Elon Confirms S & X Are Chopped Liver

[KimVerska]

I can only assume that you are not interested in buying an EV, as I can't think of any EV with even-near equivalent specs in terms of speed, range, charging infrastructure, and self-driving/AP. Are you going back to an ICE car with all their problems for a better HVAC, better windshield wipers, quieter drive and subjective styling preferences?

 

[twonius]

I can only assume that you are not interested in buying an EV, as I can't think of any EV with even-near equivalent specs in terms of speed, range, charging infrastructure, and self-driving/AP. Are you going back to an ICE car with all their problems for a better HVAC, better windshield wipers, quieter drive and subjective styling preferences?

really if you don't do long trips and don't care that much about sub 4 second 0-60 an eTron would satisfy the OPs wishes for model S money.

 

[jboy210]

I mean you can like the model 3 while also thinking it was a mistake.

Just ask most of our parents.

Kinda like that.

I think for Tesla sales/profitability they should have gone with the higher priced Y first. Just like Hyundia and Kia are doing.

Regardless of power source, SUV/CUVs sell better. And the Model 3 forums are full of people wishing their 3 were bigger, had a more upright seating position, and had a rear hatch for easier loading. All of these are features of Y.

 

[Saghost]

Kinda like that.

I think for Tesla sales/profitability they should have gone with the higher priced Y first. Just like Hyundia and Kia are doing.

Regardless of power source, SUV/CUVs sell better. And the Model 3 forums are full of people wishing their 3 were bigger, had a more upright seating position, and had a rear hatch for easier loading. All of these are features of Y.

In retrospect, you may be correct. But in 2012, I don't think they were confident they could make a compelling CUV for ~$40k.

If you look at the typical ICE cars, the CUVs eat at least 50% more energy than their sedan companions, and none of the early crop of EVs were CUVs or SUVs for that reason.

So without the efficiencies Tesla seems to conjure out of thin air (and a lot of hard work behind the scenes) these days, you'd expect to need a much bigger pack to make a CUV work. And the cost and availability of batteries has been the major driver for EV adoption for a long time.

Given that context, reaching for the mass market sedan first made sense - and while SUVs have been popular for a long time, a decade ago there were still lots of sedans on sale and they were a large fraction of the market.

 

[twonius]

In retrospect, you may be correct. But in 2012, I don't think they were confident they could make a compelling CUV for ~$40k.

If you look at the typical ICE cars, the CUVs eat at least 50% more energy than their sedan companions, and none of the early crop of EVs were CUVs or SUVs for that reason.

So without the efficiencies Tesla seems to conjure out of thin air (and a lot of hard work behind the scenes) these days, you'd expect to need a much bigger pack to make a CUV work. And the cost and availability of batteries has been the major driver for EV adoption for a long time.

Given that context, reaching for the mass market sedan first made sense - and while SUVs have been popular for a long time, a decade ago there were still lots of sedans on sale and they were a large fraction of the market.

Calculating drag, or doing small scale wind tunnel testing isn't new.
X is only about ~15% less efficient than the S. This would put a Y at about 210 miles with similar trade offs.

Also, looking at the Kona, I'm not sure what Hyundai knows that Tesla wouldn't have back then.

 

[john85775]

I just listened to the Q2-19 Earnings call and Elon said that he expects S and X to generate around 100K units a year going forwards, and he intends to continue with them.

The high volume vehicles will the the Model 3 with 3/4M and Model Y with 1.5M (his forecast).

I don't see Tesla dropping S and X (or future vehicles in those categories) and I don't know why anyone would read that into the comments on the Earnings call.

Here are the direct quotes - judge for yourself:

Q:
Elon, I'm wondering, if you can comment on whether you believe Model 3 is having any cannibalization impact on S and X sales or why you think that – or why else there might be sort of a structural step down in the demand and delivery levels relative to what we’ve seen over the last five or six years?

Elon: Actually, we're just talking about this earlier today. We're not quite sure ourselves. I think there's some cannibalization, maybe false expectation in the market that there's like some big overhaul coming for S and X, which would then cause people to hesitate to buy, if they think there's some like radical redesign coming, which is why I've stated publicly that this is not the case.

...

Q:
And can I have a follow-up question around Model S and Model X saturation? Obviously you guys have some ideas around how big that market is? How should we be thinking about sustainable volumes and pricing on those volumes?

Elon:
The Model S and X today are radically better than the ones that – when we first started production, especially S. Like say like 2013 or 2012 Model S compared to today's Model S night and day. In fact, I still run into people I know, who have like 2013 Model S, and they think it hasn't changed. And like it is dramatically better in every way. But we don't do model years. We just roll in improvements as they come. So – but I think there is maybe a communications issue, where people don't realize just how much better the S and X are today than when we first started.

And I think we actually want to address that communications issue and just get a better understanding of– from the front lines like what demand should be higher for S and X than it is and will get to the bottom of it and fix it.

...

Q:
Obviously we're seeing some lower numbers here and I think that's a core element of what's going on with the story that as we see pricing drop and volumes drop what are the right numbers to think about you guys from a planning standpoint in terms of sellthrough on both the Model S and Model X?

Elon:
Yes. I think it's probably too much focused on S and X . The S and X -- they are nice, but they're not -- and it's like without them we couldn't spell sexy. So the main reason, well not the main reason, but a reason is we want to keep spelling sexy. So, that is a reason, I should say not the main reason, but a reason to keep going with the S and X.

But the story for Tesla in future is fundamentally Model 3 and Model Y and I think like my guess is like long-term sales of – long term meaning, a couple of years I think. The demand for -- sales demand for 3 is like on the order of three quarters of a million units a year, and it's probably 1.25 million per year for Model Year, so they combined is like maybe two million from those two vehicles, and then S/X is like there may be 80,000 to 100,000 a year. So it's like 4% or 5% of the volume in 3 and Y. And then you could throw like a truck in there, pickup truck and a semi, but it just gets smaller and smaller. So they are great products, but they’re -- from a volume standpoint, they're not all that important in the long-term.​

 

[jaguar36]

Thanks for posting this John

Elon:
The Model S and X today are radically better than the ones that – when we first started production, especially S. Like say like 2013 or 2012 Model S compared to today's Model S night and day. In fact, I still run into people I know, who have like 2013 Model S, and they think it hasn't changed. And like it is dramatically better in every way. But we don't do model years. We just roll in improvements as they come. So – but I think there is maybe a communications issue, where people don't realize just how much better the S and X are today than when we first started.

And I think we actually want to address that communications issue and just get a better understanding of– from the front lines like what demand should be higher for S and X than it is and will get to the bottom of it and fix it.


Elon:
... then S/X is like there may be 80,000 to 100,000 a year.​

The way people know its a different car is when you make it look different. My 2017 is way better than my 2014, no doubt about it, and the Raven upgrade is even better still I'm sure. But they still look the same. Trying to convince people that its a vastly better car when they look pretty much the same is never going to happen. In addition you can't just keep upgrading an old platform forever, eventually you need to start over. I'd say this is even more true with the S when it was designed on a shoestring back in 2011 before anyone really knew how an EV would work.

The numbers back this up as well. The S just got the 2nd biggest upgrade in its life, prices have dropped (P100D used to be a $150k car) and the sales are way down. They're running at only 60k a year right now. How are they going to get that up to even 80k? Telling people its really new? No way that cuts it.​

 

[EVDRVN]

Unless they have changed direction my intel says a all new S with 3 build tech. Lower cost and higher margin.

 

[john85775]

I've listened to and re-read this Elon quote from the conference call several times:

And I think we actually want to address that communications issue and just get a better understanding of– from the front lines like what demand should be higher for S and X than it is and will get to the bottom of it and fix it.

He actually thinks the demand issue for the Model S / X isn't related to the product itself but communications related to the product.

So they keep devaluing them by hacking the prices of the things, pissing off past buyers (my 7 month old $121k MX just booked out for $75k, both Carmax and Tesla trade-in) rather than innovating or signaling continued investment in the product line.

Yet -- it's a communications issue. Just baffling.

 

[glide]

You mean like the Nissan GTR? It is a 6 figure halo car that has had the same engine and design for the past 10 years. They have shown no indication of changing anything either. I can guarantee Nissan cares far more about the Rogue and Sentra than they do the GTR.

BMW even came out last year and openly admitted they dont believe in producing halo cars and have no plans to build one. The CEO openly came out and said "Instead of having one flagship very small, but let's say very highlighted flagship, we would rather have an armada of very fast vessels to attack a broader range of possible customer groups."

MBs G wagon didnt get a redesign for 40 years. No joke, the first generation G-class came out in 1970. The second generation G-class came out in 2019.

Dont even get me started on Cadillac. They have been promising a halo car for 8 years now and still havent even produced renders.

Pretty much all companies focus on their mass produced consumer lines, because that is where the money is. If 80% of your sales come from the Model 3, then 80% of your focus will be on the Model 3.

The Model S was never positioned in the lineup like a Nissan GTR. It’s also not an Acura NSX. Those vehicles are not produced in any meaningful volume compared to the rest of the line.

Model S clearly is meant to be along the lines of a 5/7 series or S class. And if BMW/Merc stopped updating those, they would be losing customers in droves.

 

[tomas]

Agree. Not going SUV/CUV first was an error.

They didn’t have capacity for that level of demand.

 

[byeLT4]

Does anyone else feel the lack of 'model year' change is hurting? I understand sales will fall for the old model once the new model comes out but, at least at that point major changes will be locked in for at least a year. I see so many posts of people waiting for the interior refresh that may or may not be even coming. At least in a yearly change, when the new one comes out you could buy and not have to worry that next week you'll have an outdated car. Then prices for the newer ones can stay somewhat steady and the old inventory can have the 'blowout sale' prices.

 

[NoMoGas]

Did you hear him on the call? Highly dismissive of the S/X whenever it came up.

On the FINANCIAL call? Context is everything.

 

[john85775]

On the FINANCIAL call? Context is everything.

Yes, the first sentence of the first post of the thread begins “On today's Tesla investor conference call...”

 

[NoMoGas]

Yes, the first sentence of the first post of the thread begins “On today's Tesla investor conference call...”

That was my point.

 

[Fred42]

On today's Tesla investor conference call, a question was asked about stabilizing Model S and X sales.

Elon's response: "S & X are nice. Without them we can't spell S3XY. Hehe. I love the main reason. Hehe. A reason is we want to spell S3XY. Not the main reason. The story is fundamentally 3 and Y. "

He then said S/X is not important in the long term, and in the context of the 3, Y, pickup truck and semi, S & X will stabilize at 80k-100k per year and represent around 5% of total sales essentially as a niche product.

This came after reiterating there will be no refresh for Model S / X.

But it was the first part of his response -- that the models are basically living on in the product portfolio as a placeholder -- that made me queasy about replacing our 2018 X with a Raven.

This post in the roundtable echoes my concern:
Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable

Elon Confirms S & X Are Chopped Liver
Yum, yum, yum, chopped liver with a new interior. I'll bite.

 

[dhanson865]

Did you hear him on the call? Highly dismissive of the S/X whenever it came up.

Dismissive to financial analysts that nitpick over minor details instead of paying attention to the big picture.

He wasn't talking to or about consumers.

 

[john85775]

So much explaining for such a plain spoken CEO.

 

[5JMJ]

Unless they have changed direction my intel says a all new S with 3 build tech. Lower cost and higher margin.

Did your source give a timeline for when this will be released? Will this be the rumoured refresh or an all new model?

 

[tomas]

Did your source give a timeline for when this will be released? Will this be the rumoured refresh or an all new model?

This guy on the Internet said:...