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by abduhl 1049 days ago
>> They could do that but would have to raise the base price.

Why? The component is already in every vehicle. This is not like binning for chips: every vehicle must (and does) have the capability because it’s unknown whether a consumer will pay for the upgrade. If anything, the price should go down because software costs have decreased by removing the software locks.
2 comments
caf 1049 days ago
You're assuming that the cost of the component is being recovered through the base price of every vehicle, but that's not likely because the base price has to compete on price against other vehicles without the feature.

Instead if, for example, the component adds $30 to the BOM and they know from market research that 10% of buyers will pay $500 for the software unlock within 3 months of purchase, they don't have to include the cost in the base price and still make very good margin on it.

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alistairSH 1049 days ago
The value of the option could be enough to allow below-cost pricing on the base model. Completely made up napkin math…

Base price: $10,000. Cost to produce (including profit): $11,000. Cost of option: $2000. 51% of buyers opt for the option at purchase. Some % of resales result in additional sales of the option.

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