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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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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.


"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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