TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

Does the M3 Intro kill M/X sales increase?

Discussion in 'TSLA Investor Discussions' started by electracity, Nov 4, 2015.

  1. electracity

    electracity Active Member

    Joined:
    Jun 8, 2015
    Messages:
    1,797
    Location:
    60606
    This issue was brought up in another thread, and it raises an important question. I believe the pending X release stalled potential S buyers. How does Tesla avoid a major trend of "waiting for the 3 to decide"?

    Showing a car the looks like the Bolt wouldn't affect S/X sales, but that would not be consistent with the S3XY strategy.
     
  2. austinEV

    austinEV Active Member

    Joined:
    May 16, 2013
    Messages:
    2,486
    Location:
    Austin
    The answer will be the same as the much-discussed question of "does the model X intro kill model S sales". The strategy was and is:

    1) undersell the new model until it's in volume production
    2) There is less cross shopping than people think. High end sedan does not 100% overlap with mid range sedan.
    3) provide modest incentives to get buyers off the fence, referral program or similar.

    That was the playbook for the X intro. I expect something similar with the 3. This also helps point out the frequently questioned value of the X. If S demand dips due to the pending 3 release, the X production can take up some slack. (since there is much less market overlap with the X and 3)
     
  3. Familial Rhino

    Familial Rhino Endangerous Herbivore

    Joined:
    Feb 27, 2014
    Messages:
    1,053
    Location:
    Toronto, ON
    Model S sales don't seem to have been affected that much by the X overall, even if some people waited before they made their choice, partly thanks to the fairly large backlog of Model S orders. In the case of the Model 3, I think the drastic price difference between the 3 and the S/X will take care of this problem.
     
  4. TexasEV

    TexasEV Active Member

    Joined:
    Jun 5, 2013
    Messages:
    3,772
    Location:
    Austin, TX
    There is no evidence that the pending Model X release stalled Model S sales. To the contrary, Model S sales were up this quarter. If the Model 3 isn't available in quantity for at least two years, people who want/need a car now aren't going to wait for it. Maybe this will be an issue in 2017 but by then the Model S will have even more features to attract buyers who can afford it over the Model 3, not the least being range.
     
  5. electracity

    electracity Active Member

    Joined:
    Jun 8, 2015
    Messages:
    1,797
    Location:
    60606
    1) Q3 was the slowest quarter to quarter sales increase (1% IIRC)
    2) Referral program.

    All just coincidental? Would many rational potential buyers not wait to see the X reveal, especially considering that huge number of buyers who have never spent money on a car in Tesla's price class?
     
  6. Quant

    Quant Member

    Joined:
    Apr 7, 2015
    Messages:
    251
    Location:
    Austin, tx
    NO! NO! NO! And NO!..... People are not wanting to wait for 2 years, IF they can afford an S , particularly if they can lease it...on personal account , or even better, on a business account!

    Leasing will continue to a big driver of US sales for the S ! The tax advantages are very good!
     
  7. Ugliest1

    Ugliest1 S85: "Sparky"

    Joined:
    Aug 19, 2013
    Messages:
    889
    Location:
    Victoria BC Canada
    I think Tesla is already *IN* a massive "waiting for the 3 to decide", in fact it's more "Yeah the S is the best car ever but I can't afford it; I'm waiting for Model 3". There's no decision for the future, for many, many people that decision has already been made.

    Aren't you confusing 'sales' with 'ability to produce and deliver'? The 3Q ER stated that demand for both S and X grew. Because of the way Tesla operates, it seems to me your slower q to q sales increase would have more to do with the week shutdown in the factory (slowing production) and the initially slow X ramp (limiting production). If they could produce more, faster, they'd deliver more.
     
  8. RyanT

    RyanT Member

    Joined:
    Sep 9, 2014
    Messages:
    184
    Location:
    Portland
    The model 3 got me interested in Tesla, then I test drove at the store, started looking at financing, and decided what the heck. Bought a Model S. I'm sure many people will be the same way.
     
  9. electracity

    electracity Active Member

    Joined:
    Jun 8, 2015
    Messages:
    1,797
    Location:
    60606
    That's a good point. It may even push some "waiting for 3" into buyers of MS now. But I can only think that Tesla is showing the 3 in March as part of a plan to raise capital. Otherwise a big book of prepaid 3 orders is good for the stock price, but doesn't provide additional capital. I expect good news from Tesla for the next twelve months without the M3 showing.

    For a sales perspective, giving people a concrete unavailable alternative is not a good idea. I think the X was only revealed in a panic.

    Part of my concern is that I see no good financial reason to produce a $35K car. Since I don't like the car, I don't like the reveal.

    - - - Updated - - -

    Yeah, you need to stay away from the store. :)

    I'm afraid a concrete 3 will give spouses everywhere more ammunition to fight off the S/X.

    - - - Updated - - -

    Is Tesla running 2.5 shifts?
     
  10. anticitizen13.7

    anticitizen13.7 Enemy of the Status Quo

    Joined:
    Dec 22, 2012
    Messages:
    2,548
    Location:
    United States
    Model X and Model S are similar in footprint -- they are in the larger category of car. It seemed like people who were on the fence about buying either Model X or Model S wanted to know the specifications of the X and whether it would be better at carrying stuff. The rumors of the non-folding 2nd row seat on the X, which turned out to be true, only added to the confusion.

    Model 3, on the other hand, is expected to be a smaller class of vehicle than the X or the S. People who buy large sedans or SUVs typically aren't in the market for something the size of a BMW 3-series (which is what the Model 3 is expected to compete against).

    For me personally, the Model S and Model X are both too big, too expensive, and therefore out of consideration.

    I am waiting for the Model 3.
     
  11. Petra

    Petra Member

    Joined:
    Jan 31, 2015
    Messages:
    223
    Location:
    Palmdale, CA USA
    It's an interesting question... however, I think that most of the people waiting for the Model 3 aren't people who would buy a Model S or a Model X due to cost. In my case, the wife and I had originally planned to lease another cheap short range EV (change from our current Leaf to an i3) to wait things out, then decide between the Model 3 and the Model S in 2019. Neither of us particularly like large cars and that's the biggest turn-off for us with the Model S. However, after running numbers and driving every EV on the market, we decided to just go ahead and order a Model S (should be delivered around the end of this month). Now, my case is probably an edge case, but the main reason for wanting to wait originally was mostly to see if the price difference between the still vaporware Model 3 and the future Model S would be worth it or not, given that the 3 would likely be a more desirable size... so it became a choice between blowing another $12k or so to lease again and wait things out (plus the potential reduction of EV subsidies in the future) or buying a Model S now and hoping for a battery upgrade path (I don't really foresee us needing more range, but it would make us feel better about the long term viability of the purchase). Known ergonomics vs. unknown ergonomics also played a role, as ordering when we did saved us from the awful Next-Gen seats and if similar seats were the only option in the future Model S or Model 3, then it would be an absolute dealbreaker for us.

    Would availability of the Model 3 have swayed us from the Model S? Maybe. Possibly. Okay, probably--we kinda hate spending money. It's impossible to know right now, though... but we had to make a decision because the Leaf's lease ends next month. So, we decided to buy the car we liked rather than put more money into half-assed EVs as a delaying tactic.
     
  12. Robert.Boston

    Robert.Boston Model S VIN P01536

    Joined:
    Oct 7, 2011
    Messages:
    7,842
    Location:
    Portland, Maine, USA
    Every mainstream auto OEM has a range of sedeans, e.g. Mercedes C, E, S, or BMW 3(4), 5(6), 7. While introducing the Model 3 will surely shift some buyers from the Model S (and maybe a few from the Model X), there may also be an offset: as customers come in for the Model 3, they up-shop to the Model S.

    With the introduction of the Model 3, Tesla will also need to dramatically increase its support infrastructure, bringing many more Service Centers and Superchargers into service. This infrastructure improvement will make the purchase of all Tesla models more attractive.
     
  13. Quant

    Quant Member

    Joined:
    Apr 7, 2015
    Messages:
    251
    Location:
    Austin, tx
    Nods
    What you don't get is price elasticity of demand. And, reservations for a Model 3, once open, in international markets, will be huge!

    Not the small S sales in Europe that we have currently. I think Europe sales of Model 3 could be over 200k a year, and initial reservations from Norway, Sweden, Germany, Suisse, Netherlands and even the UK will be very huge!

    Every Model S owner who has shown their S to their friends and family will have created at a minimum 3 for every 10 who have envy and wanted an S BUT could not afford , or did not want to spend $ 90 K for an S.

    That by itself will be about 300 K potential customers in waiting, IMO.

    AND, the more Tesla's people see driving around, more will buy an S and an X, as get up sold in the store, particularly Audi, Porsche, BMW and MB switchers.
     
  14. adiggs

    adiggs Active Member

    Joined:
    Sep 25, 2012
    Messages:
    1,347
    Location:
    Portland, OR
    Replying to the thread title, I believe that launch of the Model 3 will absolutely (and finally) help us understand the true demand level for Model S / X. A confounding factor to understanding the demand today are the large number of people that are buying a more expensive car than they are comfortable with, or have ever purchased before, when they acquire Model S. These are people that can afford the car, but were never in that market before, and given a choice, wouldn't be in that market now.

    I'm one of them, and I'm pretty sure that I'd take a well optioned Model 3 for $50-70k over S or X in a heartbeat. Particularly in more of a station wagon type configuration :)


    Anyway - back to my point. The lack of a full function / compelling EV in the ~$50k range is driving buyers in 2 directions. A small number are going upmarket and buying an S/X anyway - a larger number are going down market for something to make do with, or even further down market and doing nothing (no EV at all).

    When the next major price range starts having full function / compelling EVs available, then we'll start to see what the true demand is for a ~$100k EV. People that would rather spend $50k than $100k and who can get their needs met with the $50k vehicle will do so, and to that extent, S/X demand will subside by that amount. Of course we won't know immediately upon availability - it'll take a year or three and enough supply in the $50k and then $35k range to know what the true demand is in the $100k range. In the meantime, Tesla should absolutely take advantage of some people being able and willing to go further up market than they really want to go, and make and sell as many S/X as they can. By my reckoning, they have about 2 years ('16 and '17) to really make hay. After that, it'll be real demand - not the artificially created demand from no options we have today.
     
  15. drinkerofkoolaid

    drinkerofkoolaid Active Member

    Joined:
    Nov 3, 2012
    Messages:
    1,624
    Location:
    F
    The Model S, Model X, and Model 3 cater to people with different needs, and wants. The Model 3 will likely do the same. Many people who buy a Model S and a Model X will probably also buy the Model 3. The market for a $35,000 - $50,000 Model 3 is basically anyone who can afford to buy a new mid range vehicle.

    Also, a topic that no-one has really talked about is the Model 3 body. Elon has said it won't have an aluminum body.

    I'm very curious what the Model 3 body will be made of.

    If the Model 3 body isn't aluminum, is this being done to reduce the cost of the vehicle, to reduce the cost to insure the vehicle, or because Tesla is planning to use a new material that is better than aluminum?
     
  16. SteveG3

    SteveG3 Active Member

    Joined:
    Sep 21, 2012
    Messages:
    1,671
    Location:
    US
    To the original question, perhaps some impact on S/X sales as we move to the reveal of the Model 3. If there is, I doubt this will last long. If things go well, Tesla will probably have the capacity to make ~100K Model 3 in 2018, ~250K in 2019, and ~400K in 2020 (by Model 3 I mean the platform, sedan and cuv). I think it is extremely likely that global demand for the Model 3 will be several times what Tesla can make in 2019. On top of those who would buy the S/X regardless of there being a Model 3, I think there will still be plenty of people unable to get the Model 3 who will buy the S/X in those first few years. What's more, a 2020 Model S/X will be markedly more compelling to many than the one available today (range of ~400 miles, and quite possibly substantially SuperCharging will wipe out only areas the car is not better than ICE).

    Also worth noting, unless something has changed in the past couple of years, Tesla CAN use the money from deposits for the Model 3 contrary to what another poster suggested.
     
  17. surfside

    surfside Member

    Joined:
    May 6, 2013
    Messages:
    164
    Location:
    United States
    when did he say this? pretty sure it wasn't on this most recent call...

    surfside
     
  18. Quant

    Quant Member

    Joined:
    Apr 7, 2015
    Messages:
    251
    Location:
    Austin, tx
    Cant recall which interview....but yes he did say that recently!
     
  19. ZachShahan

    ZachShahan Member

    Joined:
    Dec 3, 2014
    Messages:
    497
    Location:
    Sarasota, FL / Wroclaw, Poland
    I do really wonder how many people are in a similar case. Like you, I much prefer smaller cars. Would definitely get the 3 (or Y -- I want those FWDs :D) if were available, but have to get something in the meantime. Keep going back and forth between the i3 (which actually has a really fun drive and is, despite what some like to say, very cutting edge), but am on the Model S side of things right now. (Still have some time to decide.) Historically, before I was on the market for a car, I thought the i3 and Model S were different enough and far enough apart in cost that people weren't cross-shopping, but then when I was in the boat of needing a car (in the coming months), I realized it's a very hard decision choosing between the two. My "dilemma" articles are at the bottom of this post if you want a lot more details.

    But, anyhow, I'm super curious how many people are in a similar boat. Wish there were data on this.

    Btw, I know there are discussions elsewhere, but I'm curious to hear more about your issues with the NG seats.

    Nissan LEAF vs BMW i3 vs Tesla Model S -- Help Me Choose | CleanTechnica

    BMW i3 vs Tesla Model S -- The Dilemma Continues | CleanTechnica

    - - - Updated - - -

    Btw, yes, I agree it's a wonderful plan. Not having the 3 makes zero sense to me. I'm simply curious about the numbers no one has. :D

    - - - Updated - - -

    100% agree.

    - - - Updated - - -

    My recollection is that he specifically said steel, in order to bring the cost down. But maybe I'm remembering wrongly.
     
  20. Ugliest1

    Ugliest1 S85: "Sparky"

    Joined:
    Aug 19, 2013
    Messages:
    889
    Location:
    Victoria BC Canada
    This whole post resonates with me; I would have preferred a smaller car (my wife feels that way 100x, she hates driving the S, poor me). OTOH on our trips we seem to fill all available storage space in the car, yes even the huge amount the S has, so maybe we just need a Dr.Who phone booth. Also the purchase price was completely daunting and not in the same universe as any other car we have had.

    I also agree the '16 and '17 make hay theory is a possibility. My plan was originally a well-optioned 3, but in the end I just couldn't wait the 5 years still in an ICE.
     

Share This Page