Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Nocturnal]

A lot of people think the S is actually the best looking Tesla.

I find the X really depends on the color. Personally, I really like it with the White paint and black 20inch rims.

I love my 3 but I'm in this camp. Not counting the roadster of course.

 

[Zaxxon]

I am not trying to be defensive, but your statement clearly said "and that a relatively Inferior Model S,X to the 3 (not in all, but in certain important aspects) is affecting S,X sales" is clearly saying that part of the reason that S,X sales are suffering is because they are "relatively" inferior to the 3, and I heartily disagree. I am simply asking you for an example of the important aspect that is inferior on the S,X compared to the 3 that would affect someone's purchasing decision.

So the fact that it can only charge at 200Kw versus 250Kw (which I did mention) is the deciding factor in your purchasing decisions. So having 20% faster charging for, what, about the first 5 minutes of supercharging? So 1 minute faster charging is how you think "many" people judge a 100k purchase.

I own both a 3 and an X (new Raven), so I think I have a solid perspective on this. And I think it is relevant to investors, as there are some ways (significant to me) that the 3 is objectively better than the S/X. And vice-versa. But enough 'wins' for the 3 that I'm sure that it's a partial cause for lower S/X sales:

-The 3 is half the price of an S, for virtually equivalent driving performance (looking only at the drive). It's not quite as quick, but feels just as quick since it's smaller. It's also more agile.
-The S/X do not have the 3's 'virtual' climate controls. This is actually a big deal in day-to-day use if you share the car with someone else and have significantly different climate control/vent position preferences. In the 3, you get in the car and the vents and other controls are exactly as you like them. I get in the X after my wife has driven it and I have to readjust all the vents manually. (With my hands!!!!) Definite first-world problem, but a clear win for the 3.
-The S/X do not have the 3's phone-as-key option. This is my biggest single complaint when I drive the X. The fob is cool, and it should certainly still be a feature on the X as it makes remote door operation simple. But having to go get the fob every time I enter the car and then carry it with me while I'm out, is an inconvenience that's simply not needed. You can kind of work around this if your phone and the car have solid data connections by manually unlocking and remote starting via the app, but it's not nearly as convenient or reliable as the Bluetooth connection the 3 uses. It feels antiquated to have to go get the fob now that I'm spoiled by the 3.
-The S/X can't charge as quickly, either in raw power level (200 kW vs 250 kW) or miles-per-minute measures. It's actually a significant difference (not 5 minutes as you mentioned above). I recently took both cars together on a road trip and we were routinely waiting for the X while the 3 was ready to depart before we were.

All this said, the X is still a fantastic vehicle (I just bought one, right?). But to pretend that the 3 is not the technological leader in Tesla's fleet is to wave away what's in front of you. Combine that with the very significant price differential and you have certain cannibalization.

I have no doubt that all of those features (and some new ones) are coming to the S/X eventually.

 

[madodel]

A lot of people think the S is actually the best looking Tesla.

I find the X really depends on the color. Personally, I really like it with the White paint and black 20inch rims.

I still get lots of complements on my now 3 1/2 year old X. Seeing all the shoebox SUVs makes me appreciate the beauty and uniqueness of my X. All those other look alike SUVs are just cars eventually headed for the junk heap of history.

 

[Antares Nebula]

I own both a 3 and an X (new Raven), so I think I have a solid perspective on this. And I think it is relevant to investors, as there are some ways (significant to me) that the 3 is objectively better than the S/X. And vice-versa. But enough 'wins' for the 3 that I'm sure that it's a partial cause for lower S/X sales:

-The 3 is half the price of an S, for virtually equivalent driving performance (looking only at the drive). It's not quite as quick, but feels just as quick since it's smaller. It's also more agile.
-The S/X do not have the 3's 'virtual' climate controls. This is actually a big deal in day-to-day use if you share the car with someone else and have significantly different climate control/vent position preferences. In the 3, you get in the car and the vents and other controls are exactly as you like them. I get in the X after my wife has driven it and I have to readjust all the vents manually. (With my hands!!!!) Definite first-world problem, but a clear win for the 3.
-The S/X do not have the 3's phone-as-key option. This is my biggest single complaint when I drive the X. The fob is cool, and it should certainly still be a feature on the X as it makes remote door operation simple. But having to go get the fob every time I enter the car and then carry it with me while I'm out, is an inconvenience that's simply not needed. You can kind of work around this if your phone and the car have solid data connections by manually unlocking and remote starting via the app, but it's not nearly as convenient or reliable as the Bluetooth connection the 3 uses. It feels antiquated to have to go get the fob now that I'm spoiled by the 3.
-The S/X can't charge as quickly, either in raw power level (200 kW vs 250 kW) or miles-per-minute measures. It's actually a significant difference (not 5 minutes as you mentioned above). I recently took both cars together on a road trip and we were routinely waiting for the X while the 3 was ready to depart before we were.

All this said, the X is still a fantastic vehicle (I just bought one, right?). But to pretend that the 3 is not the technological leader in Tesla's fleet is to wave away what's in front of you. Combine that with the very significant price differential and you have certain cannibalization.

I have no doubt that all of those features (and some new ones) are coming to the S/X eventually.

Thank you @Zaxxon. I was not aware of these additional differences. This makes it even more clearer that there are sufficient non-trivial differences (beyond price) that will sway (some, but not all) potential S,X customers to wait (or get a 3 instead). Different strokes for different folks.

BUT IT IS AFFECTING DEMAND OF THE HIGHER END MODELS.

And this doesn't even consider whether the S,X design (interior and exterior) are long in the tooth and in need of an update (another debatable point I'm sure).

 

[jerry33]

Not perfect I agree, but the present badging scheme doesn't provide ANY differentiation within a model year.

The problem is that in some cases the manufacturing order is old, new, old, new. And certain items can be retrofitted.

 

[Drax7]

Tesla has had down quarters before. Q1 and Q3 of 2015 were down sequentially, as was Q1 of 2016. They haven't had a quarter that was down Y/Y since shipping the Model S - this quarter will probably be the first.

2 qtr in 2016 were lower , otherwise successively higher since and until
1st qtr of 2019. Sequential growth is
Difficult to obtain in any business and Tesla for the most exhibits that.

 

[Antares Nebula]

Another point that some of the more enthusiastic bulls are failing to realize is about market psychology. When a customer buys a top of the line product, they expect it to be top of the line in almost every way (even if some of those aspects/features are not of actual practical use to that particular customer). For example, if I buy the top of the line iPhone, I expect to have the best camera and screen among iPhone models (even if i'm not really much of a camera person, for example). It's simply the fact that I'm paying top dollar, so I expect a superior product. I would not want my top of the line iPhone to have an inferior camera or screen than a cheaper iPhone model.

This same psychology applies to cars, and more so, since it is usually the second most expensive item people buy. People who buy the higher series BMWs or Mercedes expect it to be superior to the lower series in almost every way. Same thing for Tesla. But the differences @Zaxxon pointed out in his comment above make this claim problematic for S,X. Yes, it is superior in many ways but not in other non-trivial ways. So the reaction is: "if I'm not getting the best that Tesla has to offer, then I'm going to wait or get something else". Again, not everyone will have this reaction, but many will.

 

[wipster]

Agreed. S b hot AF.

The Mercedes E series (W210 & W211) stayed basically the same from 1995 to 2009, with a bit of a refresh in 2003 (both inside and outside). They did a few little changes, but basically it was the same car. Mercedes used to be known for that. I don't find any problem with Tesla not doing a major redesign with the S and X over a 10 year period. I personally love eliminating the "model year" concept where manufacturers feel pressured to introduce something completely new every 3 years.

Tesla's practice of software updates and improving something in their vehicles when they discover something better (e.g., wiring, air conditioning, etc.) is far superior to mandatory new years to give the car magazines something to write about. I welcomed the slight refresh of the S getting rid of that faux grille plus the recent substantial mileage improvement and they did it because it was relatively easy and the benefits surely exceeded the costs. But I applaud Tesla's practice of making major changes when it makes sense rather than being expected to just because it's the 2020 model year.

 

[RobStark]

Also, in case anyone's curious, activity has resumed at the prospective service centre / store in "Mini-Norway" (aka Iceland ). Little had happened since they set up furniture at the end of June, but yesterday they bought and started setting up computers and printers, and today there was a person in there working on a laptop, a cleaning truck on site, some unknown person's Model X, etc.

 

[Joe F]

Yes, it is superior in many ways but not in other non-trivial ways. So the reaction is: "if I'm not getting the best that Tesla has to offer, then I'm I'm going to wait or get something else". Again, not everyone will have this reaction, but many will.

Because, you've interviewed many people and are qualified to make that determination? Repeatedly at this point today, I might add.

Can you guys please take this argument elsewhere?

Mods: Please make it so.

 

[Cosmacelf]

But even on the recent earnings calls, Elon was at a loss to explain the lack of demand for S,X:

[...]

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."

I think Tesla is finally hitting the wall of organic demand based on word of mouth, and free PR. Maybe, just maybe, they should try some paid advertising and see what happens?

 

[dha]

I think Tesla is finally hitting the wall of organic demand based on word of mouth, and free PR. Maybe, just maybe, they should try some paid advertising and see what happens?

My take: for the majority of prospective customers, S / X simply do not provide enough value over 3 / Y to justify significantly higher cost.

Either...

- Musk doesn't understand this

- Musk does understand this, there are additional enhancements to S / X coming and Musk has been tight-lipped to avoid Osborning

- Musk does understand this, there are no additional enhancements to S / X coming (lack of R&D bandwidth, other priorities, low ROI at the moment compared to other demand levers) and Musk is feigning ignorance to avoid talking down his flagship products.

 

[tschmidty]

Another point that some of the more enthusiastic bulls are failing to realize is about market psychology. When a customer buys a top of the line product, they expect it to be top of the line in almost every way (even if some of those aspects/features are not of actual practical use to that particular customer). For example, if I buy the top of the line iPhone, I expect to have the best camera and screen among iPhone models (even if i'm not really much of a camera person, for example). It's simply the fact that I'm paying top dollar, so I expect a superior product. I would not want my top of the line iPhone to have an inferior camera or screen than a cheaper iPhone model.

This same psychology applies to cars, and more so, since it is usually the second most expensive item people buy. People who buy the higher series BMWs or Mercedes expect it to be superior to the lower series in almost every way. Same thing for Tesla. But the differences @Zaxxon pointed out in his comment above make this claim problematic for S,X. Yes, it is superior in many ways but not in other non-trivial ways. So the reaction is: "if I'm not getting the best that Tesla has to offer, then I'm I'm going to wait or get something else". Again, not everyone will have this reaction, but many will.

I think they are fairly trivial to be honest. Not sure why you feel the need to go about it but I guess you are determined to have 100% of the people agree with you. I for one am not listening anymore.

 

[JRP3]

I own both a 3 and an X (new Raven), so I think I have a solid perspective on this.

Comparing charging times between those two vehicles isn't really appropriate. A Raven S will charge at a faster mph than an X and has greater range.

When a customer buys a top of the line product, they expect it to be top of the line in almost every way

Larger more expensive vehicles are rarely expected to have better handling or acceleration, which are fairly important metrics for vehicles.

 

[Unpilot]

Looks like a strong finish today.

 

[Don TLR]

I'm with @Antares Nebula , the 3 shouldn't be the Flagship car. I'm not paying a premium for the car that's not the latest and greatest from the company, when there seems to be more focus put on the 3 for new features.

 

[ggies07]

Looks like a strong finish today.

Spoiler

That's what she said

 

[Zaxxon]

Comparing charging times between those two vehicles isn't really appropriate. A Raven S will charge at a faster mph than an X and has greater range.

The MPH comparison is difficult, sure. But when the power is also lower, it's a bigger deal.

 

[Antares Nebula]

Okay folks, I'll stop. Sorry if I was being annoying. I am a pretty ardent bull and can be passionate in both my praise and criticisms. I was trying to provide what I thought was constructive criticism.

 

[tschmidty]

My take: for the majority of prospective customers, S / X simply do not provide enough value over 3 / Y to justify significantly higher cost.

Either...

- Musk doesn't understand this

- Musk does understand this, there are additional enhancements to S / X coming and Musk has been tight-lipped to avoid Osborning

- Musk does understand this, there are no additional enhancements to S / X coming (lack of R&D bandwidth, other priorities, low ROI at the moment compared to other demand levers) and Musk is feigning ignorance to avoid talking down his flagship products.

My take would be number 3. At this point he has already stated that as a proportion of sales both volume and revenue the S/X are not going to be a huge percentage of sales/revenue, so the determination is to focus on the other upcoming products rather than put resources towards those.

@Zaxxon mentioned 4 points, price, climate control, phone-as-key, and charging.

1. Is what it is
2. Probably not a monumental engineering effort, but again is it going to drive demand and be worth the effort?
3. This I am really surprised about, seems like it would be fairly simple to add that feature. I am 100% sure it has bluetooth, but may require a different module to handle the always on aspect of it, so not a simple software fix or else they would have done it. Then again some people really dislike the hobbled key fob for the Model 3. Personally, I love this feature and think even if it required a hardware change it can't be that significant and would be a nice thig to offer even as a retrofit.
4. Is also what it is. It is a larger battery, it will take longer to charge. I really don't get what you would expect to happen. The 200Kw versus 250 is not the major factor in why it takes longer to charge (lookup how long that 250KW charging lasts, about 5 minutes before it starts to taper off), it is that it is 25% bigger to get the same range. Now if you were to say it takes 50% longer to charge to the same SOC as the LR3 that would be a concern, but that is not the case.