As much as I have been on the potential Osborn effect train, I started to think about it and what makes sense to me is that any Osborne effect would have already happened, because it cannot really happen July going forward because the wait time will be 12-18 months for people just coming into the sales cycle. What I mean is that if you put down a reservation a year ago, that is when the Osborne effect would have taken place for that person and 400,000 others. Now there have been and will continue to be reservations for the 3 and could be creating an ongoing Osborne effect more recently, but still fairly light because people reserving a 3 today won't get it for 12-18 months. No one who can afford a model S will wait that long, they will get an S. So no Osborne effect should be happening today.
We keep wanting to apply this idea if an Usborne effect, me included, but the more I think about it the less I feel it's the real issue. Tesla is clearly responding to something very real that they are seeing and they assume it is because the 3 is canabolizing the model S in some way and I think this is real because I think the model S used to sell to people who never in there life bought a luxury car and flat out wouldn't because they are not flashy and don't need that much car. But the allure of the best EV and potential, car on the planet, pushed them into an S. This explains how the S can have 40% market share for large luxury sedan, because it's in a class of it's own and really belongs in a category that doesn't yet exist. This does not make it less of a feat, because it's astounding. Quite the opposite. It just makes it hard to determine where growth will come from and how the 3 will impact the S.
Having dumped all of that, I think this all works itself out over the next 12 months and I see frenzied demands in the second half of 2018 with tax credits expiring. Tesla could move 300,000 S3X cars in that 6 month period. My thought is that Tesla is going to produce a lot of S/X cars over the next 7 months many is which won't sell until 2H2018. I don't know what makes production is but let's say 2500/w for S/X. 60 weeks or about 150,000 S/X over the next 13 months and last month or so and another 150,000 model 3s with most targeted at the us tax credits expiring 2H2018. The idea is to make out production to maximize savings for customers. They will continue to make out S/X through the year to catch up on foreign sales. After 2018, the issues with the 3 go away because people will be able to go but one when they want one with 10,000 a week being built 2019 on and 1 million a year by the end of 2020.
By then the S Will be at the point where replacement will start to kick in in volumes high enough to perpetuate growth is the brand.
In short, I don't know what Tesla is worried about but it's clearly real. I'm not worried about anything as demand is going to be at a frenzied pace next year and I mean model 3 reveal frenzied. And only one car will be available to buy off the lot, the model S. Maybe cpo. Hide and watch.
