Demand

[dennis]

Much of the discussion from the bears here is (and has been) that demand for the Model S is flattening or declining. But shouldn't we expect that to happen at some point? The Model S is 4 years old. Sales of most luxury car models in their 4th year are well below their peak, so there is typically a pretty big "refresh" at that point and then a replacement model at year 6 or 7. Tesla has managed to keep Model S sales growing with new features, wider geographic distribution and more market awareness. Now they are resorting to a lower entry price (and perhaps lower margins) because they know that demand for Model S is price elastic.

Even if demand for Model S does flatten, I don't think it is a problem, because demand for Model X should grow significantly. It is in the very early part of the adoption curve, and sales have been held back by production problems, quality issues and a scarcity of cars at stores or on the street. All of that appears to finally be changing. The luxury SUV market is bigger than the luxury sedan market, and the Model X is the only SUV that is both high performance and eco friendly. If things like the 2nd row seats not folding are found to be holding back demand, I would expect Tesla to offer that as an option, just like they did with the sportier next gen seats and executive seating (for China) in the S.

Tesla has said that they plan to continue growing sales at least 50% per year. They didn't say plan to grow sales of each model at that rate. So if the goal for 2017 is at least 120,000 cars, that might well be 50K Model S and 70K Model X, even if there is no significant volume of Model 3. And if Model S falls to 50K, that shouldn't be interpreted as failure - it is just part of the automotive product life cycle.

 

[pGo]

I believe the demand related question should be looked at along with gross margins implications. MS and MX has way less demand at $100k and 30% margins than them offered at $75k and 22% margins. I believe at this point, Tesla will have to introduce a cheaper MX in the next 3-4 months just like recent MS 60 release to spur demand. This has implications on margins and Tesla may not be able to make gross margins goals.

There you go. Cheaper MX just like recent MS 60 release is rumored today!

 

[Spidy]

> Current order rate trends and backlog support production at those levels.
> Introduces 60kWh Model X
> MFW

 

[TMSE]

> Current order rate trends and backlog support production at those levels.
> Introduces 60kWh Model X
> MFW

What is MFW?

 

[schonelucht]

My Face When. Generally used as a sarcastic reply to point out something is unbelievable.

Can't say I disagree with that assessment. There have been only a very small trickle of X deliveries here in Europe, so despite the supposedly huge backlog they slap a 10k discount on the car? How does that make sense in any way, shape or form?

 

[TSLADream]

Is the Model X 60 option only for the US market or for the european and other parts of the world as well? I do believe demand is slowing down but I can't imagine for the Model X. Are they just trying to get all the folks to sign up for Model X before the July customer referral promotion expires?

 

[schonelucht]

It's on the European design configuration for the X as well. You may have to refresh or clear our browser to get it to show. I know I had to. In the Netherlands, price for a base 75D = 97 700 EUR while the 60D model goes for 87 700 EUR.

 

[TMSE]

You can get MX60D in September only if you select 6/7 seat config (3000 extra). 6/7 seat config requires that you must have Smart Sir Suspension (2500 extra). So, to get in September, the least expensive configuration is $79500 in the US.

If you don't select these options, delivery isn't untill end of 2016 for the cheapest MX60D at $74000.

 

[FlatSix911]

You can get MX60D in September only if you select 6/7 seat config (3000 extra). 6/7 seat config requires that you must have Smart Sir Suspension (2500 extra). So, to get in September, the least expensive configuration is $79500 in the US.

If you don't select these options, delivery isn't untill end of 2016 for the cheapest MX60D at $74000.

 

[AZ Desert Driver]

and if you get MS 60 and not the D? whats your best guess about delivery? Sept????

 

[dc_h]

Will there be a P100D soon? With two battery options at 75 and 100 with software options at 60 and 90. A P100D might not expand the market as much as a 60, but it might help encourage some upgrades for current owners and higher margins for buyers who want max range or power. Interestingly, on the Model S delivery tracker, it looks like the Model 60 is 40% of sales. How much of that is market expansion and how much is downshifting from an otherwise Model 75 buyer? Hopefully this is mostly market expansion.

 

[TMSE]

View attachment 185189

Here is the text under seat option which says late 2016.

 

[dc_h]

Surprising there is no 4 seat option. Some Asian cars have very luxurious backseat setups and a 4 seat option with added leg room and center console option would be nice for a lot of people.

 

[TMSE]

Will there be a P100D soon? With two battery options at 75 and 100 with software options at 60 and 90. A P100D might not expand the market as much as a 60, but it might help encourage some upgrades for current owners and higher margins for buyers who want max range or power. Interestingly, on the Model S delivery tracker, it looks like the Model 60 is 40% of sales. How much of that is market expansion and how much is downshifting from an otherwise Model 75 buyer? Hopefully this is mostly market expansion.

Even if someone is downshifting from an otherwise Model 75, they would likely opt for additional options which they couldn't afford before. For example, you can forego 75 for 60, but get premium upgrade ($4500 extra) in order to get bio defense feature.

 

[X Yes?]

My Face When. Generally used as a sarcastic reply to point out something is unbelievable.

Can't say I disagree with that assessment. There have been only a very small trickle of X deliveries here in Europe, so despite the supposedly huge backlog they slap a 10k discount on the car? How does that make sense in any way, shape or form?

This had to be a tough call for Tesla. They had no choice but to admit demand had dried up on the Model X after less than 6 months of any significant deliveries. With the SolarCity deal and the state of Model S and X demand, expect a New capital raise sooner, rather than later.

 

[TMSE]

Frankman's in San Diego, delivery time can be done within a day or 2. Try to find someone more than 1,000 miles away. Those deliveries will be by train and batched by region. The expected delivery on the order page is for the US, including the east coast. If you're concerned about demand, I'd watch the referral program and see if there's a base model lower than the S60. Tesla will try to stimulate demand if they don't have enough orders to fill the factory pipeline. The expected delivery dates are just noise.

What do you think of MX60D introduction today?

 

[Oil4AsphaultOnly]

What do you think of MX60D introduction today?

That would be one of the demand levers that Tesla needed to pull. Will be keeping any eye out for Q3 gross margins guidance in the Q2 earnings report. Besides $84k was too high of a starting price for the model X anyway.

 

[JRP3]

Surprising there is no 4 seat option. Some Asian cars have very luxurious backseat setups and a 4 seat option with added leg room and center console option would be nice for a lot of people.

Get the 6 seat and fold down the 3rd row.

 

[dc_h]

Get the 6 seat and fold down the 3rd row.

I know, just seems like you'd have more storage and could allow the seats to slide back farther. For a limo feel, this would be nice. Nothing urgent, but it might be a nice option in some markets.

 

[adiggs]

Get the 6 seat and fold down the 3rd row.

It creates the end result. Paying extra to remove something you don't want though is sort of a tough pill to swallow.