I was lucky enough to go for a test drive on Monday in a Tesla Model S for my birthday thanks to my very thoughtful wife. I would have preferred she just bought me one but alas I only ended up with a T-Shirt. 🙁 When going through the motions before the drive the sales guy pointed out that if I spec up the S60 then decide to update over the air to S75 I don’t have to pay Luxury Car Tax (LCT) on that part. This got me thinking, has digital disruption has arrived to auto sales and how far could car manufacturers take this idea?

Using Tesla as my example and Queensland as the state the following applies.

  • Auto Pilot upgrade $4,500 + $1,350 in LCT = $5,850 vs $5,300 direct to Tesla if you update after purchase saving $550.
  • Battery upgrade from 60kWh to 75kWh for $12,800 + $3,840 in LCT = $16,640 vs $13,500 direct to Tesla if you update after purchase saving $3,140
  • High Power Charger Upgrade $2,300 + $690 in LCT = $2,990 vs $2,800 to Tesla if you update after purchase saving $190

In total an extra $5,880 in LCT vs $3,880 in cash savings + all the money going to Tesla to plough back into R&D. Which would prefer?

I don’t think the monetary saving is the point but rather how over the air (OTA) after purchase updates could potentially radically disrupt the price and therefor the tax collected on new car sales. Is this just the beginning of what will become the norm? Buy a car with the bare essentials and pay for software updates to unlock the next feature as you require, desire or need. How about reducing the price to below the LCT tax threshold and subscribing to a “service” each month to change the game even further.

P.S. What a great car.