Marianne Simmons, a self-professed “Tesla fan girl,” bought her second electric vehicle from the company in September: a white, high-performance Model Y costing more than $77,000. Then the company slashed prices on Thursday and she realized she could have bought the same car today for $13,000 less.
That’s the reality facing owners of Tesla vehicles after the company cut the price of its cars as much as 20%, part of a push from Chief Executive Elon Musk to increase sales volume in the face of weakening demand. For existing customers, the resale value of the cars they own will take a hit along with the drop in prices of new models.
Throughout coronapanic and Bidenflation, I’ve been wondering why car makers didn’t just auction every car as it came off the line (to dealers, not to consumers, except for Tesla). Why bother having a list price at all? Maybe the reaction to the Tesla price cut is part of the reason. Let’s move our minds back to the pre-Biden era. When sales slow down and car companies offer massive incentives to clear inventory, consumers don’t get upset. The list price of a car stays the same, but the price would come down from MSRP to dealer invoice to dealer invoice minus $2,000 “cash back” (back when $2,000 was real money!). Somehow people were okay with this variation. But a variation in the official list price cannot be tolerated!
I’m in Cambridge, Maskachusetts this week and the residents deal with this upsetting issue by continuing to operate their beloved Saabs:
(I didn’t see it when I lived here, but looking at these 140-year-old wooden houses brings to mind my Houston friend’s comment that the entire Northeast is “dilapidated”. He won’t go anywhere north of Washington, D.C. without a compelling reason.)
Happy First Day of Kwanzaa everyone. Let’s look at a popular product from an African-American automobile company…
During a trip to Houston, on my way back from trying to meet up with Hunter Biden in Pahrump, Nevada, I rented a Tesla 3 from Hertz. The rental of a BMW 5-series sedan from Sixt in Vegas ($430/week) had taken about 2 minutes: sit down, adjust seat/mirrors, add phone via Bluetooth, find Apple CarPlay on the screen. It took 45 minutes, two Tesla 3s, and three Hertz employees to get out of the Hertz lot. The first Tesla would not connect to my phone. On the second one, I couldn’t figure out how to bring up the navigation screen, which is not on the “all apps” list but is instead available only via a swipe down gesture.
Range anxiety began before departing Hertz. The company commits to charging cars only to 80 percent and the second car tried was at 86 percent. You’re supposed to return it at least 70 percent charged or pay $35 for the right to return it at least 10 percent charged. I chose the latter option and thus paid about 35 cents per mile for fuel (gasoline is $2.50/gallon north of Houston so it would have been about 8 cents/mile in a Toyota Camry). I’m not sure where the Tesla range numbers are coming from because the car was down to about 30 percent charge by the time I returned it 103 flat miles later, implying a total range of about 200 miles.
Presumably an owner who saves the planet 24/7 has his/her/zir/their car paired with his/her/zir/their phone. Hertzians, on the other hand, are given a keycard that has to be held up to the door frame to lock or unlock the car and must be placed in a specific center console position to start the car. The Hertz employees said that no customer had ever figured this out himself/herself/zirself/theirself. For the entire two-day rental, I was pulling the card in and out of my pocket. By contrast, the BMW fob stayed in my pocket for a week. The car would unlock as I approached, power up when I wanted to drive, and lock itself as I walked away.
The Tesla harasses you with beeps from the moment you sit down in the car. It’s alive and sees that you’re sitting, but complains that you’re not wearing a seat belt. Every time you return to the car. Tesla has thrown out the industry convention that the car won’t complain about failure to wear a seat belt until the car is moving or at least started.
The next immediate challenge is navigation. If you previously researched a restaurant or attraction in Google Maps then… you’ll get to rekey the name of the place into Tesla’s own navigation software. The car does not supply Apple CarPlay and therefore is not synced with your Google Maps history. The Tesla navigation software does not show the traffic lights and stop signs that show up as valuable clues in Google Maps via CarPlay. The lack of CarPlay was also painful as I tried to listen to an Audible book. One good piece of learning from the rental: never buy a car that doesn’t have Android Auto and Apple CarPlay.
Once on the highway, the interior is extremely loud compared to a Toyota Camry or Honda Accord. Wind and tire noise make it difficult to hear an audiobook and, unlike most other cars, the Tesla does not automatically adjust volume.
Maybe the noise is the price you pay for awesome sports car performance? The Tesla has some good numbers for racing rednecks in pickups away from traffic lights. Suppose that there are corners? Car and Driver found that the lap time for a Tesla S on their standard track was about the same as a Honda Accord’s (3 minutes, 17 seconds). For comparison, a C8 Corvette makes the trip around in 2 minutes, 49 seconds (the new Z06 C8 Corvette will likely be much faster; a 2019 high-power Corvette did the circuit in 2 minutes, 39 seconds).
I summarized the below photo on Facebook with “One of these machines requires hours of reading, intensive Web searches, YouTube video tutorial review, phone calls to experts, and in-person dual instruction to operate.” Why the complexity? Tesla has tossed out decades of user interface conventions developed by Ford, GM, Toyota, Honda, Mercedes, and BMW. Instead of a four-position switch for wipers, the driver is supposed to press a button on the left stalk and then turn his/her/zir/their attention to the central touch screen where different wiper speeds, including a not-very-smart “Auto” mode, can be selected. Instead of dedicated buttons to answer the phone, hang up, or invoke Siri, some combination of the multi-function wheels on the steering wheel will accomplish these tasks. Instead of dedicated buttons to turn on and adjust cruise control, one engages it with overloaded gestures on the shift lever.
I never had a convenient opportunity to charge the machine. I stayed at a Home2 Suites in The Woodlands on the first night and there were no chargers in the parking lot. I valet-parked at a downtown hotel on the second night and the valet said that he thought there were chargers in the lot and would try to plug it in, but that didn’t happen. (Contrast to Death Valley National Park where laptop class members can charge their working class-subsidized EVs with “free” (working-class-paid-for) electricity in the hotel parking lots.)
The price for two days of confusion and anxiety? $400 or just slightly less than what Sixt charged for a week of BMW 5-series plus the cost of gasoline to/from Death Valley National Park and around Pahrump.
This is a report of a minivan driver’s experience at the Ron Fellows Performance Driving School in Pahrump, Nevada. A friend and I took the two-day intro class for complete novices. The school operates a fleet of nearly 200 C8 Corvettes, a fleet of 670 hp Cadillac Blackwing sedans, and a fleet of open-cockpit Radical pure race cars. We were in the Corvette.
Everyone asks “Was it fun?” The answer is that it is like flight training. You’re learning a lot and it is interesting, but you’re always frustrated because you aren’t doing as well as you want to.
The location is the nation’s most extensive race track, Spring Mountain Motor Resort and Country Club in Pahrump, Nevada, about one hour from Las Vegas. There are currently 360 members who bought in at prices ranging from $4,000 (originally) to $75,000 (today) and then pay $7,500 per year for the right to use the track for up to 16 days per month. The members will typically rent some garage space at the track or build a house somewhere on the 1,000 acres. Plans are in the works for a 7,000′ straight section of track on which a jet can be landed, which will be helpful because most of the members are coming from other parts of the U.S., e.g., Florida(!).
The structure of the school was to alternate between 30-60 minutes of classroom and 30 minutes in the car. The in-car session might be on the track, skidpad, dragstrip, or autocross course. Each day starts promptly at 8 am and concludes at 4 pm with a one-hour lunch break. We were exhausted at the end of each day from the mental and, to some extent, the physical effort. Here’s your fearful author in the morning intro (no helmet) and the afternoon track session (helmet):
The instructors, all of whom are former and/or current racers, are usually in front of you in their own car or somewhere on the sidelines. Either way, they’re communicating with you via CB radio that has been piped into the car’s AUX input.
Who takes this class? Primarily new owners of the C8 Corvette because Chevrolet pays for most of the class, resulting in a price of just over $1,000, which includes a night of lodging at the track. A Ferrari-owning friend was recently invited to a similar class in the Ferrari 296… for $18,000.
What did we learn that can be translated to street driving? First, that the C8 Corvette does not have a tendency to oversteer and, therefore, if you’re in a corner that feels too tight it never helps to add power. You’re always better off braking lightly, which will transfer weight onto the front wheels and help them steer. Also, with the stability control computers and anti-lock brakes, it is nearly always better to slow down with brakes before departing the paved surface. Accelerating transfers weight to the rear tires and makes the car understeer (move out toward the outside of the turn).
After spinning out on the skidpad a bunch of times, with the fancy computer systems disabled (press and hold the stability control switch for about 8 seconds), we learned about the magic of the Weather mode, in which the computer systems become hyper-vigilant. “It doesn’t limit the car as much as teen driver mode,” an instructor explained, “but it can be very useless even on dry pavement for novice drivers.” See the follow video starting at 5:00.
The class may not be for those who think that Twitter is now unsafe. During the explanation of the glow-in-the-dark emergency release lever inside the frunk, it was pointed out that “You can’t kidnap hookers anymore.” For everyone else, the instructors point out that this is the safest driving any of us will ever do. “There are no other cars nearby, no pedestrians, and no concrete walls near the road.” The realistic hazard is motion sickness, which snares several students in every class. Even a pilot with aerobatic experience in our class reported feeling “dizzy”. The school keeps a package of Dramamine up front. If you thought that you couldn’t make yourself sick when at the wheel of a car, you haven’t subjected yourself to constant 0.5-1g corners and speed changes.
The organization, pace, and instructor enthusiasm and skill was superior to the $50,000+ jet type rating classes offered at Flight Safety.
Speaking of aviation, you couldn’t spit in this class without hitting a fellow pilot. A handful of the attendees were airline pilots and one was an airline-track hours-building pilot. about half of the rest of the folks seemed to have at least a Private certificate and current airplane ownership was common. Here’s our merry and diverse band of brothers, sisters, and binary-resisters in Corvette appreciation:
Breakfast and lunch are included both days and there is a social evening after the first day. The clubhouse includes a Connelly pool table!
The night before class we dined at Symphony’s, a restaurant run by a local winery. They had a literal white privilege license:
If you want to meet up with Hunter Biden, note that Pahrump is the first county over from Las Vegas in which prostitution is legal. Sheri’s Ranch has its own restaurant and the $14 cheesesteak was excellent (plainly freshly grilled from sliced-up steak):
Does this mean Pahrump is not a family-friendly town? By no means, according to a bumper sticker parked in the local gourmet supermarket (Walmart) where we stopped for 70 cent/lb. bananas (I noted that these used to be 30 cents/lb. and an older lady mournfully agreed with me):
Speaking of family, quite a few students brought wives along and they seemed to have a good time in the lounge outside the classroom, in an observation tower 4 stories above the track, and at meals.
Aside from the regular street cars, the track is home to a Radical race car showroom and we also saw some fun ATVs:
Once you’re in Pahrump, Death Valley is only one more hour away. So it makes sense to combine the class with hiking in Death Valley (and/or family members can explore Death Valley National Park while a car nut is at the school).
Here’s a new car being sold for $90,000 over sticker. In other words, the dealer gets $100,000 in profit while General Motors accepts perhaps $15,000 in profit.
At least the above consumer who signed the deal accepted that vehicle prices are dynamic. Why keep pretending that they’re not?
Separately, who else would love to have a Z06 for trips to Publix?
Related:
“2023 Chevy Corvette Z06 Starts at $106,395” (Car and Driver). This sounds like a lot of money, but there is a 4-year waiting list to buy at MSRP and at that point $106,395 could be the price of a Diet Coke (sadly, there is no way to lock in this price when entering the queue at the dealers who sell at list price)
Rivian has addressed this by creating a pet comfort mode that will maintain a temperature between 68 and 74 degrees Fahrenheit in the car while you are away. All you need to do to turn it on is hit the paw icon in the upper right corner of the climate control screen. This will stay on while you’re taking care of business away from the vehicle. If you don’t set a specific temperature, it will automatically set to 72 degrees Fahrenheit.
The Rivian addresses this by alerting anyone who passes by that the pet comfort mode is on and your dog is OK.
The companies that could easily do this with a bit of programming, e.g., Ford, GM, Toyota, Hyundai/Kia, Mercedes, BMW et al., apparently can’t be bothered. Only the startups (Tesla, Rivian, and maybe Lucid (according to a salesperson I talked to in a San Diego mall in June 2022)) provide this.
In other car news, a dealer here in South Florida had a new C8 Corvette in stock(!). With the Z51 (but not Z06!) performance package, convertible body, 3LT trim, and 75th anniversary color scheme, the machine carries an MSRP of $108,000. They expressed a willingness to sell it for $138,000, which includes a $30,000 “market value adjustment.” The high-end used car lot at the northeast end of Jupiter says that C8 Corvettes in yellow are the easiest to sell and that, within a day or two of being parked within sight of the road, are gone.
Related:
“Buying a new car in the U.S. has never been more expensive” (CBS, August 11, 2022): “The average price Americans paid for a new vehicle in July hit a record high of $48,182 … And prices are likely to continue rising because demand for new vehicles is unusually high while inventories are low compared to previous years, experts told CBS MoneyWatch. … Prepare to pay through the nose“
March 2020… Why do we care about COVID-19 deaths more than driving-related deaths?: I point out that we aren’t doing anything about motor vehicle fatalities that are comparable in scale to the feared-at-the-time COVID deaths. I failed to adjust for life-years in this piece, so didn’t capture that fact that motor vehicle accidents have a far higher cost than the COVID-19 epidemic that led us to shut down schools, lock down businesses (except for “essential” marijuana in California and Massachusetts), etc. “We’re willing to invest $trillions to reduce the death toll from coronaplague, but hardly a dime to build centerline dividers on more of our two-lane roads so as to eliminate head-on collisions.”
February 2021… Save lives by limiting cars to 35 mph?: … by shutting down for a year we’ve spent way more per life-year in our attempt to reduce coronaplague deaths than I ever could have imagined. If we infer from this how much saving a life-year is worth to us, it would be rational to limit cars and tracks, nearly all of which are electronically controlled, to 35 mph. Consider that most people who die in car accidents had many decades of life expectancy in front of them, unlike the typical 82-year-old victim of COVID-19. … How about insisting that engine control software be updated in order to get an inspection sticker? The update will prevent the car from exceeding 35 mph. New cars, obviously, can be limited via regulation.
It looks as though the lockdown-loving Europeans agree with me, at least to some extent. They’re not willing to put anywhere near as high a price on a life-year lost due to a car accident compared to a life-year lost to COVID-19, but they are going to at least take the basic steps.
Mandatory on all new cars sold by 2024, the switchable ISA technology is expected to reduce speeding by 30% and traffic deaths by 20%.
Haptic feedback requires the car to recognize speed signs and, if the driver is in fact speeding, automatically push back against the driver’s accelerator pedal pressure. The speed control function goes one step further by cutting power input from the pedal once the speed limit is reached.
At least in the early years of these systems going in, the driver will have the ability to override the electronically enforced speed limit. Should we take bets on how soon before a public health emergency is declared and the electronic limit because a hard limit?
Here’s a great place for a computer-enforced speed limit, Lion Country Safari:
Speed limit 5 mph and the kids in the back would scream “speeder, speeder!” if the Honda Odyssey’s instruments indicated 6 mph or faster.
A daily-driver Ferrari at the local office park:
You can’t spit in a strip mall parking lot in South Florida without hitting a car that would end up with 400 excess horsepower in the event that this kind of regulation is adopted in the U.S.
I was in an Uber the other day here in Palm Beach County. It was a Kia Sorento, a small SUV that supposedly costs $30,885 new. The driver had recently purchased it, a 2019 model, for $28,000. It had 125,000 on the odometer when he agreed to pay $28,000.
Plainly a new Sorento, uninspiring as it seemed to me, is worth a lot more than $30,885 retail. Thus, it amazes me that Kia will keep selling these to dealers for the invoice price. Why not auction each vehicle as it is about to go into production (for buyers who want to choose colors and options) or as it comes out of the factory? That would enable the manufacturer to capture most of the profits that dealers are currently getting and it would even work better in a downturn. Instead of having to work overtime with incentive programs and rebates, the manufacturers would just naturally get less for each car in a recession.
A friend found a Toyota dealer agreement on sec.gov. It says “To buy and resell the Toyota Products identified in the Toyota Product Addendum hereto which may be periodically revised by IMPORTER” is a right granted to the dealer, but nothing about whether every 2022 Camry must be sold at the same price.
When information was being distributed on paper and auctions could be conducted only in person, maybe the fixed invoice/retail pricing system made sense. But why does it make sense now given that the cost of running an auction is a few dollars per item at most?
Nearly every house that is sold is subject to an auction, effectively, right? If it makes sense for houses, why not for cars? Art and decorative objects are auctioned by Sotheby’s. If it makes sense for a Barye at $1,260, why not for a car at $20,000+?
The same logic can be applied to almost anything that costs more than $100. The limited edition version of the Godzilla pinball machine was instantly sold out at $10,500. Stern left a huge amount of profit on the table (some people turned around and re-sold their machines for $15,000 or more) and plenty of potential buyers who would have been happy to pay more were disappointed. Why did it ever make sense to have a list price for this item? Same question for the $9,000 “premium” version of the game, which has a multi-month waiting list.
Let’s look at watches. A used in-production Rolex is worth $44,500, but Rolex sells it to dealers for the retail price of $12,400 minus the wholesale-retail discount. If we assume that a new Rolex Daytona is worth at least as much as a used Rolex Daytona, Rolex is giving up roughly $30,000 of profit on every sale. From Bloomberg, the jewelry store that PPP built:
If the answer is “consumers expect fixed prices and to consider a purchase for a few months before making a final decision,” coronapanic can be the excuse for a switch to an economically rational system in which everything reasonably valuable is auctioned, if not to the final consumer then at least to the retailer (who can adjust his/her/zir/their price accordingly).
Given our battery range of up to 310 miles, I plotted a meticulous route, splitting our days into four chunks of roughly 7½-hours each. We’d need to charge once or twice each day and plug in near our hotel overnight.
Over four days, we spent $175 on charging. We estimated the equivalent cost for gas in a Kia Forte would have been $275, based on the AAA average national gas price for May 19. That $100 savings cost us many hours in waiting time.
The car lost range faster than planned and charged slower than advertised:
But when we tick down 15% over 35 miles? Disconcerting. And the estimated charging time after plugging in? Even more so. This “quick charge” should take 5 minutes, based on our calculations. So why does the dashboard tell us it will take an hour?
They encounter a charger that is supposed to deliver 350 kW and instead it delivers 20, but occasionally one does work.
In the parking lot of a Clarksville, Ind., Walmart, we barely have time for lunch, as the Electrify America charging station fills up our battery in about 25 minutes, as advertised.
The woman charging next to us describes a harrowing recent trip in her Volkswagen ID.4. Deborah Carrico, 65, had to be towed twice while driving between her Louisville, Ky., apartment and Boulder, Colo., where her daughter was getting married.
Load up that Kindle if you’re going to travel with an electric car:
As intense wind and rain whip around us, the car cautions, “Conditions have not been met” for its cruise-control system. Soon the battery starts bleeding life. What began as a 100-mile cushion between Chicago and our planned first stop in Effingham, Ill., has fallen to 30.
“If it gets down to 10, we’re stopping at a Level 2,” Mack says as she frantically searches PlugShare.
We feel defeated pulling into a Nissan Mazda dealership in Mattoon, Ill. “How long could it possibly take to charge the 30 miles we need to make it to the next fast station?” I wonder.
Three hours. It takes 3 hours.
Here’s a map of where they charged:
As part of my plan to be wrong about everything, I would have expected electric cars to become cheaper and more practical than gasoline-powered cars (so many moving parts!) within 10 years of the first practical car (let’s call that the Tesla S, introduced in 2012). Right now, however, they’re both more expensive and less practical (as you can infer from the fact that you almost never encounter an electric-powered Uber).
The biggest benefit of tesla isn’t even how it’s made, the price etc. It’s the supercharger network. Without anything resembling it (and there’s nothing else really) other manufacturers don’t make cars, they make toys.
The market cap today is $18 billion, an 85 percent loss for those who bought the stock at the time of my November post (or a massive profit for those who went short!).
Though this truck has many parlor tricks—a big frunk that can swallow 400 pounds, an optional tongue-weight scale, and BlueCruise hands-free driving—none are as impressive as how quick it builds speed from a standstill, thanks to 775 pound-feet of instant torque. Mat the accelerator and the front tires spin. Actually, the fronts will spin if you floor the accelerator at any speed below 50 mph or so. The effect is amplified as you load the truck closer to its 2235-pound max payload capacity.
It even drives and feels a lot like an F-150. A 50/50 weight balance contributes to very good road manners. … A low center of gravity keeps the truck relatively flat through corners, too.
The base vinyl-lined Pro model starts at $41,769 and comes with the 98.0-kWh battery that’s good for an EPA range of 230 miles, while the upgraded extended-range battery brings 131.0 kilowatts-hours of storage and 320 miles of range. … On the not-so-good front, the Lightning can tow up to 10,000 pounds when spec’d with the Max Trailer Tow package, but it can’t do so for very long between charges. We pulled an 8300-pound boat and trailer at about 65 mph, and the on-board trip computer indicated we were getting less than one mile per kilowatt-hour. This puts the highway range with a trailer of decent size and mass somewhere around 100 miles.
[A friend has a reservation for the F-150 Lightning and they won’t let him order the base model, so the $41.7k price is maybe just a theoretical one. The real price is at least $60k.]
So the Ford product is at least pretty good, is backed by a company from which people have been buying trucks for more than 100 years, and is much cheaper than what Rivian charges for a similar capability.
Ford even shows a great place to run out of battery power:
If this vehicle had dog mode, it would certainly be a better value than anything from Tesla!
Circling back to Rivian… after they run out of Silicon Valley enthusiasts, who is going to pay $100,000 for a non-Ford, non-GM, non-Toyota pickup truck? And what is the stock/company worth?
Rivian stock versus the S&P 500 starting on the date of my first post:
