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Plug In Cars article questioning long term viability of TM

Discussion in 'Model S' started by M_Mike, Dec 26, 2012.

  1. M_Mike

    M_Mike Member

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  2. wassenberg

    wassenberg Member

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    europeen cars are not yet on the market....a boost of reservations will come.
     
  3. mknox

    mknox Well-Known Member

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    As a traditional "early adopter", I've been wondering about this myself. What concerns me a bit are the many reports of early glitches and bugs (door handles, window fogging, 12v batteries, excessive vampire draw, etc.) and how the so-called "mainstream" consumers will respond. Consumers Reports (a publication I personally have very little respect for) tend to pick up on consumer complaints and have been known to trash other automobile brands for issues arguably smaller than some I'm reading about on these forums. (They even did so with the iPhone 4 because of antenna "problems" that customers reported). If CR decides to give Model S a poor rating based on this, I think it really could dampen enthusiasm for this car, especially since it is sold in a category of vehicle that is supposed to be rock solid and problem free.

    As a Reservation holder, I certainly hope Tesla can get a grip on these early problems and mitigate any fallout that may occur if issues start hitting mainstream. My understanding is that their service is nothing short of stellar. However, I believe they have less than 100 Roadsters in Canada, and do wonder if their stellar service can accommodate 1000's of Model S cars?
     
  4. Zythryn

    Zythryn MS 70D, MX 90D

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    I both agree and disagree with the article.
    After a successful ramp up, the next big test will be if demand can be sustained after all the awards and initial demand.

    I think they can. The luxury car market in the US alone is about 1,000,000 cars each year. 20,000 is only 2% of that.
    I would also guess that after the awards die down, and before the wait for a new reservation drops that we will see a drop in reservations. This will pick up again as the wait drops from 6-9 months to 1-3 months.
    Tesla will also help themselves by adding items common to other luxury cars such as adaptive cruise control. I am sure they will be doing this, and all sorts of other goodies:)
     
  5. Chas F

    Chas F Model S 60kWh #P6396

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    Also, I thought the NACOTY list has already been finalized and Model S didn't make the cut due to timing. Sounds like the writer didn't put much effort into research.
     
  6. Oyvind.H

    Oyvind.H Member

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    The author makes the same assumption John Petersen loves to make, which is that noone will reserve a Model S in 2013 :) Using this type of logic it`s easy to predict when Tesla will go bankrupt :)
     
  7. richkae

    richkae VIN587

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    I know plenty of people who are waiting for the time from ordering to delivery to shrink before they consider buying.
    A shorter waiting list will attract many of those. Yes, they know if they ordered now they would get it sooner than if they wait, but a lot of people are not happy being on a long waiting list.
     
  8. 49er

    49er Member

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    I don't think they can survive on luxury car shoppers alone. I look at the Model S as an $80k luxury car. That is the price point the mainstream luxury car shopper will look at it and say "I don't have to make (m)any compromises" relative to other cars in its class. I don't count the lower price-point Model S configurations because a mainstream consumer cross-shopping a Model S with a 40kWh or 60kWh battery pack has a lot of (perceived) less-constrained alternatives at the $50k or $60k price points.

    According to this Reuters article, U.S. sales data for the calendar year 2011 were as follows:

    M-Benz: 245k units
    BMW: 248k units

    Extrapolating from this article (which is hazardous for several reasons not the least of which is that it's just one month's data), it looks like about 60% of BMW's units are 1-, 3-, and 5- series. So those are cars under $70k (using carsdirect as my source for pricing). Assuming this 60% holds across other marques as well, then the market for cars above $70k in the US is 400k units/year (i.e. Zythryn's 1M units * 40%). Tesla plans not to just sell 20k Model S, but an additional 20k Model X annually, for a total of 40k units.

    That looks tough to me. Again, that's considering the current pricing.

    I hope I'm wrong! I want Tesla to succeed.
     
  9. strider

    strider Active Member

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    Keep in mind that 40k is a GLOBAL production target yet you are only looking at the US market for your demand calculation.
     
  10. 49er

    49er Member

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    That's right. What percentage of Model S sales are expected to be in the US? I'd expect it to be at least 50%. For the Model X I'd expect it to be higher; let's say 70%. That means 10k Model S units and 14k Model X units, for a total of 24k units annually in the US. In context, that's 25% of BMW's non 1-,3-, and 5-series sales in the US in 2011.

    I think the key for Tesla will be to convert otherwise-non-luxury-car shoppers. On the "con" side for Tesla, at $50k -$100k, these cars are very high consideration purchases.
     
  11. Norbert

    Norbert TSLA will win

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    To me your numbers seem too small. Why would you think US sales will be more than 50%?

    The following numbers are 2010 (they have grown since). All these start around $50k or higher, and they are just part of the market.

    Code:
    BMW 5 series      worldwide: 211,968  US: 39,488
    BMW 7 series      worldwide:  65,814  US: 12,253
    Mercedes E-class  worldwide: 323,200  US: 60,922
    The sum of just these 3 product lines is worldwide 600,000.
     
  12. Robert.Boston

    Robert.Boston Model S VIN P01536

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    People will cross-shop the Model S against not only the top-of-the line sedans, but also the upper-mid range of competitor's lines: MB E-class, BMW 5-series, Audi A6/A7, Infiniti M, Lexus G. Sure these cost less up front, but as noted, people who are spending $60k+ on a car aren't usually on a strict budget and are willing to consider spending more up front to get a better car and lower future costs. Tesla will need to start wrapping in more of the "basic luxuries" (if you'll allow that oxymoron), e.g. parking sensors.

    Also, Tesla has announced a 15k sales target for the Model X, not 20k.
     
  13. ChrisgG

    ChrisgG Member

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    Of buying a thing that lasts long and is expensive from a new company is risky. I'm not so much worrying aoubt the demand yet, as they don't really advertised yet and therefore saved a lot of money and still are on track.

    But Tesla has to prove a lot of things:

    1. That the qualetiy is good (things like the 12V Battery Brigging just isn't acceptable)
    2. They can keep up the good service and don't annoy people with long wait times for the rangers or if you drive several hundred miles and you end up staying over night there instead of driving back in the evening...
    3. That they will make a profit with their target numbers.
    4. That over some time they catch up in the 'gadget' department
     
  14. Brian H

    Brian H Banned

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    A number of points;

    1) Long term expectations are that the market will be divided equally between US (incl. Canada), Europe, and Asia-Pacific.
    2) The market segment appeal is much wider than the traditional luxury market; many current buyers are spending up to 5X more on the Model S than they have ever spent on a car before. It is a "paradigm breaker", IOW.
    3) The delivery times are compressing just due to the near-equivalence of reservation and production rates. 15K reservation backlog at 2.5K cars produced a month (current and targetted near-term rate, per Elon Musk) means a 6-month wait, for the existing reservations. Future waits will shrink or grow depending on the ratio of new reservations to existing production.
    4) The economics will begin to bite. The site teslarumors.com asks the rhetorical question, "Can you afford NOT to buy a Tesla?" on the basis of comprehensive Total Cost of Ownership (TCO) calculations.
    5) In some countries in Europe, the EV exemptions from VAT and/or other taxes puts it at a much lower price point comparison. In Norway, e.g., it is a 'steal', and sales are exceptional.
    6) TM is getting word-of-mouth and free publicity that other makers would die for. Formal marketing hasn't even begun in any real sense. It's almost as though TM is holding back from promotion because it knows it's got a tiger by the tail, and doesn't want to spur it just yet!
    7) The internal space the S, and even more the X, has is moving it into the whole "mass personal transport" niche; the soccer moms have yet to be heard from, and when they have, the Model S and X will eat deeply into the minivan and SUV markets. Which are much larger than the luxury car segments.
    8) Feature catchup is at the earliest stages. Updates (and hardware retrofits which have been suggested and/or promised) have just begun. When that "due bill" is worked through, new features will begin to be added. "The Model S you take delivery of today is the worst it will ever be." What other car can make such a claim.

    So market disillusionment, a la Leaf, is quite unlikely.
     
  15. 49er

    49er Member

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    I'm making a few assumptions that certainly could be very wrong:

    1) That the mainstream car buyer would only look at the 85kWh configuration as viable when cross-shopping, and thus the Model S is effectively a $70-80k car. That's why I excluded cars priced under $80k (removed the 1-,3-, 5-series from BMW's sales). I think Robert.Boston made a great point, though, that people looking at $60k cars might be convinced to move upward in price.

    2) That, as a relatively new car and car company, awareness of Tesla and the Model S is relatively low. In their favor, the awards and press is certainly helping to build awareness. The stores help, as do cars on the road of course. On the other hand, BMW and MB have decades of history, millions of units sold, and are established brands. Lexus has done well in its two decades of existence, but it's part of Toyota, so the resources were there from the start (and Lexus still doesn't sell much in Europe AFAIK). So I'm making an assumption that over the next few years, Tesla will derive 50% or more of the Model S sales in the US because I'm assuming awareness is higher here. Again, I could be very wrong as I don't have a sense for awareness outside of the US. The Chinese apparently love Buick, so who knows what is possible :tongue:

    Anyway, we'll find out a lot in the next 6-12 months. I do want Tesla to succeed wildly.
     
  16. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    And there's all those Prius folks, who wouldn't ever consider a BMW 1-, 3-, 5-series or similar car.
     
  17. Norbert

    Norbert TSLA will win

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    I think both of your assumptions are correct in a sense, however they are only a part of what is happening.

    As others have pointed out, the Model S has a strong attraction across the borders of any narrowly defined market segment, perhaps not for everyone, but for a good percentage of the population. As perhaps the Prius does in a similar way. But unlike the Prius, the Model S' electric drive train has a strong appeal beyond the environmental benefits.

    Yes, the newness of car and company might be a hurdle at first, but the innovation/newness in both car and company can easily be turned into an advantageous surprise factor. Model S is definitely newsworthy and attention gathering.
     
  18. vfx

    vfx Well-Known Member

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    Add to the above that more store openings equal more sales. More Superchargers will increase awareness.

    As the cars appear in TV shows, movies, and celebrity owners talk about them and be seen in them (this car is totally replacing the Prius in Hollywood), there will be even more visibility.

    Articles like this are good but they also make the assumption that everyone at the company are planning the status quo for the next year. Like GB and his team have NOTHING new planned.
     
  19. byt

    byt Member

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    I wanted to add my situation. I have never in my life purchased a luxury car and I didn't purchase the Model S for its luxury status. I did purchase the Model S for all the other reasons however... :)
     
  20. rcc

    rcc Model S 85KW, VIN #2236

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    #20 rcc, Dec 28, 2012
    Last edited: Dec 28, 2012
    I think you all are missing something.

    I've driven pretty high-powered, RWD, good handling stick shift cars for my entire adult life.

    The Model S is unique blend of driver's car and practical sedan. Even leaving out the eco-friendly/high-efficiency aspect, this car has no equal.

    I can get better handling in a Ferrari or Porsche. I can get equal throttle response in a supercar like a McLaren. I can get a comparably comfortable ride and comfortably carry 5 adults in many big luxury sedans. I can get the same amount of cargo room in SUV's and some big sedans/wagon.

    To the best of my knowledge, the only place I can get all of that in one car is the Model S. Period. To get that, I'll gladly put up with the 265 mile range and the lack of some features. Especially because it's pretty clear that the electric drivetrain is what lets Tesla put all those features into the one car.

    And no other car gives me the "mostly one pedal" driving experience of the Model S. It's better than driving a Ferarri sequential transmission to say nothing of driving a stick shift. And I get 89 mpg, pay less for power/fuel and can supercharge for free. (And since I live in CA, I'll be able to drive in the HOV lanes.)

    You won't find another car that has all that in one package.

    The Model S is a great car. It's got some shortcomings because it's electric and because Tesla is a startup. But a lot of buyers who want an eco-friendly car with a long range will accept that tradeoff. As will a lot of drivers who want a drivers car and want a comfortable ride and/or family sedan.

    I really don't see a problem selling 20,000 Model S's a year assuming no crippling quality or design defects. And I think we'll know for sure on that front in another 3-6 months or less.
     

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