2015 Q2 Discussion thread for Delivery numbers, Earnings Report and Conference Call

[dsm363]

Except this is not how people shop cars, at least those who are not in the "cult of Tesla" and who are not early adopters.

If you are thinking of buying a Model S and go to the Tesla web site, you will see two cars at approximately the same price points. One is brand spanking new, with obviously newer design, technology, and vastly superior interior amenities and design (based on Musk's own words). Very few consumers will go for the outdated vehicle unless it is steeply discounted. Replace Model S with "iPhone 5" and Model X with "iPhone 6" in your statements and see if it still makes sense. It doesn't to me.



If a Model S redesign - to keep pace with Model X - is a year away, as you suggest, then Tesla is in BIG BIG trouble and so is our stock investment.

iPhone 5 and 6 (slightly bigger screen) are same basic design with different internals and only slightly different form factor. The Model S is a sedan and the Model X is a crossover. Someone considering a sedan might not be interested in a crossover vehicle and the other way around too. I have no idea if a refresh of the Model S design is coming soon or not but don't think the Model X being present will kill Model S sales. Maybe people who thought about buying a Model S would buy a Model X but that is still a sale for Tesla.

 

[SteveG3]

As to Tesla considering a capital raise... I think they want to see what combined ongoing S/X demand is. They more or less lowered 2016 guidance today from 100K+ to 80-90K. I wouldn't be surprised if at the time they suggested entering 2016 at at 100K run rate, they thought 130K or more vehicles per year was a likely demand level in the out years. It's still possible, but they are more cautious about it. That's probably about a $500 million difference in cash available to spend on expansion (GF, Model 3, etc), each year depending on whether demand turns out to be more like 80K or 130K.

While I would rather not see a secondary soon, I don't think a 5-10% increase in shares meaningfully changes the long range attractiveness of a Tesla investment.

- - - Updated - - -

This... I don't think I'm even remotely interested in buying a Model S now. I "might" look at an Model X now but Elon all but said on this call that the Model X is going to be vastly superior. What does that mean? I have no idea but I'm not plunking down a $2500 non refundable deposit on a Model S. Listening to this call today, Tesla has potentially lost me as a customer for the foreseeable future. I'm SOOOO glad I rescheduled my appointment with my gallery to put the deposit down to this Saturday which I will now cancel all together.

Tesla is in trouble. I agree, the Model S is going to tank in regards to orders. Anyone who is buying one right now is gonna be in for a very rude awakening I think...

Jeff

I didn't hear that message. Last call, Elon said, he thinks the Model X will be as good an SUV as the S is a sedan.

I do agree there's a challenge here with perception of S looking less compelling. We've already seen a couple of pre-emptive steps on this- the referral program, new S offerings a couple of weeks ago (even the whole addition of dual motors a year ago). I think if there is a bigger battery for the X within months if not immediately it will be available for the S. The X may hit me with some wonderful improvements I've not imagined, but for me, such a potential bigger battery only offered on the X is the only potential X exclusive that would deter me from getting an S (and as I say, I think it's very unlikely that it would be an X exclusive for more than a few months if at all).

 

[dsm363]

I would think we've already seen the bigger battery (90kWh) that will be on the X. There is little reason to offer a bigger battery pack on the X and not on the Model S.

 

[Todd Burch]

Some folks here need to crush up a chill pill and smoke it.

There are lots of people who don't cross-shop XUVs/SUVs and sedans. There are lots of people who don't want an X. There are a lot of people who want the 2.8sec 0-60 performance of the S that the X will not be able to deliver. Regardless of the Model X's capabilities and feature set, it doesn't take away from the fact that the Model S is among the best sedans on the planet and, considering all things, many consider to be the best by far.

The doom and gloom here is silly...some folks here are starting to sound like Seeking Alpha writers. Just relax folks, there wasn't really anything earth-shattering in this conference call, which in my opinion is why it was pretty boring. The most impactful message long term was regarding the future potential of the battery storage market (Tesla Energy), and anyone who's spent a little time on these forums should already realize the enormous potential it represents for Tesla's future revenue.

 

[aznt1217]

iPhone 5 and 6 (slightly bigger screen) are same basic design with different internals and only slightly different form factor. The Model S is a sedan and the Model X is a crossover. Someone considering a sedan might not be interested in a crossover vehicle and the other way around too. I have no idea if a refresh of the Model S design is coming soon or not but don't think the Model X being present will kill Model S sales. Maybe people who thought about buying a Model S would buy a Model X but that is still a sale for Tesla.

Thank you! I second this notion and its pretty easy to sum it up: not everybody wants an SUV

Just saw Todd's comment above. Thank you sir

 

[MikeC]

I think the analogy is more between an iPhone 6 and iPhone 6+. Basically the same internals but some people want more space and others want a sleeker form.

Yes, the Model X will be better in a lot of ways because it is coming three years later. I would be worried if they did not incorporate all they learned from the Model S to make the X awesome. This does not mean that S sales will fall off a cliff - heck, the Model S is 10 years ahead of it's ICE competition and they're still selling. It will still be the second best vehicle on the market and the best sedan by a wide margin.

The X has been cannibalizing the S for years - my wife would have been driving one long ago if we didn't know the X was coming.

 

[anticitizen13.7]

If you are thinking of buying a Model S and go to the Tesla web site, you will see two cars at approximately the same price points. One is brand spanking new, with obviously newer design, technology, and vastly superior interior amenities and design (based on Musk's own words). Very few consumers will go for the outdated vehicle unless it is steeply discounted. Replace Model S with "iPhone 5" and Model X with "iPhone 6" in your statements and see if it still makes sense. It doesn't to me.

The analogy doesn't quite work, because Model S and Model X target very different customer profiles. Think of it this way: a person who wants to buy a Honda Accord (mid-size sedan) is not likely to chose a Honda Pilot (a 3-row SUV) simply because the Pilot is a brand new model this year. While the 2016 Pilot has more interior amenities, a new 9-speed automatic transmission, and optional torque vectoring AWD, its styling, efficiency, and capacity aren't wanted or needed by the typical Accord buying customer.

I also believe that Model X will be noticeably more expensive than Model S. There's almost no way that the X's beefier tow-capable chassis, larger frame, and more complicated interior will cost the same as Model S.

 

[Bighorn]

You couldn't give me an SUV. The best looking SUV is still a pretty homely beast. They've alluded to how difficult and time consuming it's been to design the Model X and make it marginally aesthetically pleasing. The Model S will remain a tour de force in the automotive industry for the foreseeable future, redesign or no. Whatever geewhiz tech they've come up with to add to the Model X should translate relatively easily to the S.

 

[Mille Pun]

This... I don't think I'm even remotely interested in buying a Model S now. I "might" look at an Model X now but Elon all but said on this call that the Model X is going to be vastly superior. What does that mean? I have no idea but I'm not plunking down a $2500 non refundable deposit on a Model S. Listening to this call today, Tesla has potentially lost me as a customer for the foreseeable future. I'm SOOOO glad I rescheduled my appointment with my gallery to put the deposit down to this Saturday which I will now cancel all together.

Tesla is in trouble. I agree, the Model S is going to tank in regards to orders. Anyone who is buying one right now is gonna be in for a very rude awakening I think...

Jeff

EDIT: While I don't believe in rewriting what I said, thus I won't erase it, I did let my frustration get the better of me for a moment and I don't genuinely feel that way about Tesla but I won't erase what I wrote either.

Jeff

Thanks for canceling such that my delivery date will probably be bit earlier.
both S and X are on the premier line in Tesla, and I don't see any reason why Musk will set differentiate on technology, basically they are sedan and SUX and both are CAR! When u order a newly gadget u will get the latest technology, even on the same model. So some people will keep on waiting iPhone 8,9.....and hesitate to order the current best model that they can get.

 

[Todd Burch]

Whatever geewhiz tech they've come up with to add to the Model X should translate relatively easily to the S.

Off topic I know, but speaking of which...I would like some Falcon doors retrofitted to my S. Hopefully for less than $1000 .

 

[Bighorn]

Off topic I know, but speaking of which...I would like some Falcon doors retrofitted to my S. Hopefully for less than $1000 .

You couldn't pay me to take a falcon wing retrofit on my S

 

[Spidy]

It's been nearly a year since they announced autopilot, and yet no one seems to understand that autopilot =/= autonomous driving? I swear, we had several questions at the shareholder meeting about it, and now this GS guy comes along asking this.

*sigh*

Well, it was just not the best idea to call it like that. People mostly know Autopilot from aircrafts and there they usually operate without the pilot having to pay much attention and they even eat and do other stuff while it's on (and everyone has seen a hollywood movie where it gets turned on last second and then saves everyone :biggrin. I think this will cause a lot of confusion in the long run. There is a good reason other manufacturers call it active lane keeping assist and driver assist package, because that's exactly what it is.

 

[Lerxt]

Well, it was just not the best idea to call it like that. People mostly know Autopilot from aircrafts and there they usually operate without the pilot having to pay much attention and they even eat and do other stuff while it's on (and everyone has seen a hollywood movie where it gets turnedu on last second and then saves everyone :biggrin. I think this will cause a lot of confusion in the long run. There is a good reason other manufacturers call it active lane keeping assist and driver assist package, because that's exactly what it is.

This is totally incorrect regarding aircraft autopilots. Autopilots are monitored very closely by at least one of the pilots all of the time. They are an assistant, they are not in command.

 

[dsm363]

2015 Q2 Discussion thread for Delivery numbers, Earnings Report and Conferenc...

I think the analogy is more between an iPhone 6 and iPhone 6+. Basically the same internals but some people want more space and others want a sleeker form.

Yes, the Model X will be better in a lot of ways because it is coming three years later. I would be worried if they did not incorporate all they learned from the Model S to make the X awesome. This does not mean that S sales will fall off a cliff - heck, the Model S is 10 years ahead of it's ICE competition and they're still selling. It will still be the second best vehicle on the market and the best sedan by a wide margin.

The X has been cannibalizing the S for years - my wife would have been driving one long ago if we didn't know the X was coming.

Agree. Better analogy with iPhone 6 vs 6+ I didn't even consider the 6+ due to size. Probably wouldn't get the Model X either for same reason. If Tesla takes years to update the Model S to catch up Model X then maybe but that's very unlikely.

 

[AmpedRealtor]

The doom and gloom here is silly...some folks here are starting to sound like Seeking Alpha writers.

I'm just worried about my favorite company of all time, that's all. I want them to hit it out of the park all the time. I know that's not sustainable, but I can't help it. I want them to succeed. But I've also seen how good Tesla is at self-inflicting wounds. Their execution is what has me concerned.

The analogy doesn't quite work, because Model S and Model X target very different customer profiles. Think of it this way: a person who wants to buy a Honda Accord (mid-size sedan) is not likely to chose a Honda Pilot (a 3-row SUV) simply because the Pilot is a brand new model this year. While the 2016 Pilot has more interior amenities, a new 9-speed automatic transmission, and optional torque vectoring AWD, its styling, efficiency, and capacity aren't wanted or needed by the typical Accord buying customer.

I also believe that Model X will be noticeably more expensive than Model S. There's almost no way that the X's beefier tow-capable chassis, larger frame, and more complicated interior will cost the same as Model S.

I agree in a general sense. But as a customer who is spending a lot of money - two or three times what that customer spent on a car previously (which is a lot of us) - wouldn't you hesitate buying a Model S when you see the Model X and all of its interior goodness? Isn't the natural thought pattern "so this cool stuff is coming to the S, so I should just wait"? There will be some obvious things, like improved headlights, motorized spoiler (already seen in the wild), curved windshield above your head (also seen in the wild), rumored 360-view, improved interior, etc. That's stuff that's been seen or talked about, there could be more surprises. That's where I'm going with this... it's not about the different market segments, it's about seeing the latest model and knowing that the model you really want - the sedan - will undergo a major update soon, so better to wait. I'm not saying it's going to happen, just that I'm worried about it. I hope I'm wrong.

 

[Mille Pun]

It's my first time seeing ppl 'worry' a company offering cooler product / technology:biggrin:

 

[eloder]

I agree in a general sense. But as a customer who is spending a lot of money - two or three times what that customer spent on a car previously (which is a lot of us) - wouldn't you hesitate buying a Model S when you see the Model X and all of its interior goodness? Isn't the natural thought pattern "so this cool stuff is coming to the S, so I should just wait"? There will be some obvious things, like improved headlights, motorized spoiler (already seen in the wild), curved windshield above your head (also seen in the wild), rumored 360-view, improved interior, etc. That's stuff that's been seen or talked about, there could be more surprises. That's where I'm going with this... it's not about the different market segments, it's about seeing the latest model and knowing that the model you really want - the sedan - will undergo a major update soon, so better to wait. I'm not saying it's going to happen, just that I'm worried about it. I hope I'm wrong.

Carbuying is often an emotional thing. There are cars that, objectively, are far worse than others at a similar price point and form factor, but they're still bought. For example, anything in the Prius lineup versus most other hybrid hatchbacks (huge differences in mpg, cargo space, passenger room, etc.).

Or just look at the fact that trucks are the #1 commuter car for buyers. I never quite understood that, especially since my last commuter leased for under $100 a month and had 42 mpg.

I'm not really worried because while there might be some cannibalization between S and X, it's likely to be very small even if the MX blows away the MS. The main reason being, as others have mentioned, that the S still blows just about every ICE out there out of the water, and it still has the emotional "sexy, sporty" appeal that can't translate 100% to any SUV form-factor. Plus, it'll still be faster.

 

[Beavis]

I'm locking my doors and closing the shades. I have a hoard of food left over from Y2K. I'm going to the basement until things settle down.

 

[jdevo2004]

Can someone do a point form of the relevant information for this quarter?

 

[anticitizen13.7]

I agree in a general sense. But as a customer who is spending a lot of money - two or three times what that customer spent on a car previously (which is a lot of us) - wouldn't you hesitate buying a Model S when you see the Model X and all of its interior goodness? Isn't the natural thought pattern "so this cool stuff is coming to the S, so I should just wait"? There will be some obvious things, like improved headlights, motorized spoiler (already seen in the wild), curved windshield above your head (also seen in the wild), rumored 360-view, improved interior, etc. That's stuff that's been seen or talked about, there could be more surprises. That's where I'm going with this... it's not about the different market segments, it's about seeing the latest model and knowing that the model you really want - the sedan - will undergo a major update soon, so better to wait. I'm not saying it's going to happen, just that I'm worried about it. I hope I'm wrong.

The obvious exterior stuff I actually don't care about. A motorized spoiler is just one more thing that can malfunction. The curved overhead windshield is unlikely to replace the panoramic roof as this would require major structural changes to Model S.

It's a fair point that improved electronics in Model X would almost certainly mean upgrades for Model S, if only because this helps Tesla reduce manufacturing complexity by having similar components across the product lines. That would give potential buyers pause, especially for tech savvy customers who are familiar with iPhone launch cycles. iPhone 6 demand is probably relatively low right now, given that the 6S is only 6 weeks away.

The flip side of this is that Model S components are tried and true at this point. If I'm paying 75-100k for a car, I'm not sure I necessarily want to be the adventurous early adopter. Even with something relatively simple like an iPhone, new things can go wrong. The iPhone 5 had a lot of launch issues, including weak anodized color on black slate models, power buttons that would go bad, and batteries that lost abnormal amounts of capacity. Apple eventually had recalls for the later 2 problems, but early adopters really got burned. If I needed a car and Model S as presently available suited my needs, I think I would buy it even if Model X showed off a bunch of fancy new tech.