem is that the buyers who had placed deposits were told that they would need to pay more for the vehicles that they had already ordered and optioned to their liking. The price of a Roadster with the standard feature set has been increased by $6,700.

The cost of the High Performance Charger that allows owners to recharge the batteries in the Roadster in as little as 3.5-hours was increased in price to $3,000 according to Autoblog. The previously stock set of alloy wheels is now a $2,300 upgrade.

Tesla is reported to claim that the price increases on the options are needed for the company to become profitable faster. This is despite the fact that these owners had previously been told that their order was accepted and that their cars were locked for production.

There is no word on price increases for the new Tesla Roadster Sport that was recently announced.

Updated 1/21/2009

Tesla contacted DailyTech to provide an official statement on the price increase we reported yesterday.

Tesla announced a $40 million financing round in November and is not running out of cash. Rather, it is increasing options prices for at least 350 customers who have not yet taken delivery of 2008 model-year vehicles in order to improve margins on each car delivered. Healthy margins make the company more attractive to the next round of investors -- whether they're venture capitalists, shareholders or the federal government in the form of low-interest loans -- and thereby help ensure the long-term viability of the company.

Tesla is fortunate and rare among automakers today in that it has sold out its production run through October. Waiting to increase options pricing would have resulted in many months of lower margins. Fortunately, many of Tesla's early customers understand this and have been very outspoken in their support for this difficult but necessary decision. No one at Tesla made this decision lightly, and we provided customers in-depth data so they could understand why Tesla did it. Ultimately it will help keep the company viable for decades to come so we can keep longstanding customers happy and greatly expand the number of vehicles we sell.

Tesla announced a $40 million financing round in November and is not running out of cash. Rather, it is increasing options prices for at least 350 customers who have not yet taken delivery of 2008 model-year vehicles in order to improve margins on each car delivered. Healthy margins make the company more attractive to the next round of investors -- whether they're venture capitalists, shareholders or the federal government in the form of low-interest loans -- and thereby help ensure the long-term viability of the company.

Tesla is fortunate and rare among automakers today in that it has sold out its production run through October. Waiting to increase options pricing would have resulted in many months of lower margins. Fortunately, many of Tesla's early customers understand this and have been very outspoken in their support for this difficult but necessary decision. No one at Tesla made this decision lightly, and we provided customers in-depth data so they could understand why Tesla did it. Ultimately it will help keep the company viable for decades to come so we can keep longstanding customers happy and greatly expand the number of vehicles we sell.



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Ah, the classic case of...
By theplaidfad on 1/20/2009 11:46:30 AM , Rating: 5
... the good ole' bait n' switch. Pay up boys, Pay up!




RE: Ah, the classic case of...
By Reclaimer77 on 1/20/2009 11:48:44 AM , Rating: 1
Lol yeah. I would love to feel sorry for these people, but I can't. They're idiots.

You could have had a Ferrari you suckers.


RE: Ah, the classic case of...
By hcahwk19 on 1/20/2009 11:51:37 AM , Rating: 1
True, but the Ferrari won't help you save the planet with its 8 mpg. :) Those who fell for this are a bunch of fools.


RE: Ah, the classic case of...
By mvpx02 on 1/20/2009 1:20:07 PM , Rating: 4
The planet is dying? The Tesla Roadster isn't "saving the planet" any faster than a Ferrari.


RE: Ah, the classic case of...
By quiksilvr on 1/20/2009 1:38:55 PM , Rating: 4
Though I agree the Tesla Roadster isn't "saving the planet", they have had PLENTY of opportunities to do so. They easily could have started with a 4 door sedan with a 300 mile range for $50,000. Instead they make some sport car that didn't sell well due to its insane price point, fired 90% of their workforce, and are now asking Congress for $350,000,000...idiots...


RE: Ah, the classic case of...
By othercents on 1/20/2009 2:33:38 PM , Rating: 4
quote:
They easily could have started with a 4 door sedan with a 300 mile range for $50,000.

Are you sure? My understanding is that building a 4 door sedan at that price range and still be profitable would require the ability to mass produce a large number of them. Since they neither had the facilities to mass produce the vehicle nor did they have the funding to build the facilities the next best option was the build a small number of higher end vehicles to build up capital.

Granted the economic turn of events has changed their position to need help to build the 4 door sedan which has included layoffs, increased pricing, and the need to beg the government for hand outs. However this still might have been the outcome even if they were producing a 4 door sedan. I haven't seen a car company not cut back in some way or another in the past year.

Other


RE: Ah, the classic case of...
By Solandri on 1/20/2009 3:42:57 PM , Rating: 1
Since they aren't selling anything yet, how could the economic downturn have negatively affected their ability to bring a product to market? If anything it has made it easier for them as higher unemployment has caused the cost of labor to drop, and suppliers for the Big 3 automakers are probably desperate to sell parts to them at discount prices.


RE: Ah, the classic case of...
By monomer on 1/20/2009 4:08:30 PM , Rating: 2
Solandri, Tesla delivered something like 100 Roadsters in 2008.


RE: Ah, the classic case of...
By Reclaimer77 on 1/20/09, Rating: -1
RE: Ah, the classic case of...
By Viditor on 1/20/2009 6:08:14 PM , Rating: 5
It's outrageously expensive to set up a large scale assembly line for a car (in the $billions). Tesla's plan (which was a very good one at the time) was to produce 100 of them and float an IPO for capital to build the line.
Unfortunately, the economy went south in the middle of that plan so that IPOs are not a good idea now...


RE: Ah, the classic case of...
By Solandri on 1/20/2009 8:16:22 PM , Rating: 1
I see. They weren't planning to grow the business with increasing sales, they were betting on an IPO to raise the funds needed to jump start at a higher level of unit sales. Risky, but might've worked in the era of loose credit. Thanks for the clarification.


By foolsgambit11 on 1/20/2009 7:57:34 PM , Rating: 2
And thus we return to the fact that Tesla couldn't manage mass production (at least, not for the foreseeable future). They went for the 'safest' business model for releasing a boutique electric car (or any boutique car, for that matter). Go sporty.


RE: Ah, the classic case of...
By William Gaatjes on 1/21/2009 4:06:22 PM , Rating: 2
Most sports cars are not mass produced, that's why they are so expensive. 100 is not a small number in those circles. If sports cars would be mass produced they are not exclusive anymore. And sometimes there is some revolutionary technology used as with porsche but even still. 100 is pretty average.


RE: Ah, the classic case of...
By Spuke on 1/21/2009 4:29:36 PM , Rating: 2
100 is not average. Even Lamborghini sells more cars than that. Ferrari sold more Enzo's than that. 100 is most definitely extremely low volume and definitely not average.


RE: Ah, the classic case of...
By CyborgTMT on 1/21/2009 8:32:41 PM , Rating: 3
Actually they are doing pretty good. Even though all Enzo's are listed as being produced in 2003, they were actually built between 2002 and 2005 giving Ferrari 3 years to build 400 of them. Tesla has produced 100 cars in a 9 month span. That is the exact same production rate as Ferrari - 133 cars per year.


RE: Ah, the classic case of...
By FITCamaro on 1/22/2009 7:02:16 AM , Rating: 2
They make more than the Enzo.


RE: Ah, the classic case of...
By Spuke on 1/22/2009 12:35:39 PM , Rating: 2
quote:
That is the exact same production rate as Ferrari - 133 cars per year.
Where do you get your numbers from? Ferrari made 122 cars in December alone. 1600 total for 2008.


RE: Ah, the classic case of...
By Drexial on 1/20/2009 3:00:39 PM , Rating: 2
Its your most notable cars that get attention. Chevy is recognized for its Corvette, not its cobalt. More people know Ferrari for the Enzo then the 355. So Tesla wanted to start at the top to get notoriety and to build capital to move on to a car for everyone.

It clearly isn't the cost of the car that has prevented them from selling car, considering they have 4 times as many people waiting for one as they have made. They started building them just before the costs of most of their materials went up. It also seems like they cant keep up with demand. (its starting to sound like Motorex)


RE: Ah, the classic case of...
By Reclaimer77 on 1/20/2009 3:24:31 PM , Rating: 2
Ferrari's, and to a lesser extent, Corvettes built their image and mistique on a racing background.

The Tesla is never going to have that kind of brand recognition going for it. It's always going to be the Elise with batteries.


RE: Ah, the classic case of...
By PrinceGaz on 1/21/2009 8:08:25 PM , Rating: 2
On Top Gear, the old Tesla Roadster (with the economy rather than performance tyres) managed a 1:27.2 round the track in "mildly-moist" conditions. Given that the Lotus Elise Sport 190 only managed a 1:28.2 under "dry" conditions, that makes the Roadster look very favourable.

Okay so the Roadster didn't have as good a handling around corners as the Elise due to the additional battery weight, but the sheer power and torque it could deliver whilst accelerating on straights, combined with the regenerative braking before corners which helped compensate for the extra weight and therefore kinetic-energy the discs would have to handle, made up for it.

It might only manage fifty or sixty miles around the test track when the Stig goes mad with it power-sliding around corners, such that the battery is dead in under an hour, but for the majority of people who want to commute to work in a high-performance non-locally-polluting car, it is a fantastic choice that can do between a hundred and two hundred miles on a full charge. Combined with an overnight charge from a nuclear power station, you can have a blast on the way to and from work, and still contribute a lot less to global-warming than Prius drivers.

An Elise with batteries? Yep, I'd take one, as it faster than the Elise on petrol (gasoline).


RE: Ah, the classic case of...
By Spuke on 1/22/2009 12:44:02 PM , Rating: 2
quote:
An Elise with batteries? Yep, I'd take one, as it faster than the Elise on petrol (gasoline).
Which is slower than a Chevy Cobalt SS.


RE: Ah, the classic case of...
By PrinceGaz on 1/22/2009 7:24:02 PM , Rating: 2
What do you mean by faster? Top Speed- which will only be of any use on a race-circuit, or Acceleration- which can be used every day.

Lets see:

Top Speed:

Tesla Roadster (any model): 125mph (electronically limited)
Chevrolet Cobalt SS (supercharged): 158mph (also electronically limited, but is the fastest model)

0-60mph Time:

Tesla Roadster: 3.9s (standard), 3.7s (2009 Sport)
Chevrolet Cobalt SS: 5.5s (the fastest version, the turbocharged model for this stat). I'm not going to include the supercharged version using the optional nitrous as that is not really fair.

Quarter-mile drag time:

Tesla Roadster: 12.8s (104.7mph final speed) (model used not stated, but was done in 2008)
Chevrolet Cobalt SS: 13.9s (102.5mph final speed) (turbocharged model, the fastest for the quarter mile)

So unless you normally drive at well over 70-80mph, I would say the Tesla Roadster is a good bit faster than all but the Chevy Cobalt SS being fed nitrous.

Even the 60-103mph times between them are close, with the Cobalt SS only having a slight advantage (these are estimated from the 0-60, and the quarter mile drag times which both passed the line at around 103-104mph)

Tesla Roadster: 8.8s (est)
Chevy Cobalt SS: 8.5s (est)

Based on those stats of the Tesla Roadster vs the best Chevy Cobalt SS (without nitrous), I'd say the Roadster is a good bit faster on all but a very fast track. The two cars would probably be very close after a half-mile drag-race with finishing speeds around the 120mph region, but you don't often have those on public roads.


RE: Ah, the classic case of...
By PrinceGaz on 1/22/2009 7:41:41 PM , Rating: 2
Oh, one other important point: the Roadster is rear-wheel drive whilst the Cobalt SS is front-wheel drive. Even if the Cobalt SS was using nitrous to massively boost its power; it would be pointless as you cannot transfer that sort of power to the road in a front-wheel drive car except at very high speeds. Using nitrous to boost its power to (guessing here) 400hp or so would just cause the front wheels to spin and burn rubber more than anything else.

Above about 100mph, the nitrous would certainly help increase performance, but on public-roads, it will only help you to outrun the police who are certain to be chasing you by then.


RE: Ah, the classic case of...
By Spuke on 1/23/2009 7:17:35 PM , Rating: 2
My mistake, I'm still thinking about the Car and Driver Lightning Lap.


RE: Ah, the classic case of...
By Nik00117 on 1/21/2009 3:16:42 AM , Rating: 2
This is bad, my company speacil orders vechilies all the time. A part of our program states that if the price of the vehicle goes up your not affected. If it goes down we give you the lower price.

Telsa needs to ahve the same ploicy. If they'd call me up and tell me that my next response was "When will I be getting my $50,000 back?"


RE: Ah, the classic case of...
By gstrickler on 1/21/2009 6:50:41 PM , Rating: 2
quote:
"When will I be getting my $50,000 back with interest ?"
Or maybe I would just pay the higher price (assuming I could afford to have pre-ordered one in the first place). I mean, it is a cool car, but it certainly makes me wonder how they are going to treat their customers when this is how they treat the early adopters who put up money well before a car was even available.


RE: Ah, the classic case of...
By hcahwk19 on 1/22/2009 7:27:30 PM , Rating: 2
I forgot that people will take you literally unless you denote sarcasm.


RE: Ah, the classic case of...
By bighairycamel on 1/20/2009 11:54:11 AM , Rating: 2
More like a Porsche. The cheaptest Ferrari (brand new anyway) is $173k base.


RE: Ah, the classic case of...
By Viditor on 1/20/09, Rating: 0
RE: Ah, the classic case of...
By kattanna on 1/20/09, Rating: -1
RE: Ah, the classic case of...
By noirsoft on 1/20/2009 12:44:34 PM , Rating: 2
The Tesla exists. They have already sold cars to customers.


RE: Ah, the classic case of...
By Drexial on 1/20/2009 2:09:25 PM , Rating: 2
I have seen one myself in Chicago on the streets. Its a nice looking car.


RE: Ah, the classic case of...
By jjmcubed on 1/20/2009 4:43:07 PM , Rating: 1
The fact that an untrue statement gets a 5 rating tells me more about the readers of this blog then any comment ever could. Interesting and disturbing.


RE: Ah, the classic case of...
By Spuke on 1/20/2009 1:30:12 PM , Rating: 4
Really?

Car and Driver
Tesla Roadster: 0-60 in 4.4 sec
http://tinyurl.com/9v7dtv

Porsche 911 Carrera: 0-60 in 4.1 sec
http://tinyurl.com/7wg6n4

Ferrari F430: 0-60 in 3.5 sec
http://tinyurl.com/9rnq3w


RE: Ah, the classic case of...
By quiksilvr on 1/20/2009 1:43:33 PM , Rating: 3
Um...NO. If you actually read the article it states:
"Zero to 60 mph transpires in 3.9 seconds, claims Tesla, and we believe it. (We recorded 4.4 seconds on a wet road with the old two-speed transmission in our unofficial first test.)"


RE: Ah, the classic case of...
By Spuke on 1/20/2009 1:53:43 PM , Rating: 5
quote:
"Zero to 60 mph transpires in 3.9 seconds, claims Tesla, and we believe it.
Um YEAH! That 3.9 sec 0-60 was NOT tested. Any car company can claim any number for performance. Hard, independent numbers are the only one's that count. I don't care what C&D believes, they TESTED the car and it got 4.4 seconds (not exactly slow BTW). And, more importantly, Viditors claim that the Tesla is so much faster than the Porsche and Ferrari is blatantly false. Hell, the 911 Carrera is cheaper and was the RWD drive version and it was STILL quicker in TESTING (not claiming or believing) than the Tesla.

Base prices
Porsche 911 Carrera: $75,600
Tesla Roadster: $109,000


RE: Ah, the classic case of...
By Reclaimer77 on 1/20/2009 2:19:59 PM , Rating: 1
Good post.

I don't agree with the premise behind arguing over 0-60 times though.

0-60 times obviously don't tell the whole story about the comparative value in a gimmick electric roadster and a traditional sports car.

Especially, as you so succinctly pointed out, the alarming cost of the Tesla. $100k + is pure exotic car territory, and frankly, the Tesla can't compete in this market.


RE: Ah, the classic case of...
By Spuke on 1/20/2009 2:30:44 PM , Rating: 2
quote:
0-60 times obviously don't tell the whole story about the comparative value in a gimmick electric roadster and a traditional sports car.
I agree here and don't pay much attention to them. If I'm interested in knowing a cars straightline performance, I use the 1/4 mile numbers instead. Also, I like my straightline speed but will compromise it for awesome grip and handling. That's why I really like C&D's new Lightning Lap tests, you get detailed explanations of how each car performs in each part of the lap. It gives you a really great idea of how certain cars perform in the handling and grip department.


RE: Ah, the classic case of...
By The0ne on 1/20/2009 6:40:12 PM , Rating: 2
I'm in the same boat as you are. C&D's new lap tests are really nice.


RE: Ah, the classic case of...
By Spuke on 1/20/2009 6:51:47 PM , Rating: 2
There are quite a few surprises in those tests. I always thought the Elise was a track God until the supercharged version was spanked by the FWD Cobalt SS by 3 seconds. Lightweight isn't everything.

http://tinyurl.com/47tktg


RE: Ah, the classic case of...
By The0ne on 1/20/2009 10:55:57 PM , Rating: 2
Yea, the new cobalt SS looks really good on the track :) Many are surprise by it.


RE: Ah, the classic case of...
By jjmcubed on 1/21/2009 1:57:26 AM , Rating: 2
According to this months letters, the driver of said Elise was shown the door. If that is really the case, a retest should be done.


RE: Ah, the classic case of...
By Spuke on 1/21/2009 12:28:48 PM , Rating: 2
quote:
If that is really the case, a retest should be done.
Interesting if that is the case. I would think a retest should be done. There's gotta be a lot of pissed of Elise owners out there. I can feel the hate within them.


RE: Ah, the classic case of...
By Moishe on 1/20/2009 4:23:10 PM , Rating: 4
John Carmack bought one and it has been delivered. He has dedicated a portion of the last Armadillo Aerospace update to include the car.

Great reading and provides non-PR insight into the car.

http://www.armadilloaerospace.com/n.x/Armadillo/Ho...


RE: Ah, the classic case of...
By Moishe on 1/20/2009 4:26:10 PM , Rating: 2
Another interesting thing is how Carmack compares his Tesla with his previous cars, a twin-turbo Testarossa and F50.


RE: Ah, the classic case of...
By Spuke on 1/20/2009 6:21:37 PM , Rating: 2
He doesn't really compare the two cars just mentions his previous cars as a background. And, WOW, what a background!!!! Obviously, the man loves retarded fast cars and he wasn't expecting that kind of performance from the Tesla. When a person feels that a F50 is MEH performance....LOL!!!!

Quote from him,
quote:
It doesn't have the wide-eyed, slack-jawed, religious-experience type of performance that my Testarossa used to have, but there is a lot to be said for racking up a dozen happy-car-grins a day with your normal driving.


I had the opportunity to ride in a car with a power to weight of .19. We're talking a car that's faster than a Porsche 911 GT2. Everytime the guy stepped on the gas, I would get a shot of adrenaline. It was exhilarating!!! Carmack's Testarossa would have a power to weight of .31. That's just insane!!! The Tesla would have a power to weight of .10. My Solstice has a PTW of .09.

Solstice GXP 0-60 is 5.6 sec (manual), 5.2 sec (auto)
Tesla 0-60 is 4.4 sec
Figures from Car and Driver

So a hundredth makes a huge difference.


RE: Ah, the classic case of...
By jmunjr on 1/21/2009 3:52:53 AM , Rating: 2
I got a Nissan GT-R in August. Now when I drive my 300hp Infiniti G35 w/manual transmission it feels really, really slow even though it hits 60 in 5.5 seconds, and so would 99.99% of all other cars on the road...

I bet if I drove a Veyron the GT-R would seem slow, and in all honesty I wish the GT-R was faster...it can be but still debating the upgrade.


RE: Ah, the classic case of...
By Spuke on 1/21/2009 1:43:21 PM , Rating: 2
quote:
I got a Nissan GT-R in August.
Congrats on the GTR. I'd a imagine a Veyron would make nearly anything feel slow. :)


RE: Ah, the classic case of...
By gstrickler on 1/21/2009 7:04:11 PM , Rating: 2
quote:
So a hundredth makes a huge difference.
Torque is at least as important as power in 0-60 results. Electric motors are noted for being very high torque, and that's the main reason for the differences in timing between the Solstice and the Tesla. Power helps more at the high end, where overcoming drag is the main factor. That's not to say that power isn't important, but for "quickness", torque and weight are more important than power.


RE: Ah, the classic case of...
By Spuke on 1/22/2009 3:36:00 PM , Rating: 2
The Tesla has a 300 lb weight advantage on my car also so I'm really not surprised that it's faster. It probably has more area under the curve than my car too but that's just a guess. Also, hp is just the result of a mathematical formula. You make torque and hp through the entire rpm range.

HP = rpm x T(torque)/5252(constant)


RE: Ah, the classic case of...
By 67STANG on 1/21/2009 9:00:29 PM , Rating: 2
Or for $65k:

Ariel Atom
0-60 in 2.9 seconds, FTW

http://www.youtube.com/watch?v=WaWoo82zNUA


RE: Ah, the classic case of...
By Spuke on 1/22/2009 3:37:29 PM , Rating: 2
quote:
Ariel Atom 0-60 in 2.9 seconds, FTW
When I hit the lottery, that's the first phone call I'm making.


RE: Ah, the classic case of...
By ekv on 1/25/2009 3:07:29 AM , Rating: 2
After that video they ought to change the name to Alien Atom. "You too can be an alien ..." 8)

Always wanted a Porsche, but I think for sheer fun this would be hard to top. Wow.


RE: Ah, the classic case of...
By strikeback03 on 1/20/2009 2:58:49 PM , Rating: 1
Because lots of owners buy Ferraris and Porsches to drag with :roll:

In the primary use for most (looking good) then the Tesla is probably competitive. If you want an actual performance comparison, lets see how the Tesla does for a day at a road course.


RE: Ah, the classic case of...
By Spuke on 1/20/2009 3:34:19 PM , Rating: 3
quote:
Because lots of owners buy Ferraris and Porsches to drag with
Both owners are interested in total performance and do indeed hit up the drag strips with these cars. Both marques make vehicles that are stunningly fast in a straight line so why wouldn't an owner be interested in using that performance?


RE: Ah, the classic case of...
By The0ne on 1/20/2009 6:42:02 PM , Rating: 3
Top Gear got two of them and they both died during tests I believe. There's a youtube video somewhere. :)


RE: Ah, the classic case of...
By Viditor on 1/21/2009 12:32:01 AM , Rating: 2
The batteries went flat after 50km...
It seems when you drive at high speeds (like racing), the battery empties MUCH faster (50km range instead of 250 mile range).
Top gear didn't have enough time for a recharge to make air.


RE: Ah, the classic case of...
By Tsuwamono on 1/20/2009 1:02:15 PM , Rating: 1
they will probably pay the original price listed and anyone purchasing AFTER the price change will pay the new one...


By consumerwhore on 1/20/2009 2:10:53 PM , Rating: 2
It's only "bait and switch" if it was planned all along for the past two years...


RE: Ah, the classic case of...
By nugundam93 on 1/20/2009 7:03:34 PM , Rating: 2
quote:
Tesla is reported to claim that the price increases on the options are needed for the company to become profitable faster.


wow. way to go. NOT!

they could've just let their satisfied customers help sell more through word-of-mouth advertising but no, they had to have dissatisfied customers even before they get the car. amazing.


Do I hear...
By hcahwk19 on 1/20/2009 11:48:03 AM , Rating: 4
lawsuits for breach of contract??

Tesla could definitely face breach of contract lawsuits for this. Those who paid deposits made a bargained-for deal with Tesla. At the time of contract, the price was set at a certain point. It cannot change without there being a breach. If I had placed $50K on an order for one of these, Tesla would be in deep trouble. Just because they want to become profitable quicker does not give them the right in contract law to change the prices of contracts already entered into with customers. Tesla's only defense would be that somewhere in the contract there was mention of price increases for the final product. If not, Tesla's in trouble.




RE: Do I hear...
By Motley on 1/20/2009 2:39:03 PM , Rating: 5
You sure make too many claims for someone who doesn't know for sure.

quote:
Tesla could definitely face breach of contract lawsuits for this.

No, they MIGHT face breach of contract if all your other assumptions are correct.

quote:
Those who paid deposits made a bargained-for deal with Tesla.

Adding unjustified qualifiers such as "bargained-for" doesn't make your statement correct. Those who paid deposits made a deal with Tesla would be correct.

quote:
At the time of contract, the price was set at a certain point.

It's likely a price was mentioned somewhere in the contract, but even that isn't given. It's quite possible to negotiate a deposit on the right to buy, not the actual purchase itself, and that is very common.

quote:
It cannot change without there being a breach.

Assuming the contract was for an actual purchase, and not the right to purchase, you would have to have first hand knowledge and a law degree to be able to make this claim, and I doubt you have either.

quote:
If I had placed $50K on an order for one of these, Tesla would be in deep trouble.

I seriously doubt it, but keep making your hypothetical threats.

quote:
Just because they want to become profitable quicker does not give them the right in contract law to change the prices of contracts already entered into with customers.

Actually, it is quite likely that it does. It's not uncommon for contracts to have clauses that allow adjustments based on any number of factors including any reason at all.

quote:
Tesla's only defense would be that somewhere in the contract there was mention of price increases for the final product. If not, Tesla's in trouble.

I'm glad you are an all knowing law god, that you can confidently claim that you know their only possible defense. Even the best lawyers wouldn't make such a claim.

Now with that aside, I'm not justifying Tesla for what they have done. While I have actually looked into purchasing one of these for myself, I never signed a contract, so I don't have first hand knowledge of the agreement. But making authoritative claims or claims that could only be made with knowledge the person making them obviously does not have is a bit of pet peeve of my own. Don't overstate your bounds in order to try and make your point seem "right". You don't have the facts necessary to make any of your claims.


RE: Do I hear...
By hcahwk19 on 1/20/2009 5:10:24 PM , Rating: 4
Actually, in about 3 months, I will have a law degree. What I stated is completely valid. I based the claims on the assumption that this was a contract for purchase, not merely a contract to the right to purchase, which would be extremely rare.

In a contract, the terms are bargained for and agreed to by both sides, although Tesla will be seen as the party with much greater bargaining power (not good for Tesla in a court). All terms in a contract are negotiable. In a contract for purchase, the price cannot be changed once the contract is entered into by the parties. You cannot contract for a product at one price and then come back later and try to change it, unless it is specifically in the contract that the price can be changed for specific reasons, or you can show that the contract was unfair based on unequal bargaining power. The provisions for a price increase must be specific. They cannot be ambiguous at all. The fact that the contracted price cannot be changed is one of the things that allowed Southwest Airlines to do so well when oil prices skyrocketed last year. Southwest contracted its oil at a certain price (around $80 or so) for a set number of years. When prices went above the contract price, Southwest was considered to have made a good deal (especially when prices hit $140). The company that contracted to supply oil to Southwest could not change the price of the contracted oil just because the price went up. That is not allowed.
The argument that the price was unfair based on bargaining power will not work for Tesla either because it has the greater bargaining power. Since Tesla is likely the party that drafted the contract, all ambiguous terms and clauses will be construed in the light most favorable to the consumer, and they will be read against Tesla. Tesla will have to be very clear in the contract as to reasons for price increases, because a court will look extremely unfavorably on such increases. The court will look unfavorably on any contract clause that provides for price increases as well.

Also, I would like for you to show me a contract that allows for changes in the contract price for any reason at all. Such a provision is not likely to stand in a court of law.


RE: Do I hear...
By Motley on 1/21/2009 4:07:06 PM , Rating: 2
Well to start, look over 90% of the credit card contracts. You are purchasing credit, where the rate of interest you pay changes based on an outside factor. You can also look at ARM mortgages.

As for contracts for changes in the contract price for any reason are usually done as terminate with or without cause clauses. This isn't the exact same thing, but the net effect is exactly the same. The contract is cancelled, you aren't forced to pay the new price (sign new contract), but if you want to continue then you must pay the new price. These clauses are all over the place, quick review:
http://wordpress.com/tos/ - Section 10
http://www.facebook.com/terms.php - Under termination
http://www.verizon.net/policies/vzcom/tos_popup.as... - Section 9.1.3
http://code.google.com/apis/soapsearch/api_terms.h... - Term and Termination

Right to purchase contracts (or clauses) are very common, check your contract if you've ever leased a vehicle. I wouldn't call that "extremely rare".

As for your law degree in the months, I would ask your college for a refund. Obviously they failed.


RE: Do I hear...
By Motley on 1/21/2009 4:13:39 PM , Rating: 2
For the record, here a sample for a current contract for special ordering an automobile from a different vendor:

Terms and Conditions: I understand that a 1,000-dollar refundable deposit is required to secure a position on the order priority list. I understand that when the time to process this order for production is at hand, I, the Intended Registered Owner, will be contacted for the purpose of finalizing the order details and at that time an additional 4,000-dollar will be required for order submission to the factory...

Again, "finalizing the order details" allows for a change in price. The contract is simply to secure a position on the priority list.


RE: Do I hear...
By hcahwk19 on 1/22/2009 7:15:16 PM , Rating: 2
Both of your replies make my point exactly. What you are describing here are contract prices that are set in stone. You agree to pay $1000 up front to hold your spot. Then when it is time to process the final order, you pay an additional $4000 to submit the order for production. At delivery, you will pay the difference between your "deposits" and the final price. The prices noted in this contract CANNOT CHANGE!! The seller cannot come back once you have entered into this contract and tell you that your $1000 deposit is no longer good enough to secure your position on the order list. If they try to raise that deposit price. Since it is refundable, you can back out at any time before the $4000 order submission payment. When it is time to submit the order to the factory, the seller CANNOT tell you to pay more than your additional $4000 order submission payment. You will obviously have to pay the difference between your deposits and the price of the vehicle at delivery. If you don't like it, then you can back out and get your $1000 refundable deposit back. I don't see what you are not understanding here. The prices that are set out in the contract CANNOT be changed once the contract is entered into without opening up liability for damages.

When you lease a car, there is an "option to buy at the end of the lease" clause that allows the lessee to purchase the vehicle at the end of the lease for a specific price. This price is set out in the lease itself and CANNOT CHANGE. If the lease specifies a term of 36 months at $199, with the option to purchase at the end of the lease term for $12,999, that purchase-option price is contractually set. The car company cannot come back at the end of the lease and say that "$12,999 is not good enough anymore, we want $16,000." That is a breach of contract, and the lessee/buyer could sue for damages or specific performance, in which a court would force the car company to adhere to the contract's purchase-option price.

With a cell phone contract, you are locked into a specific price for a specific term. This price cannot change during the term of the contract. At the end of the contract, the company may tell you that prices are going up if you enter into another contract. But since the first contract has ended, you are not under obligation to pay the higher price of the second contract. If you do agree to enter into the next contract at a higher price, that price is set for the entire term of the contract.

With a home mortgage or student loan, you contract with the lender for a specific amount of loan, and, in most cases, plus an amount of usury that will be added to the principle loan amount depending on how long it takes you to repay the principle loan amount. Although the "total" amount that you will repay (principle plus interest) may change, the contracted principle loan amount cannot. Even with an ARM, the principle amount of the loan is fixed and cannot change.

These same examples also hold true for Tesla. Consumers entered into contracts for purchase(or for the "right" to purchase, if that is what you want to call it) and paid deposits (earnest payments) up to $50,000 to guarantee that they would get a new Tesla Roadster. Whatever deposit price they paid was contracted between the consumer and Tesla. If you paid $50,000 to "hold your spot," then Tesla cannot come back, as they are trying to do now, and tell you that your $50,000 deposit is no longer good enough to hold your car. That is a breach of contract. I am sure that the price of the car is not the deposit price, and the contract probably provides for the buyer to pay the difference between the deposit price and the vehicle's final price (which possibly could change, if not specified), which if specified, cannot change. If the contract price is $110,000, with an upfront earnest money deposit of $50,000 to hold the buyer's spot, and the difference to be paid upon delivery of the vehicle, Tesla cannot force the buyer to pay more than $60,000 at delivery of the car. These are contract prices and they cannot change. If the final car price is not specified, the amount of the difference to be paid may change, but it is not set in the contract. But, the $50,000 deposit price cannot be changed, and Tesla cannot come back and say that $50,000 deposit is no longer enough. If Tesla kicks a buyer out of line or terminates the contract for not paying additional deposit money, it is in breach of the contract.


how long...
By Gul Westfale on 1/20/2009 11:49:17 AM , Rating: 2
... before tesla folds?

they get bad reviews (range not being what they advertise), their prices are insanely high, their car is really just an elise with batteries, they had layoffs, now they raise the price.

i think these guys are doing it the right way:
http://www.zeromotorcycles.com/

a british magazine recently reviewed their bike and said it was actually BETTER than a normal bike because of its low weight, and it costs less than $8k.




RE: how long...
By joemoedee on 1/20/2009 12:04:50 PM , Rating: 2
Yes, but there's one big problem...

Motorcycle != Car

The fuel consumption of Motorcycles is pretty low to begin with, so this doesn't offer up much in the lines of improving the whole fuel consumption issue on the whole.


RE: how long...
By Gul Westfale on 1/20/2009 12:54:15 PM , Rating: 3
there are four major differences in the idea/execution though:

1) the bike guys built their machine from scratch so it would be extremely light. their bike weighs only 140 pounds. the tesla people simply stuck batteries into an existing design, resulting in a 3000 pound tow-seater. how efficient is that?

2) the bike guys invented a way of packing the batteries so they don't need to be cooled, whereas tesla use a watercooling system (which is, obviously, also powered by the car and therefore wastes more energy).

3) the bike does what its creators say it does.

4) whereas the tesla is considerably more expensive than a two seat sports car (corvette, boxster), the bike only costs $7450... that is a bit more than a japanese motocrosser but it's not tragic... a street version is coming soon, btw.

here is a review:
http://www.motorcycle.com/manufacturer/2008-zero-x...


RE: how long...
By gstrickler on 1/21/2009 7:08:50 PM , Rating: 2
quote:
the tesla people simply stuck batteries into an existing design,
No, they designed it to be an electric from the start. They did purchase some components from other manufacturers and/or contract out some of the design/manufacture, but it's not an existing design.


RE: how long...
By Gul Westfale on 1/21/2009 10:49:37 PM , Rating: 2
yes it is... it's simply a lotus elise with batteries in it. that is precisely why top gear compared it to an elise and found hat the extra weight is quite bad for the handling.


RE: how long...
By Reclaimer77 on 1/20/2009 2:23:16 PM , Rating: 2
quote:
The fuel consumption of Motorcycles is pretty low to begin with, so this doesn't offer up much in the lines of improving the whole fuel consumption issue on the whole.


And the goal of the $100k + Tesla was less fuel consumption "on the whole" ?


RE: how long...
By BZDTemp on 1/20/2009 2:30:29 PM , Rating: 2
Actually make that a somewhat heavy Elise!


RE: how long...
By Lord 666 on 1/20/2009 8:29:50 PM , Rating: 2
I have a feeling they will become the Rambus of car manufacturers.

By now, Tesla should have a list of patents developed for this car. As more car makers adopt hybrid or plug-in models, chances are Tesla will become sue happy and claim other makers are infringing on their patents to get revenue via license.


RE: how long...
By Oregonian2 on 1/21/2009 1:16:13 AM , Rating: 2
Actually, more like Transmeta I think. Rambus never made cars, so to speak.


Um...
By FITCamaro on 1/20/2009 11:46:27 AM , Rating: 2
Haven't the people who've preordered already signed a contract? One that states what the price of the vehicle will be?




RE: Um...
By MrBlastman on 1/20/2009 12:05:01 PM , Rating: 2
There is probably something in the fine print the buyers did not read. Shame on Tesla - it is a pretty rotten thing to do after taking their money and earning interest off of it for all these months/years...

However, I'm not going to cry that hard - the people that can afford these cars obviously have quite a bit of money to begin with (or spend a lot).


RE: Um...
By Smartless on 1/20/2009 1:25:02 PM , Rating: 2
You know, you'd figure fine print on a start-up company would be stupid in itself. I mean you're trying to build a good reputation right?


RE: Um...
By Moishe on 1/20/2009 4:30:08 PM , Rating: 4
So we're playing the "rich folks won't miss it" game?

Unfair is still unfair regardless of who it is against.

If I was one of those people on the list I'd just shell out the extra cash and tell them to hurry up and deliver my car.


RE: Um...
By strikeback03 on 1/20/2009 3:04:57 PM , Rating: 2
Guess we will find out if some lawsuits hit. Though if the contract does allow the price to change not due to increased costs but just because they want to make more money; then it seems about as useful as a Nick Saban contract.


Why don't the big three...
By bobny1 on 1/21/2009 7:40:06 AM , Rating: 2
put their act together and merge with tesla to mass produce a 4 door family sedan at a reazonable price point. They can easily bring American automobile back to glory.




RE: Why don't the big three...
By bobsmith1492 on 1/21/2009 3:32:40 PM , Rating: 2
Batteries are too expensive to compete with gas vehicles. That's why.


RE: Why don't the big three...
By bobsmith1492 on 1/21/2009 3:33:29 PM , Rating: 2
Oh, and they have limited life spans and issues at low temperatures.


RE: Why don't the big three...
By Spuke on 1/21/2009 4:23:00 PM , Rating: 1
quote:
put their act together and merge with tesla to mass produce a 4 door family sedan at a reazonable price point. They can easily bring American automobile back to glory.
Are you new to the Earth or something? This has been answered, ad nauseam, on DT and countless other blogs and websites. Google that shit.


Idocy
By Runiteshark on 1/20/2009 12:09:48 PM , Rating: 3
Why don't those idiots who reordered ones just get a Lotus Exige?

They'll poop their pants when they feel how that corners, and then poop their pants again when the figure out they can fill it up in about 2 minutes.

I really want a Lotus Exige S240 :(




RE: Idocy
By The0ne on 1/20/2009 6:49:02 PM , Rating: 2
I like them as well and would have considered one but I wanted comfort too. I still like my EVO X as I'm a rally fan, but if I had to reconsider I would opt for something different that handles well and is comfortable. EVO X is cheap with the interiors, except the seat :)


Good
By kontorotsui on 1/20/2009 1:12:54 PM , Rating: 2
quote:
Tesla is reported to claim that the price increases on the options are needed for the company to become profitable faster.


Now THAT will make them much happier to pay up more for the car.




RE: Good
By The0ne on 1/20/2009 6:52:17 PM , Rating: 2
Granted that there's almost no one there at the company except the higher ups. So really when they state "for the company" it really means "for top execs." :)


Depending on the contract language...
By Beenthere on 1/20/2009 2:41:08 PM , Rating: 2
... the $109,000 (reported), price may NOT have been a firm price but an honest estimate price, instead?

I doubt however that anyone who can fork out $110K for a lavish electric sportscar - with limited travel distance, is buying one of these as anything other than an indulgence.




By walk2k on 1/20/2009 4:22:31 PM , Rating: 2
Right, they can cancel their order if they don't like it.
Nobody "needs" a car like this.
They aren't gonna have to start taking the bus...


Tesla Clumsy and Has Questionnable Ethics
By LloydB on 1/20/2009 10:49:22 PM , Rating: 2
My car is being manufactured any day now and I just learned today that I will be expected to pay up. This is an outrage. There is a blog for owners only on the Tesla Motors website. You can't imagine how many customers are pissed off at this. It was the worst PR mistake for Tesla to upset all of its soon to be owners. We could have sold them a lot of cars for free. Now we all have a bad attitude. And this is not a contract issue. The right thing to do would have been or Tesla to honor their deal.




By gstrickler on 1/21/2009 7:18:15 PM , Rating: 2
Good luck. Hope you find a reasonable solution.

While it's a cool car and cool technology, in my book, Tesla failed when they fired the founders and engineers who had the vision and brought in the "suits". Yes, you need business people, managers, salesman, accountants, etc. to be successful, but when in startup/development, you need the engineers and visionaries a whole lot more.


Update: Shens.
By clovell on 1/21/2009 2:03:45 PM , Rating: 4
Oh, come on, Tesla. You guys ought to realize that Investors and Customers are not the same. If they were, you guys would probably be in even more trouble with this.

This is called the cost of doing business. Pre-ordering helps you by giving you more solid manufacturing targets, allowing you to do a better job of understanding where your margins should be set. In return, you let the customer lock in a price and get a reserved spot in line.

You have destroyed the half the reason any customer has to pre-order merchandise through your shenanigans. It is likely assured that your PR-puff-peice-response will do absolutely nothing to remove the tarnish on your image.

I realize these are 'only' options, but I'll bet you that your customers pre-ordered their vehicles with options. In the end, you made your choice, but I think it was a poor decision to choose your investors over your customers. Only time will tell, though.




Update - Ctrl Z doubled?
By Screwballl on 1/22/2009 12:15:14 AM , Rating: 2
Looks like someone accidentally hit Ctrl+Z twice on the update and clicked the post button a bit too fast...




RE: Update - Ctrl Z doubled?
By Visual on 1/22/2009 4:55:39 AM , Rating: 2
Ctrl+V :) Unless you are on some weird OS...


umm
By WileCoyote on 1/20/2009 12:54:42 PM , Rating: 3
How do we know the customers are angry? I don't see any quotes from actual customers. Maybe they agreed to the price increase. Maybe they knew there could be price increases when they singed the contract and are actually relieved that the increase wasn't that much. fud.




Hehe
By morose on 1/20/2009 1:03:48 PM , Rating: 3
The funniest thing about this is that if a significant percentage of people cancel their pre-orders (which simply HAS to be an option if you change the price on something after-the-fact like this) then Tesla's goal of bumping the price to "get profitable faster" will fail. All that pre-order money being returned to buyers? Ouch.




Anyone left?
By IcePickFreak on 1/20/2009 5:34:18 PM , Rating: 3
Who hasn't this company pissed off by now?

People who work for you - Check, fired the majority of them over the weekend via the company blog

People who buy from you - Check, why not jack-up the price of our milestone 2nd car when people already have orders in, that way we only keep the really loyal customers

Anybody else - Check, why not recommend the government tax gas to atleast $5/gal. so as to promote our then suddenly competitively priced alternative. Drivers the worldwide will be knocking down our doors!

While I certainly can appreciate the engineering and technology behind the car, Tesla as a company stinks imo. I'm curious how reliable these things are when they get romped on a lot. With it's limited range it's gonna be like an RC car when you were a kid - run it balls out til the battery is dead, then go play with something else. In this case it's probably a Ferrari/Porsche/etc you can hop in and drive up the coast for the day/weekend.




What did they expect?
By austinag on 1/20/2009 12:27:08 PM , Rating: 2
Brand new company, Brand new car, Brand new tech, and a rapidly changing economy. They're lucky the damn thing is still going to be built at all.
Right now I wouldn't give GE money up front, let alone Tesla motors...




Joke
By rcreyes on 1/20/2009 3:01:08 PM , Rating: 2
Only a big mainstream manufacturer will be able to get these exotics out and make them affordable with decent options. Honda and Toyota, prolly.




I have turned over a new leaf
By on 1/20/2009 3:36:35 PM , Rating: 2
I am better now i have been fixed, sorry everyone!
I love you all




Profitability???
By passingthrough on 1/20/2009 10:55:02 PM , Rating: 2
Why don't they just ask for a financial dip into the TARP bucket? That seems to be a much more expedient business model in today's climate...




Waste of money
By pustulio on 1/21/2009 4:22:50 AM , Rating: 2
Was on Top Gear not to long ago, they had 2 and both only did 50 miles before running out of power, broke or overheated.

In the same show the Honda FCX Clarity was shown as was better in every way to the Tesla.




It Is a Electric Guzzler
By SpaceJumper on 1/21/2009 2:45:04 PM , Rating: 2
People will see it as a electric guzzler. If Tesla motor build a 4 door family EV car with the same electric engine then it will sell.




Don't rub salt in a wound...
By Beenthere on 1/21/2009 3:31:27 PM , Rating: 2
Tesla would be smart to NOT pizz off the (350) people who ordered 2008 cars and haven't receive them yet in 2009... Bragging about selling a few thousand cars a year (or less) is pretty embarrassing when you can't deliver the goods and are cash strpped and looking for money. When you start delivering 100,000+ quality units per year to customers, then you might have something to brag about. Until hten - get to work!




Is it legal AND moral?
By pjs on 1/21/2009 9:17:34 PM , Rating: 2
If the people who made a deposit were told their price was "locked in", then they have legal grounds to not pay the increase. If not, then they are out of luck from a logal point of view. If they did not get to take delivery of the 2008 model because Tesla could not come through (performance failure on Tesla's part), then they should not have to pay the higher price. If anything, they should get a discount because it is now 2009, and 2008 model cars are ... well ... not 2009 model cars.

While I like the concept, looks and performance of the Tesla Roadster, the company itself is becomeing a bad corporate neighbor. My desire to have a Tesla is seriously waning.

They should also do something about their "showroom' in Menlo Park, CA. It looks really depressing. Like some abandoned auto dealership on the outside (that's basicly what it is, though, and looks it) with some spiffy looking sports cars visible inside. A very mixed message.




Wheels
By strikeback03 on 1/22/2009 11:53:04 AM , Rating: 2
So if the previously stock alloys are now a $2300 option, what comes stock? Do you get steelies with your $100,000+ car? Or is this $2300 for an upgrade from some generic alloys to BBS or something?




"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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