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

[dww12]

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.

He’d rather, and is planning for selling 5-10x on Model 3/Y than 1.2-1.5X on S&X that only scales so far because not everyone can buy an $80k car nor will the consider putting it immediately in the RT fleet.

 

[Zaxxon]

[lack of bluetooth phone-as-key] 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.

There's a tweet somewhere from Musk on the order of a year ago saying that it's coming to the S/X. So I hope that's still the case. We'll see. I'm just stoked that the 3 just finally got the ability to tie the phone or card key to a driver profile. That was one of the big things the S/X had that the 3 did not until just now.

 

[seldon]

Tesla should address the cease-and-desist letter from NHTSA by changing messaging to "not the safest car in the world"

 

[RobStark]

It's difficult to understand peoples priorities at times. Save a minute or two on charging times on the odd occasion charging at home doesn't cover travel distance vs better suspension, better air quality, larger size, better acceleration, etc.

The S&X are clearly better vehicles, just not so much better that they are universally seen as being worth the extra money.

Deciding which vehicle is better is mostly based on finances rather than technology.

The point is when spending double you should get all the best technology and more than the car offered for half.

In 2019, all $80k plus cars should be offering articulating LED headlights.

I can get those in a top spec Camry.

 

[powertoold]

Tesla should address the cease-and-desist letter from NHTSA by changing messaging to "not the safest car in the world"

The nhtsa is right though. Model 3 not safest, Sherman tank is

 

[kbM3]

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.

My personal guess is that they made a strategic decision to delay a major interior and/or battery pack upgrade to prioritize more important projects, but were probably caught by surprise by how much demand did drop,

Of course the big question is how much the reduced demand is due to competition’s offerings vs. tax credit drop vs. Model 3 cannibalization, vs. waiting for upgrade.

 

[anthonyj]

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?

I used to believe this and was very vocal about it. Def no demand problem though. Maybe pay Tesla owners to Uber/Lyft, maybe $2 a trip to show off their EVs

 

[humbaba]

Another consideration is the person's physical size. A guy that works at my gym has seen both my Tesla's, and tells everyone that his next car is a Tesla. There are 2 conflicting problems:
1) His budget is only about $60,000, so even an S 100D is out of his budget. So, I told him he really needs to check out a Model 3 Performance. But, problem #2:
2) He is a big guy, both 6'3" and muscular/big build. He presently drives a BMW 5 series, and says he prefers bigger cars because of his size.
I think I have convinced him to go drive both cars, and have told him the Model 3 is actually a lot larger inside that it appears because of the increased cabin size from having no motor and transmission up front. If he feels comfortable in the 3P I think he would be happier in the long run, IMO, than picking up a 3 or 4 year old used Model S.

I'm no body builder, nor am I muscular, but I'm nearly that tall with a lot of that in the legs. The Model 3 was the first car where I could put the seat too far back. What I initially found awkward was getting in/out always seemed to crack my hip against the door frame, but some adjusting minimized that and using the "Easy" profile put the problem to bed. I just have the steering wheel as high and far forward as possible and then position the seat for easiest in/out. The only remaining problem was when my wife drove the car so it remembered her profile seat position, but the most recent update resolves that quite nicely.

At his price point its hard to see what the S would offer.

 

[ggr]

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.

Or Musk/Tesla have internal and market research leading them to believe it isn't a problem. They appear to have been wrong in Q1, but I see no evidence that they aren't taking whatever steps they feel are needed.

 

[kengchang]

Service Center secured!

 

[CorneliusXX]

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.

How long were you waiting on the X while the 3 was charged?

Do you think you would have a noticeably worse road trip due to the charging speed difference if you weren't comparing it to the 3?

I'm curious to know if the enjoyment of the trip would be significantly different due to charging speed differences, or whether the X seemed worse because of the marginal difference to the 3.

 

[Curt Renz]

Undecided with Matt Ferrell - yesterday:

 

[kengchang]

How long were you waiting on the X while the 3 was charged?

Do you think you would have a noticeably worse road trip due to the charging speed difference if you weren't comparing it to the 3?

I'm curious to know if the enjoyment of the trip would be significantly different due to charging speed differences, or whether the X seemed worse because of the marginal difference to the 3.

Even if Model X can charge at 250kW, it will still take longer than Model 3 due to 100kWh vs 75kWh battery. That's physic.

 

[jbcarioca]

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.

Frankly I disagree with you on this point but we all should heed the possibility that you're correct. The issues are clear:

1. In some respects Model S and X are no longer the stars in the Tesla universe;
2. The largest impact financially is now coming from new models;
3. Tesla has not come close to adequately serving the S and X target markets globally, nor even in North America;
4. ...Apart from changing restrictive market access laws in some major US States (e.g. Texas-the US 2nd largest vehicle market);
5. ...establishing any distribution at all in many countries, some of which are quite large;
6. ...having solid local distribution/service facilities even in California, much less anywhere else.

Then there is the fact that in many major markets higher end cars tend to be fleet/company cars and have special requirements which Tesla mostly cannot now provide...and so on.

There are quite good arguments why Model S and X are nowhere near obsolescent, many of which are distribution oriented.

OTOH, there is always the industry norm renewal cycle for people who own expensive cars, and many such people want some modest undramatic physical manifestation of their continuing good taste. It seems quite likely that the existing customer base refresh cycle is suffering from that lack of visual confirmation coupled with clever and inconsequential technical revisions that will help justify the economically unjustifiable new car. This argument is very important and probably one that Elon does not much consider especially because both S and X have been consistently becoming better and better. We are probably overthinking this aspect by making it appear to be rational while the choice is emotional.

BTW, my qualifications for the last point are definitive: Porsche 964 to 994; MB 300SEL 6.3 to 450SEL; a succession of 3-series BMW convertibles (OK, those were my spouses) and so on. Not only automotive: I have a deep Apple addiction fed every year; a fairly long succession of increasingly ridiculous airplanes and so on.

Due to my qualifications and similar ones I know of among us multi-Tesla addicts I insist this is really a desire for a flashy new version. My checkbook is waiting as are others. It has precisely zero rational basis-the current S and X are the finest of their type in the world; we just want more...

 

[RobStark]

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.

1) Nobody does completely new every three years. At most, is a mild refresh after three years and new body style every 5 years with minor differences in the interior. We like to joke that ICE cars have barely changed in the last 30 years but sometimes claim traditional manufactures make radical changes every three years? Legacy OEMs rarely change tooling for decades.

2) MB was known for having crap initial quality on an all new model then slowly improving so the last model year was very good, despite this MB sales trailed off the last years before a major refresh. Lexus ate MB's cheese in North America over this practice.

3) Tesla doesn't need a major refresh every three years. If it is going to keep Model S exterior basically unchanged for 10 plus years it needs at least two refreshes. Refreshes hurt resale value for older cars. This is true. It also boost sales of new cars. As those with the older version want the new version.

 

[ReflexFunds]

I discussed parts of this briefly the other day, but I thought I’d write in a bit more detail.

One (of many) of Tesla’s key competitive advantages is its huge battery and powertrain cost advantage. (I’ll go into its other advantages another day)

Sandy Munro’s car teardown and P3’s cell teardown reports (arranged by UBS) put Tesla’s cell costs at $111/KWh, pack costs (for SR) at $35/KWh and other powertrain costs at $4.5k. For SR+ this totals $12.5k ($8k for battery pack, $4.5k for other powertrain).
For Chevy Bolt total Powertrain costs were estimated at $16.6k ($12.3k battery pack, $4.3k other powertrain).
Sandy Munro estimated mass market ICE powertrain costs at $6.5k and Luxury ICE powertrain costs at $8.5k (BMW 330i).
So this gave Tesla a $4.1k cost advantage vs Chevy Bolt on its Powertrain. However Model 3 specs are equivalent to a luxury ICE while Chevy Bolt specs are closer to a mass market car. So really Tesla’s cost advantage vs the bolt relative to their equivalent ICE Powertrain is $6.1k. Relative to the BMW 330i, Model 3’s powertrain costs are c.$4k more expensive. So Model 3 costs are significantly closer to the ICE equivalent and they are to its EV competition.

It’s worth noting that the Chevy Bolt powertrain was $4.6k cheaper than UBS’s previous estimates when UBS/Munro’s first teardown study came out in May 2017. So together this $4.6k Chevy beat plus Model 3’s $6.1k beat puts Tesla’s EV vs ICE powertrain cost premium $10.7k lower than UBS (and much of the auto industry) was estimating for EV tech as recently as 2017. Just $4k further to go for powertrain upfront cost parity, ignoring Tesla’s other cost advantages and other total costs of ownership advantages.

So just a reminder, Tesla’s SR+ Powertrain is $4k cheaper than the Bolt despite vastly superior specs on every metric. How do the specs compare?
· Range: Model 3 240 miles. Bolt 238 miles.
· 0-60 Acceleration: Model 3 5.3 seconds. Bolt 6.5 seconds.
· Max charging: Model 3 250KW. Bolt 50KW.
· Powertrain Life: Model 3 battery 500k miles, other powertrain 1,000k miles. Bolt 200k miles?
· Power: Model 3 306 HP. Bolt 200 HP.
· Torque: Model 3 415 lb-ft. Bolt 266 lb-ft.
· Battery fires: No known fires for either? Vastly better than ICE cars.

The Bolt is not a special case. As far as we know Model 3’s powertrain costs also beat the Audi E-tron and Jaguar I-pace by a similar if not greater margin.

How does Tesla have such a lead?
Five reasons: 1) Cheaper battery cells, 2) Cheaper battery packs, 3) Better battery to wheel efficiency, 4) Better weight (including battery pack capacity/kg and motor power/kg) and 5) Better drag coefficient.

 

[Tslynk67]

Model S never really had the great exterior design that was envisioned(and supposed to be done by FIskar). The Model X is just straight up unpleasant to look at. Both sold well because they were amazing ground-breaking vehicles, but are now being cannibalized by M3 and the prospect of MY.

They'll refresh MS exterior a bit soon and do a bigger overhaul on MX I'm sure. Can we just give it a rest now?

Are you nuts? The Model S is an absolute classic on the exterior, very classy indeed. Yeah, the inside looks a bit dated now, but it's a beautiful car.

As for the X, well it's hard to build beautiful tanks, but I reckon my car is not too shabby, no?

 

[Zaxxon]

How long were you waiting on the X while the 3 was charged?

Do you think you would have a noticeably worse road trip due to the charging speed difference if you weren't comparing it to the 3?

I'm curious to know if the enjoyment of the trip would be significantly different due to charging speed differences, or whether the X seemed worse because of the marginal difference to the 3.

It wasn't a huge deal, but it was a stark contrast. Probably only 10-15 minutes on average additional for the X but I didn't time it.

 

[Joe F]

A quick forum search found this thread declaring S and X as being chopped liver due to the refresh many are calling for. Perhaps join the discussion there? And I found this post there that highlights the improvements made to the MS over time.

There's no compelling difference that will persuade anyone to declare any one model better than the other. As several folks have stated, it depends on your needs. It also depends on your physical ability to manage ingress and egress on a given vehicle, despite differences on newer features on more recent designs. I have family that refuse to ride in the back of my MS due to their condition. In a M3, it would be near impossible for them.

 

[Antares Nebula]

Due to my qualifications and similar ones I know of among us multi-Tesla addicts I insist this is really a desire for a flashy new version. My checkbook is waiting as are others. It has precisely zero rational basis-the current S and X are the finest of their type in the world; we just want more...

I agree with this in part. Like you say, there are many folks that just want a flashy new Tesla. Especially rich folks. And for this reason, some would even rather buy an iPace or eTron, just because its the newest EVs and Model S (at least exteriorly) is no longer new or flashy. So yes, this is affecting demand.

But again, different strokes for different folks. Myself, I fall into the more logical camp and am more tech/feature oriented. I actually like the way the S looks (more so than the 3) and never owned one. So I would love to buy an S, but refuse to shell out 100k if it doesn't have the latest and greatest tech/features, like the Model 3. I'm pretty sure that I'm not alone in my thinking.