Tesla Motors' charismatic frontman, Elon Musk, will be showing up on the Late Show with David Letterman tonight to dazzle America's TV audience with his gorgeous all-electric sedan. Tesla says that when the Model S goes on sale at an undefined point in the future, the cost for the base model will be just under $50,000 – $49,900 to be exact – after a $7,500 government tax break. Business Insider has a word for that: Horsefeathers.
BI teamed up with Mark Boyadjis, an auto analyst at iSuppli, and they did some math based on actual numbers used in the auto industry and a lot of educated guesses. The result? They didn't exactly find a lot of room for profit if the car sells for $57,400. Their math is based on at least one error – they say the replacement battery for the Roadster is $36,000, but that's a carry-over mistake from Edmunds – it's actually $30,000. Still, that's the equivalent to the base price of an entire "near luxury" sedan – one that conventional automakers have trouble making margins on. That big, sexy touchscreen? Estimated to cost $4,000. Add everything from chassis and body panel costs to in distribution, marketing, further engineering, and lest we forget – building a factory, and Musk's price target starts to look more and more implausible.
BI has a good point here – Tesla needs to be careful with their pricing predictions. The ambitious startup made big financial mistakes when pricing the original Roadster – which didn't make everyone happy – and there's not a lot of room left to goof up a second time.