Tesla’s pricing is all a bit like IBM, isn’t it?

Last week Tesla unveiled its electric Semi to great fanfare. The four-motor truck was announced with a 500-mile range and some self-driving capabilities. What Elon Musk failed to provide was a price. Now that’s changed: the regular versions of the 300-mile and the 500-mile trucks will cost $150,000 and $180,000 each.

Bit like moving the belts over from A to B. You pay more for the throughput of the card machine, not the costs of it.

50 comments on “Tesla’s pricing is all a bit like IBM, isn’t it?

  1. The HGV fleet’s certainly a stronger contender for electric than private cars. The usage is much more structured & predictable. 500 miles would well cover a single driver’s permitted hours. The vehicles have to be parked up & truck stops are ideal for recharging facilities. And, in comparison, the fleet’s energy usage should be within the existing infrastructure capability to supply.

  2. “The HGV fleet’s certainly a stronger contender for electric than private cars.”
    hmm tesla cars sales are to the premium market. People are paying far more upfront than the fuel savings justify pretty much for the cachet. But that’s the car market isn’t HGV rudely just about cost. And if it costs more it costs more and you are not going to be able to charge more for electrically hauled goods and you don’t have a business.

  3. @Hallowed Be

    Tesla isn’t the only lot to think the HGV fleet will be almost completely electrified before the car fleet is even a half-decent fraction of the way there … I believe the logic is that electricity will work out cheaper in the long run, partly because of the costs of servicing, and since the HGV business is very cost-conscious it will make the transition quickly once the infrastructure and products are in place. I have crunched no numbers on this myself, don’t have the technical expertise to judge how right it is, but a lot of people are betting on this and it isn’t just Tesla.

  4. I’d go and ask Waitrose / John Lewis about this – as they’re the pre-eminent outfit for eco-haulage in the UK and their route structure is nothing if not predictable with guaranteed plug-in at every destination….

  5. There was one IBM machine (can’t remember what) where the speed upgrade consisted of snipping a jumper wire on the control board.

  6. And, in comparison, the fleet’s energy usage should be within the existing infrastructure capability to supply.

    For electricity, yes. But what about the internet connection for all the porn surfing?

  7. Rhoda Klapp

    the difference between several versions of Mercedes van is as I understand it – down to firmware and stick on badges

  8. @Rhoda Klapp: Common practice. I once upgraded the model and performance of a Tektronix graphics terminal by pulling a jumper on the main circuit board. I had to follow instructions over the phone because the engineer couldn’t make it from the Netherlands to Switzerland to make the $5k upgrade.

  9. Tesla already do this with their cars: the bigger battery ships with the vehicle, and you can just call them to enable the upgrade (for a hefty fee).

    They enabled the upgrade temporarily for all owners during the last round of hurricanes.

  10. Tesla already do this with their cars: the bigger battery ships with the vehicle, and you can just call them to enable the upgrade (for a hefty fee).

    Are you sure about that, Andrew? Batteries constitute a significant fraction of the cost of an EV. Shipping every S75 with an unused 25 kWh of battery seems unlikely (though when the S70D came out there was a 5 kWh ‘software upgrade’ available).

    Similarly, for the ‘Semi’, Tesla quote “under 2 kWh/mile” so a 300 mile range will need 500 kWh and 500 miles 1,000 kWh. Battery costs are around $190 per kWh, so we can see there’s not much margin on these prices :).

  11. As it stands now Telsa will be out of cash by next summer, and there is no indication that Musk has curbed his own hubris enough to allow for established manufacturing practices to enter into the “ramping up” of production of the Model 3. That truck will never hit production. Period.

    That truck represents what Musk is good at… Promoting impractical prototypes.

    I’ve said it before and I’ll say it again: Elon Musk is technology’s Baron Munchausen for the 21st century.

  12. “There was one IBM machine (can’t remember what) where the speed upgrade consisted of snipping a jumper wire on the control board.”

    Nowadays it would be done via a remote software switch. That’s certainly the way microwave links work.

  13. MyBurningEars – well i thought i was missing something so yeah lower fuel and servicing costs might swing it. Ok, but once self driving comes along won’t range and recharging time be an even bigger factor against battery powered evs.?like you, have done no numbers but unless the plan is to get legislation to make it happen then still a bit doubtful about betting that it will happen organically.

  14. @ChrisMiller: I can’t be bothered to Google, but at the time if the recent hurricanes in the US there was some discussion on this blog of the way Tesla increased the range of vehicles in the affected areas with an OTA software change.

  15. @TomJ As I said in my post, there were some (entry-level, in so far as a Tesla S can be considered ‘entry-level’) models where a small upgrade was possible. But I don’t believe this is true across the board (i.e. the 75D does not carry 100 kWh of battery with artificial software restrictions so that only 75 kWh can be used).

  16. Difference in price for the increased range will be down to the size of the battery pack. Tesla have, in the past, sold a software limited battery pack (a 75kw battery limited to 60kw); this was originally done to try and get the price of car under the German cap for EV incentives – sell the car at a lower price, the buyer gets the incentive, then uses it to upgrade to full battery pack.
    This ended up being quite popular so they continued it when battery costs came down enough that it was cheaper to close the 60kw battery line and to just put a 75kw battery in the car (which meant that they were able to temporarily upgrade people fleeing hurricanes in Florida). Since the Model 3 was announced they have stopped doing this though in order to differentiate the premium line from the cheaper Model 3.

  17. IBM will now ship you servers (mahoosive ones) with all of the slots filled but only what you pay for enabled. The hardware costs are essentially trivial for them compared to the software licensing revenue (and not having to send engineers round.)

  18. ‘What Elon Musk failed to provide was a price.’

    Thuy Ong is a sucker. What Musk has failed to provide is a truck.

    ‘The first Tesla Semis are expected to reach production in 2019.’

    Pricing is Kabuki Theater.

  19. @bloke in spain, November 24, 2017 at 12:16 pm

    The vehicles have to be parked up & truck stops are ideal for recharging facilities. And, in comparison, the fleet’s energy usage should be within the existing infrastructure capability to supply.

    Nope. Recharging is the problem. An in-home car fast-charger is ~12Kw, a car Tesla fast charger is more than twice this. For a Tesla Semi recharge it’s iirc around 1 Mwhr.

    Hence Semi driver recharge at home would take ~80 Hours.

  20. @Chris Miller, November 24, 2017 at 3:48 pm

    Similarly, for the ‘Semi’, Tesla quote “under 2 kWh/mile” so a 300 mile range will need 500 kWh and 500 miles 1,000 kWh

    The “under 2 kWh/mile” claim is dubious, it’s lower than most electric cars.

  21. @HallowedBe

    “Ok, but once self driving comes along won’t range and recharging time be an even bigger factor against battery powered evs.?”

    That sounds logical. By that point you could have the truck running 24/7 pretty much if it weren’t for the charging (since charging presumably takes longer than loading and unloading).

    Are swappable batteries the solution to the charging issue, once the trick of using driver rest periods to do the charging becomes obsolete?

  22. (Obvs exchanging batteries for a truck would be an industrial-scale enterprise, but there would presumably be industrial facilities available for it …)

  23. Just a thought, a logistics company with known routes and times could be doing a battery swap whilst their vehicles are unloading and then loading. It would mean have multiple batter packs but would certainly extend the rand and working time of vehicles.

  24. The “under 2 kWh/mile” claim is dubious, it’s lower than most electric cars.

    No, Tesla have been (intentionally?) confusing. Consumption is normally quoted as miles/kWh – a large car, like a Tesla S does ~3 miles/kWh. They’re saying the Semi will do ~0.5 miles/kWh, but have chosen to quote the inverse figure (2 kWh/mile). The actual value – 6x greater electricity consumption than a car – sounds not unreasonable, an internal combustion articulated lorry gets 7-8 mpg.

  25. In the days of mainframes (which IBM and Unisys still make, quite profitably, BTW) it was common practice for a model to operate at 4 different speeds which could be changed by internal switch settings. You might well pay twice as much (and twice as much in annual maintenance) for the top speed version.

    It actually made good economic sense – the manufacturer had a single model to produce and on-site upgrades were quick and easy! True story: back in the late 70s we ran a Honeywell (RIP) mainframe. Every week an engineer would come in and run a series of diagnostic test programs. In order to get home early, he would switch the machine to its highest speed and then put it back when the testing had finished. Our operators kept an eye on what he was doing, and then, when they had a long weekend run to babysit, they would turn up the speed and get it done in time to go down the pub. Happy days!

  26. @Diogenes: Sure, show me the title deeds and the audited toll receipts and I’ll take a look at your bridge.

    I’m not saying Tesla shares are a buy, but it is too early to tell whether it is a dog. In the last few years it has been borrowing like crazy and spending that on fixed plant and inventories. If the bankers get scared and pull the rug then the shares will tank, but if Tesla makes sales and the bankers roll over their loans then it might do OK. Market Cap is abut $52 billion, book value is $5 billion, so I think I’ll pass at the moment.

  27. In 1996 I worked for a large US company in the UK division. The sales mainframe computer needed to be up graded to cope with the additional number of transactions that were coming in. An ICL technician came in for a hour or so, got some large ring binder files out of his case and set too, changing the dip switches in a couple of the cabinets. £50K later he was off having given us an additional 25% transaction capacity. I think all of the mainframe companies used to work like this.

  28. Daedalus

    Yep, I used to work for a large mainframe manufacturer in the 90s and that is exactly how we operated.

  29. While we’re doing Four Yorkshiremen: IT Edition, IBM invented the floppy disk for exactly this purpose. An upgrade was a new floppy and no chance of the user “Tamperin’ wiv it.” We had floating point added to our 370/125 in exactly this way.

  30. It’s of some interest that rabidly pro EV pundits have paid attention to the arithmetic governing Tesla’s semi claims and found it wanting…

  31. Still works on HPE NonStop. We’ve just paid to enable the other half of our quad core processors. Just a new license file, very convenient and stress free.

  32. Shop: “Buy one, get one free!”

    Customer: “Really? In that case can I just have the free one?”

    Shop: “Sale! 50% off!”

    Customer: “So, exactly the same product, but two totally different prices? Which is the ‘real’ price? Are you taking a 100% mark-up and massive profits all the rest of the time, or are you losing masses of money during every sale?”

    Shop: “Neither. But most people aren’t interested in hearing about the complexities of retail accountancy.”

  33. MBE- swapping battery packs yes… i guess it could work, some concerns about swapping your new one for a dud and it not being accepted at the next stop… but people used to change horses after all.

  34. I can see companies wanting to virtue preen hiring Tesla trucks. The pic shows a blank side on the trailer. I see a blank billboard, waiting for company branding. A few hundred thousand is easily within the affordable range for some companies for advertising.

  35. @HallowedBe

    Indeed. Maybe works easier on a route where both ends are controlled by the firm (eg from a supermarket’s logistic depot to one of their stores) but I’m sure some kind of validation scheme is possible to deal with battery swaps with third parties.

  36. A 1,000 kWh battery pack (as needed for the 500 mile range option) would weigh ~4 tons. Swapping it ain’t going to be the work of a moment.

  37. Except that IBM was never presumably a massive front for shovelling huge amounts of new money into the markets to maintain the false impression of an economic recovery?

    Whereas Tesla and the rest of the retarded unicorns are precisely that and not much else.

    They’ll let it all crash now they have a clueless orange patsy to blame it on.

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