Question
Tesla sells internet connectivity for its cars for $100 per month by buying the bandwith from a third-party mobile company for $30 per month per
Tesla sells internet connectivity for its cars for $100 per month by buying the bandwith from a third-party mobile company for $30 per month per customer and wrapping the service in its own Tesla-developed user interface for an additional cost of $5 per month for each customer. Tesla pays a total of $5,000 per month for one customer service person who answers questions about the service and trouble shoots. Ignore taxes.
Assume that next year Tesla would like to staff a total of three customer service reps for the connectivity service at a total cost of $15,000 per month. Further, assume that Tesla expects the cost of the connectivity from the third party mobile service vendor will go down to $25 per month because of an expected sales volume increase. Assume no change in cost to wrap the service into a Tesla user interface and that the selling price remains the same. Assume existing customers do not renew. How many new paying customer months will Tesla have to sell connectivity services in the coming year to breakeven?
a) 10,000
b) ~2,571
c) ~2,769
d) ~214
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