Ford Pays $199,950 Before Taxes for Tesla’s 64th Model X SUV

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Provided by Bloomberg

Ford Motor Co. paid $199,950 — $55,000 more than the sticker price — to buy one of the first sport utility vehicles made by Tesla Motors Inc., according to vehicle registration documents obtained by Bloomberg.

The white Model X is a Founders Series with a vehicle identification number indicating it was the 64th one made at Tesla’s factory in Fremont, California. The vehicle, with Michigan plates, has been spotted recently in the Detroit area. Registration records show that Ford purchased the vehicle March 1. The original owner, a California coin dealer, bought it as part of Tesla’s customer-referral promotion.

Automakers often buy cars made by competitors for road testing and for “tear-downs” to reveal components and materials and how they’re put together. But it’s unusual to pay such a high price — almost $212,000 after Michigan sales tax and title — for such an early model.

“Wow, I hope that investment pays off in some good intelligence,” Michelle Krebs, senior analyst for researcher Autotrader.com, said of the premium Ford paid. “If you’re going to be one of the early buyers, you’re probably going to pay well over list. But that’s significant.”

Krebs suspects other major automakers, such as General Motors Co. and Toyota Motor Corp., are also among early buyers of the Model X. Automakers are looking for ways to make highly profitable SUVs more fuel efficient as they race to meet a federal mandate to average 54.5 miles per gallon by 2025. Ford is investing $4.5 billion in electrified vehicles and will add 13 electric cars and hybrids by 2020.

Future SUVs

“We’re going to definitely see more electrification and light-weighting,” Krebs said. “Those are the things I suspect Ford would be taking special note of as they develop their sport utilities of the future.”

Krebs said she hopes Chief Executive Officer Mark Fields and Executive Chairman Bill Ford — as well as the automaker’s top engineers and designers — get some seat time in the Model X.

“Everybody should be exposed to one of your hottest competitors,” Krebs said.

Tesla’s first Model Xs are limited-edition Founders Series — fewer than 100 of them were made — that typically go to board members and close friends of the company like Google co-founder Sergey Brin. Those are followed by the Signature Series models, which require a $40,000 deposit from customers and start at $132,000. The window sticker price on the all-wheel-drive Model X P90D that Ford purchased is $144,950, including the $10,000 Ludicrous Speed Upgrade that boasts a 0-to-60 miles per hour time of 3.2 seconds.

Original Owner

The original owner of the Model X that was ultimately purchased by Ford was Wayne Skiles, 71, who owns and operates the Carousel Coin & Jewelry Exchange in San Bernardino, California. Skiles owns a Model S sedan and participated in Tesla’s Model S referral program. Customers who referred at least 10 friends to purchase a Model S were able to buy a Model X Founders Series for a base price of $116,700.

“I sold 11 Model Ss. So I got a Founders Model X and immediately flipped it for a profit,” said Skiles in a phone interview. “The car never came to California. I flew to Chicago, took physical delivery of the Model X, and immediately drove it to a dealer in Chicago and sold it.”

Ford bought the vehicle from Corporate Auto of Auburn Hills, Michigan, according to the documents.

“It is a common industry practice among many automakers to buy production vehicles for testing as soon as they are released,” said Ford in a statement. “Sometimes, this means automakers pay more than sticker price to acquire them as quickly as possible.”

Quality Concerns

Tesla officially launched the Model X at a splashy event in late September, years after the vehicle’s early 2012 unveiling. The company announced that it delivered 2,400 of the SUVs in the first quarter as it continues to ramp up production. But early models are not without flaws: Several customers have reported issues with sensors on the “falcon-wing” doors that open vertically. Consumer Reports on Tuesday published a report about quality problems on early models. Tesla shares slipped 2.6 percent on Tuesday to $247.37, paring their year-to-date gain to 3.1 percent.

“We are committed to making the world’s most reliable cars,” said Tesla in a statement Tuesday. “While we have seen some issues with early Model X builds, the issues are not widespread, and we are working closely with each owner to respond quickly and proactively to address any problems. We will continue to do so until each customer is fully satisfied. This commitment is one of the reasons why 98 percent of our customers say they will buy another Tesla as their next car.”

Earlier this month, Tesla issued a recall on 2,700 Model Xs made before March 26 to repair the third-row seats after strength tests done by the automaker found a potential defect. Tesla has advised customers not to let anyone sit in those seats while the car is in use.

Musk has said that the Model X’s unique features were difficult to engineer and relied heavily on parts suppliers. Tesla said this month that Model X deliveries missed first-quarter expectations because of parts shortages stemming from “Tesla’s hubris in adding far too much new technology” to the Model X.

Written by Dana Hull and Keith Naughton of Bloomberg

(Source: Bloomberg)

Automakers Battle for High-Tech Dominance on the Road to Self-Driving Car

© REUTERS/Thomas Peter/Files
© REUTERS/Thomas Peter/Files

 At the recent Frankfurt Auto Show, Ford Motor Co unveiled a new feature that drivers pre-set their car to go at or just above the speed limit. In-car cameras and software read and react to road signs, speeding the car up or slowing it down.

Active Speed Limiter is available on select models in Europe, but not, ironically, in the United States, Ford’s home country, where road signs come in different shapes and sizes, and are often obscured by shrubbery.

So it goes on the road to the self-driving, or autonomous, car – a journey of, well, stops and starts that most experts say will take a couple decades to complete.

Meantime, advances in “semi-autonomy” – features that help handle tricky or tiresome driving situations but still require a driver’s oversight – have sparked a high-tech automotive arms race, with car companies vying to launch the most advanced features.

Automakers hope semi-autonomous features will, over time, help drivers and regulators get over fears of riding in vehicles that accelerate, steer and stop themselves, making potentially life-or-death judgments.

Shorter term, car companies want these features to make driving more convenient – and cars more profitable.

“People like features that make driving easier, safer and more fun,” says Joseph Vitale Jr., who heads global automotive consulting for Deloitte Touche Tohmatsu. “The question is what customers will pay for them.”

Ford’s Active Speed Limiter comes at 560 euros ($602.78), and it’s too soon to tell how popular it will be.

Among the biggest winners for now are the companies that produce electronic sensors, cameras and software that make self-driving features possible.

The growing list includes the high-tech units of traditional automotive suppliers such as Germany’s Continental AG, Israel’s Mobileye Vision Technologies, and consumer-technology giants Google, Apple, Samsung Electronics Co, Sony Corp and more.

At Silicon Valley’s Nvidia Corp, for example, video games remain the biggest market, but automotive revenue is the fastest-growing segment.

“We’re in well over 8 million cars on the road today and will be in more than 30 million in the next three to four years,” says Jen-Hsun Huang, Nvidia’s president and CEO. “Future cars will sense and understand the world moving around them.”

“DOING CRAZY THINGS”

A big step in that direction was the traffic-jam assistance feature on the 2014 Mercedes-Benz S-Class. Now available on more Mercedes models, the Intelligent Drive system allows the car to drive itself at low speeds in traffic jams, freeing the driver from constant braking.

BMW, Honda Motor Co, Hyundai Motor Co and others have or will soon introduce similar features.

Silicon Valley’s Tesla Motors recently broke new ground by downloading “autopilot” features to its newer models, just as software updates are downloaded to smartphones and tablets. Autopilot basically drives the car itself, but Tesla warns drivers not to relinquish control entirely.

On a recent investor call, Tesla CEO Elon Musk said he had seen some “fairly crazy videos on YouTube” of Tesla owners driving hands-free with autopilot, and added: “This is not good. We will be putting some additional constraints on when autopilot can be activated, to minimize the possibility of people doing crazy things with it.”

BELLS AND WHISTLES

For consumers, getting their first car with semi-automated features can be both exciting and daunting, especially those who haven’t bought a new car in years.

“I had no idea this sort of thing was out there,” says Mark Goldsmith, a Tokyo-area TV news writer. “I’d been driving a 15-year-old Jeep, which only had cruise control that you constantly had to adjust, so all these new features are a novelty.”

Goldsmith recently traded the Jeep for a 2015 Volvo [GEELY.UL] with a mouthful of a name – the V40 T5 R-design – and a handful of semi-automated driving features.

Those include adaptive cruise control, distance warning, blind-spot information system, “city safety,” driver alert system, lane-keeping aid, road-sign information, anti-skid system and parking assist. Combined they add close to $1,000 to the car’s total price of nearly $31,000.

While Goldsmith says he has yet to test all the automated features, he says the suite of functions was “definitely” a factor that helped sell he and his wife on the car.

But to other drivers, like Kirstin Houser, a communications and events manager in Frankfurt, mastering how to use all the buttons, switches and toggles to activate the automated drive functions on her family car, a 2015 Mercedes E-Klasse Kombi, was a time-consuming process which required “relearn(ing) how to drive”.

“There are just too many bells and whistles on the steering column, either to push, pull, scroll, hold down, release, etc. By the time I remember which one to use, there’s already a row of cars behind me honking to park my car,” she said.

“Safe driving, and also understanding the general mechanics of a car, are so engrained in the way we drive that it’s hard to separate that and allow our car to make those judgments.”

TARGET 2020 

Ford recently added automated straight-in, “perpendicular” parking on some models. While developing the feature, company engineers found that cars could self-park in places so tight that drivers couldn’t pull out of them. They reworked the software to add pull-out capability to Active Park Assist, which is priced at $395 in America and 350 euros in Europe.

BMW’s new flagship 7 Series sedan has a remote self-parking feature that allows the car to park itself with nobody inside. Drivers stop, hop out, push a button on the key fob, and the car takes over.

Google is holding discussions with at least half a dozen car companies with aims of launching its self-driving car system by 2020. That same year, Japan’s Big Three – Toyota, Nissan Motor Co and Honda – are targeting the Tokyo Summer Olympic Games to launch and showcase cars that will largely handle themselves in city traffic, but not entirely.

“We maintain our expectation that drivers will remain in control of their cars in 2020,” Moritaka Yoshida, Toyota’s chief safety technology officer, said recently at a demonstration of the company’s latest automated driving technology.

Nonetheless, the company’s Lexus GS450 SX models equipped with cameras, radar and laser sensors changed lanes and merged smoothly in heavy traffic, without help from the driver.

The 2020 Olympics could become a venue for automotive as well as athletic competition, and not just among traditional car companies.

Tokyo-based Robot Taxi plans to bypass semi-autonomy and deploy 3,000 self-driving taxis that athletes, VIPs and tourists can summon by a smartphone app to ferry to and from venues.

“It’s not about the car,” the company’s chairman Hisashi Taniguchi told Reuters. “We’re going to generate revenue from supplying self-driving vehicles as a service, and collecting user fees. It’s all about the app, and how many people use it.”

($1 = 0.9290 euros)($1 = 122.9700 yen)

Written by Naomi Tajitsu and Paul Ingrassia of Reuters

(Source: Reuters)