S70D investor implications

[30seconds]

My view is that the 60 wasn't well received by the public and the 70D looks to be a more compelling car for basically the same price. Plus due to added weight and drag for the model X the 60 battery would be even less compelling. Battery constraints could be the issue, but with the price/car ratio getting better I wold expect more overall demand, even if 25% of orders are the 70.

we will see soon with the quarterly call

 

[jhm]

My view is that the 60 wasn't well received by the public and the 70D looks to be a more compelling car for basically the same price. Plus due to added weight and drag for the model X the 60 battery would be even less compelling. Battery constraints could be the issue, but with the price/car ratio getting better I wold expect more overall demand, even if 25% of orders are the 70.

we will see soon with the quarterly call

I agree. I think sales for the 70D to 2 to 3 times that of 60 and 85 combined. The 85D also is a more powerful and compelling vehicle than when it was first issued (0-60 went from 5.2s to 4.4s!), so I expect sales to be about 1.5 higher than before. And finally I'd expect P85D sales to remain about the same. All told we need to go from 10,030 in Q1 to about 13,500 Model S in each of the remaining quarters. I think this line up can do it.

This is a real great line up. I wish it had been in place in January when I ordered my 85. At the time, the only rationale for the 85D was to get AWD, which I did not need. The 85D was not much quicker than the 85. If I had to make my choice today I'm not sure if I would order a 70D or a 85D, but I would be more eager to buy either one, while I was willing to pass on the 60 for a year. Moreover, I would have given serious consideration to both, and that is a very good thing from a marketing point of view. I also believe people will pretty much spend what they are willing to spend. So the choice between 70D and 85D would not have made much difference in revenue. I would buy a nicely optioned 70D or a more thinly optioned 85D. It's all about getting the car that makes me happiest for the money I am willing to pay.

So under this new line up, I do expect to see ASP to drop a little, maybe $4K to $8K, while units sales go up 35%. The decline in ASP is not due to "cannibalization", however. It is simply due to selling more cars in the $75k to $90k range, options included. For example, suppose the old ASP was $100 and the ASP on 35% incremental sales is $85. Then the new ASP is $96 = (100 + 0.35×85)/1.35, meanwhile revenue is up about 30%.

So I'm excited to see how this plays out. I guess we'll see some impact in Q2, but the full impact will be in Q3.

 

[GenIIIBuyer]

I agree. I think sales for the 70D to 2 to 3 times that of 60 and 85 combined. The 85D also is a more powerful and compelling vehicle than when it was first issued (0-60 went from 5.2s to 4.4s!), so I expect sales to be about 1.5 higher than before. And finally I'd expect P85D sales to remain about the same. All told we need to go from 10,030 in Q1 to about 13,500 Model S in each of the remaining quarters. I think this line up can do it.

This is a real great line up. I wish it had been in place in January when I ordered my 85. At the time, the only rationale for the 85D was to get AWD, which I did not need. The 85D was not much quicker than the 85. If I had to make my choice today I'm not sure if I would order a 70D or a 85D, but I would be more eager to buy either one, while I was willing to pass on the 60 for a year. Moreover, I would have given serious consideration to both, and that is a very good thing from a marketing point of view. I also believe people will pretty much spend what they are willing to spend. So the choice between 70D and 85D would not have made much difference in revenue. I would buy a nicely optioned 70D or a more thinly optioned 85D. It's all about getting the car that makes me happiest for the money I am willing to pay.

So under this new line up, I do expect to see ASP to drop a little, maybe $4K to $8K, while units sales go up 35%. The decline in ASP is not due to "cannibalization", however. It is simply due to selling more cars in the $75k to $90k range, options included. For example, suppose the old ASP was $100 and the ASP on 35% incremental sales is $85. Then the new ASP is $96 = (100 + 0.35×85)/1.35, meanwhile revenue is up about 30%.

So I'm excited to see how this plays out. I guess we'll see some impact in Q2, but the full impact will be in Q3.

Agreed, the announcement of the 70D was the first real sign from Tesla that they are able to start moving up the demand curve. Very encouraging.

 

[Papafox]

I agree. I think sales for the 70D to 2 to 3 times that of 60 and 85 combined. The 85D also is a more powerful and compelling vehicle than when it was first issued (0-60 went from 5.2s to 4.4s!), so I expect sales to be about 1.5 higher than before. And finally I'd expect P85D sales to remain about the same. All told we need to go from 10,030 in Q1 to about 13,500 Model S in each of the remaining quarters. I think this line up can do it.

This is a real great line up. I wish it had been in place in January when I ordered my 85. At the time, the only rationale for the 85D was to get AWD, which I did not need. The 85D was not much quicker than the 85. If I had to make my choice today I'm not sure if I would order a 70D or a 85D, but I would be more eager to buy either one, while I was willing to pass on the 60 for a year. Moreover, I would have given serious consideration to both, and that is a very good thing from a marketing point of view. I also believe people will pretty much spend what they are willing to spend. So the choice between 70D and 85D would not have made much difference in revenue. I would buy a nicely optioned 70D or a more thinly optioned 85D. It's all about getting the car that makes me happiest for the money I am willing to pay.

So under this new line up, I do expect to see ASP to drop a little, maybe $4K to $8K, while units sales go up 35%. The decline in ASP is not due to "cannibalization", however. It is simply due to selling more cars in the $75k to $90k range, options included. For example, suppose the old ASP was $100 and the ASP on 35% incremental sales is $85. Then the new ASP is $96 = (100 + 0.35×85)/1.35, meanwhile revenue is up about 30%.

So I'm excited to see how this plays out. I guess we'll see some impact in Q2, but the full impact will be in Q3.

JHM,
I mirrored your feelings in another thread: this is a great lineup of cars. The 70D is a really compelling entry point, complete with supercharger access, the 85D is a near supercar with its amazing acceleration, and the P85D is the most affordable supercar on the market (which also happens to be economical to maintain and feed). Add autopilot and you have strong reasons for early adapters to move up much sooner than they would otherwise. There's not a weak car in the lineup. Here in Hawaii, we're seeing used 40kwh and 60kwh Teslas being scooped up by former Leaf drivers.