Did the Model 3 kill the Model S and the Model X and Tesla with them?

[Galve2000]

The Model 3 is an exceptional car...

but did it kill off demand for the S and the X, which are (or were) where Tesla generates revenue?

I personally prefer the S to the 3. but i feel like I am in the minority.

sometimes I feel like a Schmuck for my willingness to send an extra $36,000 for a bigger car that feels slightly more luxurious, and has 60 extra miles of rated range.. yes it goes 0-60 in 3.2 seconds vs 4.4 seconds too, and has more cargo space... but I digress.

yes i am comparing long range versions, not performance versions.

The sales figures of the S and X have plummeted for good reason.. the 3 is just such a great value for the money.

I just can't shake the feeling that Tesla shot themselves in the foot here and they need to increase the price of the 3 to entice people to spend their $$ on an S, or actually make some revenue on the 3.

thoughts?

 

[ntam]

I have been following Tesla since 2011 and had bought 4 Tesla and currently still own 3 of them. I think it is much more complicated than that. Someone should start a thread on what went wrong with Tesla. Below are some suggestions:

1. Falcon Wing Door which caused 2-year delay of Model X
2. Incorrect priority of handling Federal Tax Credit phase-out. Elon wanted to maximize the number of customers who can get full credit instead of minimize sales fall off after phase out of Tax Credit.
3. Over-estimated demand due to 400K reservations of Model 3 after unveil. It was a blessing and a curse. Should have planned production capacity based on natural demand instead of unrealistic demand (on hindsight). A lot of reservation holders were hoping to buy the $35,000 car with $7500 Federal Tax Credit.
4. If Model X was not delayed, they could have refreshed Model S and X with 2170 cell and more efficient motor first before releasing the Model 3. Then S and X will always have the latest technology and command flagship pricing.
5. Elon had not changed his way of marketing in 10 years. His methods of using word of mouth, referral program and Twitter works for the first 500K customers. But for the next million customers, those methods do not work as well and are easily influenced by FUD from short sellers.
6. In manufacturing, Tesla focused on ramp rate instead of quality. Design and engineering are great but poor quality gave more ammunition to short sellers.
7. Elon doesn't understand honesty is a virtue in peace time but a short coming in a war. He is fighting enemies from all sides and phases like "production hell", "would have run out of cash in 7 weeks", "logistic hell",... are counter productive. You will get sympathy from supporters but it showed weaknesses to critics.
8. For high volume delivery like the Model 3, maybe it is time to consider the dealership model. You will eliminate one enemy and let you focus on improving manufacturing and new product development.

I am writing down these thoughts because I am at a cross-road. I have invested in Tesla since 2011 and overall I am still grateful for Tesla because I am still having more money than before I bought Tesla stock. But the recent decline have really tested my resolve. I have to decide if I should continue to hold on the shares.

 

[Uncle Paul]

Tesla's goal has never been to make as much money as possible. Their stated goal is to convert drivers from ICE vehicles that pollute our cities to EV's that are cleaner.

Master Plan:
1. Produce expensive sports car to prove concept.
2. Use Roadster income to develop and manufacture high end Sedan.
3. Use that money to spin off an expensive SUV.
4. Use that money to build a less expensive, lower cost 4 door sedan affordable for many more people.

They achieve their goal if they increase the volume of people converting over to EVs.

They have borrowed as they have gone along to finance factories for vehicles and batteries.

Plan is going as concieved. Tesla does not care which model you purchase, as long as you convert from ICE to EV.

Next they will release the Model Y SUV. That will also take some potential S, X and 3 customers away....but they will still be driving a Tesla.

Now they are reducing the prices of Model S and X, while at the same time adding capabilites and making improvements. This will draw addtional customers to those models. Faster Autopilot computers as well as more efficient drive systems. New suspension with automatic adjustments will increase comfort and handling. All at a lower price.

Lots more improvements to come!!

 

[4EVar]

The Model 3 is an exceptional car...

but did it kill off demand for the S and the X, which are (or were) where Tesla generates revenue?

I personally prefer the S to the 3. but i feel like I am in the minority.

sometimes I feel like a Schmuck for my willingness to send an extra $36,000 for a bigger car that feels slightly more luxurious, and has 60 extra miles of rated range.. yes it goes 0-60 in 3.2 seconds vs 4.4 seconds too, and has more cargo space... but I digress.

You are not alone. I much prefer the S over the 3 any day. Better interior, more space, MUCH bettor looking exterior. Quicker .Etc etc

 

[re04586]

Galve2000 - I think you are on to something.

With the Model 3 you get 85% of of the Model S for 50% of the price.
There just aren't that many people willing to extra for S. It's a no-brainer for most people.

Additionally, there a lots of people who bought a Tesla as a status symbol. (not everyone, but there a lot)
And with the Model 3 now, owning a Tesla doesn't carry that same status, they are everywhere on the roads now.
Those buyers that were looking for a car as a status symbol will look elsewhere now.

While I always hear the argument on how Tesla's goal was not to make money, but rather save the planet, I wonder if that still holds true.
Tesla is a publicly owned company, who's primary obligation is to its shareholders.
What do you think the shareholders goals are? Money.

So yeah, I do think is possible the Model 3 being priced so low and with such slim margins could have negative side effects.

 

[2012MS85]

@ntam has excellent points and honesty in summarizing where things have gone wrong in the past year (which one can objectively determine by a 50% drop in TSLA over the past year, which has never been good for any publicly-traded company).

I’m in love with my Sig P85 S, as well as my MR 3 with EAP & FSD...both purchased in Dec 2018. I sold my first 2012 S85 in Mar 2018 with plans to buy the tech-heavy 3 that I loved before its reveal on 31 Mar 2016 (making my reservation an hour before the reveal). After selling my original S for $40k, I recommended to my wife either investing that $40k in TSLA or ordering a 3. She finally chose the 3 in Oct 2018. For many months, I was sad to not be a stockholder as TSLA stock spiked; now I’m relieved to have the physical work-of-art and daily driving joy instead. I had actually ordered the new white interior that didn’t go into production on the 3 until December. So thinking I’d miss out on the full tax credit by year-end, I sought and found a beautiful Sig Red P85 from the original owner in Seattle, and then convinced my wife to buy it and cancel the 3. She said yes to the S, but Tesla’s failed to process my written cancellation on the 3. After flying to Seattle to drive my Sig S home, I received a Tesla text 2 hours into my 50-hour drive home (without AutoPilot)...my “new 3 was just built” and ready for Westmont pickup in a few days! That gave me 48-hours to daydream about EAP & the 3...and a sales pitch to my wife...who ultimately agreed to us buying a second Tesla in a week because I’d rent out the 3 through my limo and exotic car rental business (so it would theoretically pay for itself). From my ownership experience, here’s where else Tesla has miscalculated:

1. I bought my 6-yr-old S (with extended warranty through 2020) believing my greatest risk/expense would be $12,000 for a replacement battery someday. Wrong! I learned just a few months ago here on TMC that Tesla’s original $12k offer is now actually $25,000! Guess what? Virtually no one will buy a used Tesla in a few years when the single largest part that goes bad is $25k (cause most don’t have a spare $25k laying around). This is a huge Achilles heal for EVs when they want mass adoption by the 99% who don’t get EVs. And if my original MCU goes bad in 2021? It’s only $4-5k

2. I tried multiple times to buy TESLA solar panels, 60 of them. In Iowa, sorry said Tesla! My $50k went to the competition. It’s almost impossible to understand how Tesla has mismanaged their multi-Billion $ purchase of Solar City. Why do they refuse to sell me solar, regardless of where I live?! Partner with local installers and make it happen!

3. I wanted the Powerwall on day one of its unveiling long ago...nope! I ordered the PW2 on day one (Tesla today still has my $500 deposit from long ago)...again, nothing. Promised installation well over a year ago, then nothing. Also bought another red PW2 referral prize - and paid $2k deposit to someone on TMC - after Tesla then confirmed it WAS transferable to me...before they changed their mind. Another great Tesla product, albeit pricey, that I can’t actually buy. Bad business policy and practice. See a pattern?

4. I was super happy to earn free Arachnids for my S on the last day of the referral program. Was texted by Tesla to order before Feb 28 or forfeit my prize, so I quickly used my iPhone to do so. My link gave me only one option (delivery location, so I chose Westmont). Immediately I received a congratulatory reply that my forged 3 wheels would arrive in July! Wait, what?!? I wanted the 21” Arachnids for my S, so I IMMEDIATELY called and got a circular automated message that ended (twice) with a hang up of my call. So 30 minutes of that non-sense led me to email Tesla about the simple error on Tesla’s part/system. A few days later came my reply...nope, NO ARACHNIDS 4U! I was told my “order/selection” was final and absolutely nothing could be done! I explained clearly and politely what had happened and that I was given no CHOICE. Another week later, same reply...I’m SOL. I begged on the next email to please investigate because others most certainly are facing the same problem ordering the correct rims they wanted (since lots of folks own more than one Tesla). Finally, after about a month, Tesla admitted my solo choice was due to MY failure to properly register my S...which I explained I had done one week BEFORE buying my 3! Another month passed, and finally some new dude congratulated me on my Arachnids that would soon arrive at Westmont by April. No apology whatsoever for THEIR mistake. And it’s May 22, and still no rims. This should have been a really awesome prize for talking non-stop to every friend and stranger about how awesome TESLA is! Instead, it’s an embarrassing story to share here...telling more about what’s really wrong with a company and product we all love for different reasons.

Finally, I think the REAL reason Tesla isn’t being adopted by the masses is...FEAR ! Folks I talk to every day tell me they’re freaked out by self-driving cars! They state they would NEVER want one. I explain - and show them with my app - all the benefits and cool tech. They remain apathetic. This single issue isn’t properly understood by Tesla. Elon likely thinks everyone loves tech (and Mars) as much as he loves it. But fear of EAP/FSD is a real thing. I’m amazed every day that virtually everyone has this same response about the very feature I find most fascinating about my 3

 

[dethman]

@ntam has excellent points and honesty in summarizing where things have gone wrong in the past year (which one can objectively determine by a 50% drop in TSLA over the past year, which has never been good for any publicly-traded company).

1. I bought my 6-yr-old S (with extended warranty through 2020) believing my greatest risk/expense would be $12,000 for a replacement battery someday. Wrong! I learned just a few months ago here on TMC that Tesla’s original $12k offer is now actually $25,000! Guess what? Virtually no one will buy a used Tesla in a few years when the single largest part that goes bad is $25k (cause most don’t have a spare $25k laying around). This is a huge Achilles heal for EVs when they want mass adoption by the 99% who don’t get EVs. And if my original MCU goes bad in 2021? It’s only $4-5k

2. I tried multiple times to buy TESLA solar panels, 60 of them. In Iowa, sorry said Tesla! My $50k went to the competition. It’s almost impossible to understand how Tesla has mismanaged their multi-Billion $ purchase of Solar City. Why do they refuse to sell me solar, regardless of where I live?! Partner with local installers and make it happen!

3. I wanted the Powerwall on day one of its unveiling long ago...nope! I ordered the PW2 on day one (Tesla today still has my $500 deposit from long ago)...again, nothing. Promised installation well over a year ago, then nothing. Also bought another red PW2 referral prize - and paid $2k deposit to someone on TMC - after Tesla then confirmed it WAS transferable to me...before they changed their mind. Another great Tesla product, albeit pricey, that I can’t actually buy. Bad business policy and practice. See a pattern?

4. I was super happy to earn free Arachnids for my S on the last day of the referral program. Was texted by Tesla to order before Feb 28 or forfeit my prize, so I quickly used my iPhone to do so. My link gave me only one option (delivery location, so I chose Westmont). Immediately I received a congratulatory reply that my forged 3 wheels would arrive in July! Wait, what?!? I wanted the 21” Arachnids for my S, so I IMMEDIATELY called and got a circular automated message that ended (twice) with a hang up of my call. So 30 minutes of that non-sense led me to email Tesla about the simple error on Tesla’s part/system. A few days later came my reply...nope, NO ARACHNIDS 4U! I was told my “order/selection” was final and absolutely nothing could be done! I explained clearly and politely what had happened and that I was given no CHOICE. Another week later, same reply...I’m SOL. I begged on the next email to please investigate because others most certainly are facing the same problem ordering the correct rims they wanted (since lots of folks own more than one Tesla). Finally, after about a month, Tesla admitted my solo choice was due to MY failure to properly register my S...which I explained I had done one week BEFORE buying my 3! Another month passed, and finally some new dude congratulated me on my Arachnids that would soon arrive at Westmont by April. No apology whatsoever for THEIR mistake. And it’s May 22, and still no rims. This should have been a really awesome prize for talking non-stop to every friend and stranger about how awesome TESLA is! Instead, it’s an embarrassing story to share here...telling more about what’s really wrong with a company and product we all love for different reasons.

Finally, I think the REAL reason Tesla isn’t being adopted by the masses is...FEAR ! Folks I talk to every day tell me they’re freaked out by self-driving cars! They state they would NEVER want one. I explain - and show them with my app - all the benefits and cool tech. They remain apathetic. This single issue isn’t properly understood by Tesla. Elon likely thinks everyone loves tech (and Mars) as much as he loves it. But fear of EAP/FSD is a real thing. I’m amazed every day that virtually everyone has this same response about the very feature I find most fascinating about my 3

some great examples of how tesla has shot themselves in the foot so many times. great ideals, great technology, but extremely poor business execution. so many promises left unfulfilled. so many supporters let down time and time again. head of the company who runs his mouth on twitter, promising things that the company can't achieve, so of course targets are missed and the stock crumbles. on top of that, the company still is of the mindset that the customer does NOT matter and is unwilling to compromise with any customer or even bother answer their phone calls or emails.

the S and X are dying because tesla did not take any time to value their existing customers, the ones who invested in their company from the beginning. ignored any updates to the S/X while putting all their efforts into maximizing the technology on a cheap car that they underpriced because they had to due to elon's big mouth. huge price cuts (due to crap demand from poor business decisions) that depreciate current owners' value, straight out LIES about FSD, and essentially ignoring anyone who bought a tesla in the last 5 years and only focusing on 3 owners, and the result is disallusioned owners and stockholders and day1 fanbois who feel ignored and neglected. it's just not any good way to do business or foster brand loyalty. we need a new head of the company. NOW.

 

[2012MS85]

some great examples of how tesla has shot themselves in the foot so many times. great ideals, great technology, but extremely poor business execution. so many promises left unfulfilled. so many supporters let down time and time again. head of the company who runs his mouth on twitter, promising things that the company can't achieve, so of course targets are missed and the stock crumbles. on top of that, the company still is of the mindset that the customer does NOT matter and is unwilling to compromise with any customer or even bother answer their phone calls or emails.

the S and X are dying because tesla did not take any time to value their existing customers, the ones who invested in their company from the beginning. ignored any updates to the S/X while putting all their efforts into maximizing the technology on a cheap car that they underpriced because they had to due to elon's big mouth. huge price cuts (due to crap demand from poor business decisions) that depreciate current owners' value, straight out LIES about FSD, and essentially ignoring anyone who bought a tesla in the last 5 years and only focusing on 3 owners, and the result is disallusioned owners and stockholders and day1 fanbois who feel ignored and neglected. it's just not any good way to do business or foster brand loyalty. we need a new head of the company. NOW.

If recent reporting is true, it sounds like Apple was onto something when they tried to buy Tesla in 2013 if only Elon would step aside. Elon has great ideas, but will go down in history as one of the worst CEOs ever. His hubris has killed his vision.

 

[Mike Robinson]

I'm very happy with my 2018 MS 100D. My friend has a new M3 and loves it. Personally, I would not buy a M3. It's just too small for me. I would buy another Lexus hybrid if the Model S was not available.

 

[Gray468]

Love my 2017 S100D HW2 more or less loaded... meaning I watched $25k of its value be stripped away before depreciation (a much better S is $25k cheaper today).

But I am at peace with it. Eventually, I will be HW3 (so the story goes) and the SC for life is valuable to us x-country road trip folks. The car today is way better than when I bought it 2 years ago thanks to free SW updates. Do I envy Sentry mode and the plethora of other features I don’t yet have? Yep. But I am happy to wait for them.

30k miles and nary a moan or whimper from the car. Faster than almost anybody on the road when it needs to be. And love the room to hold my bike inside or 4 passengers comfortably.

There is no model 3 on my horizon. Several years from now, I will likely pay too much for my new model S. But loving it.

 

[cicob]

I have been following Tesla since 2011 and had bought 4 Tesla and currently still own 3 of them. I think it is much more complicated than that. Someone should start a thread on what went wrong with Tesla. Below are some suggestions:

1. Falcon Wing Door which caused 2-year delay of Model X
2. Incorrect priority of handling Federal Tax Credit phase-out. Elon wanted to maximize the number of customers who can get full credit instead of minimize sales fall off after phase out of Tax Credit.
3. Over-estimated demand due to 400K reservations of Model 3 after unveil. It was a blessing and a curse. Should have planned production capacity based on natural demand instead of unrealistic demand (on hindsight). A lot of reservation holders were hoping to buy the $35,000 car with $7500 Federal Tax Credit.
4. If Model X was not delayed, they could have refreshed Model S and X with 2170 cell and more efficient motor first before releasing the Model 3. Then S and X will always have the latest technology and command flagship pricing.
5. Elon had not changed his way of marketing in 10 years. His methods of using word of mouth, referral program and Twitter works for the first 500K customers. But for the next million customers, those methods do not work as well and are easily influenced by FUD from short sellers.
6. In manufacturing, Tesla focused on ramp rate instead of quality. Design and engineering are great but poor quality gave more ammunition to short sellers.
7. Elon doesn't understand honesty is a virtue in peace time but a short coming in a war. He is fighting enemies from all sides and phases like "production hell", "would have run out of cash in 7 weeks", "logistic hell",... are counter productive. You will get sympathy from supporters but it showed weaknesses to critics.
8. For high volume delivery like the Model 3, maybe it is time to consider the dealership model. You will eliminate one enemy and let you focus on improving manufacturing and new product development.

I am writing down these thoughts because I am at a cross-road. I have invested in Tesla since 2011 and overall I am still grateful for Tesla because I am still having more money than before I bought Tesla stock. But the recent decline have really tested my resolve. I have to decide if I should continue to hold on the shares.

Very wise. I couldn't phrase it any better.
(Only one Tesla here.)

 

[Mr. Treesy]

I would wager one of the problems facing the S and X is its interior being dated compared to the 3. The exterior of both cars is lovely but the interior doesn't feel as fresh or modern as it once did. I suspect once that's addressed sales will increase for both. Anyone interested in the S or X I recommend waiting to buy because a refresh is overdue and likely to be released this or next year. I'm sure many others are waiting too hence the lack of sales.

 

[Galve2000]

I would wager one of the problems facing the S and X is its interior being dated compared to the 3. The exterior of both cars is lovely but the interior doesn't feel as fresh or modern as it once did. I suspect once that's addressed sales will increase for both. Anyone interested in the S or X I recommend waiting to buy because a refresh is overdue and likely to be released this or next year. I'm sure many others are waiting too hence the lack of sales.

I’m not a fan of the 3 interior.. it is one thing that keeps me solidly in the S camp.

The other being that I like the feel of a bigger car.. except on those rare occasions where nyc parking spots would fit a 3 but not an S.

But in general, the S is my jam..

And yet.. I don’t know if they I prefer the model S interior to the tune of $36,000!

 

[Reid]

sometimes I feel like a Schmuck for my willingness to send an extra $36,000 for a bigger car that feels slightly more luxurious, and has 60 extra miles of rated range.. yes it goes 0-60 in 3.2 seconds vs 4.4 seconds too, and has more cargo space... but I digress.

 

[hmgolds]

I very much doubt that the M3 cannibalized any MX sales. I'm certain that the M3 cannibalized some MS sales. But if you don't cannibalize your own product, someone else will.

I believe the M3 will be regarded as the car that brought EVs to the mainstream. Though you can argue that a 50k car is not exactly mainstream.

 

[petecrayton]

Galve2000 - I think you are on to something.

With the Model 3 you get 85% of of the Model S for 50% of the price.
There just aren't that many people willing to extra for S. It's a no-brainer for most people.

Additionally, there a lots of people who bought a Tesla as a status symbol. (not everyone, but there a lot)
And with the Model 3 now, owning a Tesla doesn't carry that same status, they are everywhere on the roads now.
Those buyers that were looking for a car as a status symbol will look elsewhere now.

While I always hear the argument on how Tesla's goal was not to make money, but rather save the planet, I wonder if that still holds true.
Tesla is a publicly owned company, who's primary obligation is to its shareholders.
What do you think the shareholders goals are? Money.

So yeah, I do think is possible the Model 3 being priced so low and with such slim margins could have negative side effects.[/Q

 

[petecrayton]

I may have opted for a 3 had it been available when I bought my S. Put another way, I might have "cheaped out" and rationalized that the 3 wasn't that big a step down. And practically speaking, it is not. But I am glad I didn't. Most of my life I have chosen cars for form rather than function and I believe the S is about as classy as it gets. I believe that will continue to matter to that segment of buyers that want the "top of the line".

 

[petecrayton]

I would wager one of the problems facing the S and X is its interior being dated compared to the 3. The exterior of both cars is lovely but the interior doesn't feel as fresh or modern as it once did. I suspect once that's addressed sales will increase for both. Anyone interested in the S or X I recommend waiting to buy because a refresh is overdue and likely to be released this or next year. I'm sure many others are waiting too hence the lack of sales.

I hope they don't "refresh" too soon...I've got another 4 years of payments! And I can't say I like the screen configuration on the 3; it looks like an afterthought.

 

[Rich A.]

The Model 3 is an exceptional car...

but did it kill off demand for the S and the X, which are (or were) where Tesla generates revenue?

I personally prefer the S to the 3. but i feel like I am in the minority.

sometimes I feel like a Schmuck for my willingness to send an extra $36,000 for a bigger car that feels slightly more luxurious, and has 60 extra miles of rated range.. yes it goes 0-60 in 3.2 seconds vs 4.4 seconds too, and has more cargo space... but I digress.

yes i am comparing long range versions, not performance versions.

The sales figures of the S and X have plummeted for good reason.. the 3 is just such a great value for the money.

I just can't shake the feeling that Tesla shot themselves in the foot here and they need to increase the price of the 3 to entice people to spend their $$ on an S, or actually make some revenue on the 3.

thoughts?

Yeah, I have thoughts. Musk had NO right and NO reason to boast of a $35K Model 3 so far in advance, before Tesla had an opportunity to complete the design of the car, battery pack, and especially the assembly line. There was no need - Musk set inappropriate expectations and then was consumed by them. The Model 3 NEVER needed to be a $35K car before tax incentives. It could have been a well-optioned $50K car (like it typically is anyway). That way, it would not have competed as much with the Model S/X, and Tesla could have drifted down the base price over the following few years after initial demand was met, after the manufacturing costs were established, and after the Model S re-design (so as to not cannibalize Model S/X sales as much as it has).

 

[Donz_S]

I have been following Tesla since 2011 and had bought 4 Tesla and currently still own 3 of them. I think it is much more complicated than that. Someone should start a thread on what went wrong with Tesla. Below are some suggestions:

4. If Model X was not delayed, they could have refreshed Model S and X with 2170 cell and more efficient motor first before releasing the Model 3. Then S and X will always have the latest technology and command flagship pricing.
8. For high volume delivery like the Model 3, maybe it is time to consider the dealership model. You will eliminate one enemy and let you focus on improving manufacturing and new product development.

Nice Post!

RE: 4. I hadn't thought of it like that but totally agree with you. Gotta keep the high-end vehicles "high end" to entice buyers.

RE 8. Oh please Tesla do not go to the dealership model. This one of the facets of Tesla that I really like. I do know how to haggle for price on a car, but I hate it! I want to buy a car similar to when I buy groceries or similar... see price tag, pay that price. No gimmicks or tricks.