
Tesla’s Betting You’ll Pay $9,000 for a Software Upgrade - tcwc
http://www.bloomberg.com/graphics/2016-tesla-model-s/
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DanielStraight
Maybe this is just pointless pedantry but...

This isn't a software upgrade. It's an on/off switch.

There's a difference. A software upgrade implies some new code which cost real
money to develop is being made available. That's not the case here.

As others mentioned, manufacturers do this already for cost reasons (reducing
variation) on other software, but in that case it's legitimately a software
upgrade because the new software being turned on cost actual money to develop
which they recoup by putting it behind a paywall.

In this case, it probably actually cost Tesla money to implement the software
to cap the battery.

What we have here is software being used to implement a paywall on hardware to
recoup hardware development costs (presumably developing the 75 battery cost
more than developing a 60 would have). _It 's a software-controlled hardware
upgrade_ which happens to not actually be implemented as an upgrade because of
cost control reasons.

I don't know that there is precedent for this precise business model.

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tcoppi
Sure there is, nVidia and ATI/AMD have done pretty much exactly this sort of
segmentation of many consumer->pro video cards in drivers practically forever.

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mamon
I think that with graphic cards it is a little different: the manufacturing
process is simply not perfect, so attempt to produce card with 56 Streaming
Processors (Pascal) can result in 40 SP units working fine and 16 being
broken. So you disable broken units and sell the piece as lower end card
instead.

~~~
tcoppi
They also do it on cards that pass the higher-end binning process fine and
sell them downmarket anyway when there is more demand there.

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ucha
So we're going to have jailbroken Teslas that have the full range but can't
update their software OTA...

Current cost of Li-ion battery is $145/kWh. It surprises me that they'd chose
to give away $2250 worth of battery simply because it costs more to develop a
new one. I understand the batteries they use are pretty modular - the cost of
adjusting down capacity should be minimal. I'm speculating that they expect a
large portion of buyers of the 60 model to upgrade to the more expensive
version to recoup the costs. They could make the price of the upgrade a
decreasing function of the age of the vehicle because no one would want to
update an old car.

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mikeash
If the cost is $2,250 and they charge $9,000 for the post-purchase upgrade,
then they only need 25% of buyers to upgrade the battery later for it to break
even, and that's ignoring any cost savings in the manufacturing process.

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wibr
Soon Tesla will send you a text message as soon as your battery is low, trying
to sell you a temporary boost so that you can get to the next charger safely.
At least my mobile provider does that as soon as my data volume is almost used
up.

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Artemis2
I'm curious of the implications of intentionally crippling a critical product
with software. For instance, if your life depended on your Tesla having enough
battery to drive to the next charger, would Tesla be responsible for your
death? After all, they could have saved you at virtually no cost; they
intentionally forbade you to fully use a product you fully purchased,
resulting in your death. Maybe someone else can articulate this in a better
way or knows more about the ethics.

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dwild
> fully purchased

Did you? The remaining battery is essentially lent to you.

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fhood
This is nothing new. Many car manufacturers have premium features already
built in to the car but disabled in the software (because its cheaper to build
fewer variants). Volkswagen charges a premium for remote window control
despite all cars being manufactured to support the feature.

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dismal2
this is very different, the closes comparison i could think of is bmw selling
a 320i and 328i which both have basically the same engine running different
amounts of turbo pressure, but EVEN THERE the engine internals have the be
quite a bit different.

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imtringued
It's exactly the the same engine but there is a tradeoff for the performance.
The one with more horse power will generally either have less fuel efficiency
or produce more emissions.

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dismal2
Eh, I'd assume different pistons and camshafts, but googling doesn't return
any definitive answers. Could be wrong. Maybe I'm giving BMW too much credit.

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J_Darnley
Since MS can't even get me to use Windows 10 for free I doubt it.

 _reads article_

Oh. An anti-feature.

> The only difference is that the software on the lower-end version limits the
> capacity of the S60’s battery, crippling its range. In fact, owners can
> instantly transform a lowly S60 into an S75 at any time for a fee of $9,000
> ($500 more than if they’d initially bought it that way). They don’t even
> have to bring the car to a service center. Tesla flips the software switch
> remotely.

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gravypod
This is the reason for me that closed source software [that does dubious
things] is doomed to fail.

As users find out about things like this, and as it starts effecting them more
and more, there will be an aura of distrust.

Currently, I'd say programmers or IT-related people are the only ones that
care about this. But as soon as the consumer sees they need to pay 9k for
something they already have? Closed source software is done for.

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rm_-rf_slash
Echoes of the utopian infancy of the Internet. Only the tech community
significantly cares about this stuff, most people couldn't be bothered with
how the software is made as long as it works. Just like in previous
generations of technology and capitalism, there will always be enough people
who grumble and pull out their wallets to keep the profits flowing.

~~~
gravypod
When people have to fork over 9k, I'd bet they will start caring.

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cbanek
Licensing vs ownership of things I buy is getting to be a real grey area.
Businesses definitely want to license content to me rather than sell it, at
least in a legal sense.

For example, when I buy a DVD, I don't really own it. I own a physical copy of
the media with a license to only play it in an approved player.

This has spread a bit for example to gaming. Katamari Damacy for the 360 was
actually shipped with DLC on the game disc that you had to pay additional
money to unlock, and it wasn't the only one.

If I were rich enough to afford a Tesla, I guess it would probably be against
the license to use the hardware I have to the fullest (if I didn't pay for
it), because Tesla doesn't want that and I've only licensed their software.

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maxerickson
I think there is a difference from the game. The disc for the game costs the
same to produce regardless of whether you buy the DLC or not. The larger
battery costs more to produce regardless of whether you pay for it or not and
(slightly) hurts the performance of cars that don't have the upgrade (it's
literal dead weight).

I guess I don't really care, especially if there is good disclosure for
expensive physical devices (because I can then not buy them).

~~~
cbanek
It is definitely different which is what makes it interesting. Since you're
maybe getting something you didn't pay for. On one hand, it is dead weight if
you can't use it, which is even worse (since it degrades performance) but if
you can jailbreak it you get it for free. But either way, it definitely has a
real physical cost, it's not just code.

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unklefolk
Does Tesla try to justify this practice anywhere? Buying a software for a
superior navigation system I understand but hobbling the performance of a car
seems pretty shady.

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mikeash
Would you prefer that they not sell the cheaper version at all, or would you
prefer that they sell the cheaper version with a physically smaller battery
that costs a lot more money to upgrade?

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thoralfskolem
I'd prefer to not have to jailbreak a car.

If this is the future for electric car business models where we have software
defined features, I'm going to disengage as an early adopter. I actually think
they should not sell the cheaper version because it dilutes the brand and the
software upgrade starts to make the brand give off an enterprise subscription
stench.

Where does this business model end? Am I going to have to renew my battery
algorithm subscription yearly or my car turns into a piece of locked out
hardware? Maybe I have to pay regularly to download self-driving updates? Am I
going to have to pay to support the infrastructure to receive updates long
after my car ends its production run?

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mikeash
That's a slippery slope argument not supported by the facts.

You don't have to jailbreak. You can get the car fully unlocked from the
factory. But it costs more.

So again, what would you prefer, not having the lower cost option, or having
the lower cost option be hardware limited? Or is there some third option you
want?

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jonhohle
The ultimate DLC. What happens when Tesla's update server goes down, a car is
factory reset, and that it's no longer possible apply that $9,000 IAP? (ICP?)

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fencepost
Hm, do the batteries used by Tesla have the same kind of "extended lifespan if
rarely fully charged" issues that apply to the kind of cells used in most
laptops? If so, then I'd be curious about whether this is implemented as a cap
on the battery charge - I might actually prefer the lower capacity if it means
my batteries last years longer.

~~~
mikeash
Yes to all. However, unlike most consumer electronics, Teslas allow you to
manually set the maximum charge it will take at any given time. I usually keep
mine at 90%, for example, and only charge to 100% for long trips.

If you take the 75 option, you could keep the charge limiter set to 80% for
normal use and achieve the same effect as keeping a software-limited 60 at
100%, but with the option to bump it up when you need more.

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aembleton
I wonder if they might considering letting you pay for the use of the bigger
battery for a short period of time. For example, if you want to take a road
trip you could pay $10/day to make use of the full capacity.

I expect that could be very popular.

~~~
relix
Even better would be per charge probably. Pay $5 to charge once to 120% (or
however much it is).

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heavymark
I don't think this is a software upgrade or newer version of the software.
They are simply saying for additional money they can enable additional
features that are already part of the cars code base. Like buying an in-app
purchase in an iPhone app. Or like on BMW enabling all the connected features.

While I imagine the author hoped to try to put this in a negative light to
stir up controversy, this of course is actually a great thing. As with any
other car, if you have a car and want much better mileage or a big new feature
like self driving, you won't be paying 9K for the feature you will be spending
50-100K+ since your only option is to buy an entirely new car every few years
to get the latest features.

Any to get the new features I don't need to pay all the thousands associated
with getting a new car, as well as negotiating on a new car, and everything
else associated with it. Of course Tesla could just offer all features and
build in the 9K in the car, and thus not allowing anyone who can't afford all
the features to ever have a tesla. Instead they price it so people who want a
tesla but dont necessary need some of those features a chance to buy the car,
and then later get those features if they save up. Win win for everyone.

But most likely people complaining will be the same people who complain about
the entry level storage on an iPhone. They would rather apple not sell it at
all, than let people who can't afford the higher amount be able to buy an
iPhone at all.

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wrsh07
This actually seems like a really nice option. It allows you to get a loan for
a cheaper car, and once that is paid off, you can upgrade it.

~~~
cptskippy
That's a very interesting way to look at it.

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andykellr
I don't get the controversy.

You may have a 75 kWh in your car, but you didn't pay for it. You paid for a
60 kWh so that is what you get to use.

Tesla has merely optimized the logistics a the battery upgrade, pre-delivering
it and pre-installing it, doing 99% of the work at no charge. When you pay for
it, they can make the upgrade as easy as an in-app purchase.

~~~
dismal2
Is there supposed to be a /s at the end?

Isn't the price kind of arbitrary? Would you accept this with any other
product? Like buying a cheaper house because some of the rooms are walled off,
or a hard drive that has a few GB of unremovable data, until you pay more.

~~~
andykellr
Well, let's say I don't have any children, but I think I might have 2-3 in the
next 5-10 years. I would definitely buy a small house with a nice master at a
lower price that I can instantly upgrade later, especially if I don't actually
see the walled off rooms and the footprint of my house just somehow magically
changes in software. It sounds awesome and I would definitely sign up for
that.

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Shivetya
9k for forty miles range? Really? They are betting wrong.

Plus I wonder how long before someone hacks these cars for personal use only?

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knorker
Just like every other car manufacturer?

My understanding is that you choose which car to buy, and then you pay them
thousands to flip a bit to enable extra horse power, on the same hardware.

Or you get some shady garage to chip it for you.

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dismal2
this isn't true. you can barely get any additional power out of naturally
aspirated engine with software tuning, and sure you can do this for a short
while on turbo engines but good luck running it reliably without spending
money on various other modifications like cooling, engine internals, etc.
manufacturers tune for a combination of gas milage, longevity, and to meet
emissions regulations.

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zem
this is just market segmentation, which is almost always sensible from the
company's standpoint, and shady from an intuitive pov because our intuition
works in terms of repaying the company's cost to provide us with value,
whereas segmentation works by extracting the maximum amount of money from the
overall market.

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golemotron
Wasn't this done with Windows NT and Windows NT Server decades ago? It was
just a configuration setting to upgrade.

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Gravityloss
Isn't this indirect evidence of too little competition? It has happened in the
past with Intel for example...

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Cshelton
And this is different from the "GPS Navigation" .."upgrade" most other
manufactures make you pay $2,000 - $3,000 for...when the GPS is built in by
default to almost every new car now.

This is actually a really smart move by Tesla. They are able to offer a lower
cost version of the car, without changing anything on the manufacturing side.
Thus increase sales through a lower price entry point.

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ericfrederich
Funny. This company likes to get brownie points for being environmental. We
all know that those batteries are not guilt-free when it comes to the
environment. They're wasting our earth's precious resources by putting extra
capacity which may never be used ;-)

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wrsh07
This is kind of an absurd point because it's not obvious that manufacturing
different types of batteries would actually be more environmentally friendly.

More complicated logistics could also be detrimental to the environment.

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tobyhinloopen
Well... it's not unusual for companies to ship the same product with different
pricing and crippled performance. It's being done all the time. This is just
"the next level".

I wonder if you can "hack" it yourself :)

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chrishacken
Definitely not worth bricking your entire battery over $9,000.

