After unsuccessful? sale of Tesla car (and short), Tilson goes on a test ride for investment purposes… My Test Drive Of The Tesla Model X by Whitney Tilson
Summary
Last week my wife and I test drove the new Tesla Model X SUV, mainly because we’re in the market for a new car but also for investment research purposes (though I currently have no position in the stock).
It is a spectacular car: it looks great, is quite compact for an SUV with a third row, and the inside is very cool and stylish – with the huge windshield and falcon-wing doors, it feels like being a spaceship.
It is likely the only car that might persuade us not to upgrade to the new Volvo XC90 hybrid, which says something given that we’ve only driven Volvos for nearly two decades.
I did find some negatives: it’s very expensive, the third-row seats are very cramped and I’m not sure the falcon-wing doors are very practical.
A couple of years ago, I put down $5,000 and got in line (I am #10,128) for the new Tesla SUV, the Model X. At long last, Tesla (NASDAQ:TSLA) is now manufacturing this car, so it’s time for my wife and me to make a decision: do we want to order one, or just get our $5,000 back?
To make this decision, we wanted to see, experience, and test drive the car, so we signed up for a visit to the Tesla showroom in NYC last Wednesday. I drove the car around the block for 15 minutes (in heavy traffic; no chance to take it out on the West Side Highway, alas) and then we spent the better part of an hour checking out the Model X in the showroom and spec’ing out the exact car we’d want, if we choose to buy one (details below).
In short, it’s a spectacular car. We went to see it without any expectation that we’d actually buy one – we’re perfectly happy with our seven-year-old Volvo Cross Country, though it’s a gas guzzler and is getting a bit run down – but are now seriously considering buying it (though with a few days of reflection, I think we’re more likely to upgrade to the new Volvo XC90 hybrid, which I compare to the Tesla Model X here).
As you can see from the pics below and the ones I’ve posted here, the Model X looks great – not big and boxy like a lot of SUVs with third rows – and the inside is very cool and stylish. With the huge windshield and falcon-wing doors, it feels like being a spaceship. And by all accounts, Teslas drive amazingly well, though I wasn’t able to judge this.
A few observations and comments:
- Second row: The second-row seats were very comfortable. They slid and also pivoted backwards and forwards, which the same seats in our current car don’t do. If you slide one of those seats all the way back and pivot it backward, it’s super comfortable. But they move quite slowly (electric, not manual), so if someone is regularly getting in and out of the third row, the delay might become annoying.
- Third row: In contrast, the two seats in the back (third row) are very cramped. No adult would be comfortable there for very long, but with the second-row seats moved forward a bit, children up to maybe age 12 would fit fine.
- Falcon-wing doors: The falcon-wing doors take about five seconds to open, as you can see from this video I took (which also shows the interior). It didn’t seem irritatingly long at the time, but maybe over time it would become annoying? Note that you can open the falcon-wing doors with the key fob as you approach the car as well as from the front console.
- Storage: If you add in the “frunk” (storage area in the front; see pics 11 & 12 here; pics 13 & 14 show the rear storage with the third row of seats both up and down), the Model X, despite being quite a bit smaller, appeared to have about as much storage space as our current car, which is a lot, especially if you fold down the third-row seats. Unlike our current car, however, the second-row seats don’t fold down, so that would be a disadvantage a few times a year when I want to throw my bike in the back without popping the front wheel or taking a lot of trash cans to the dump. Similarly, there are no roof rails, so there’s no way to tie a bag or two on the roof with bungie cords (as I do 2-3 times a year), nor do the falcon-wing doors allow any sort of roof rack for a storage bin or something like a paddleboard or kayak. That said, for $200 extra we ordered the Accessory Hitch, which holds bikes, skis and snowboards. It looks like this:
Tesla Model X SUV
- Consumer Reports’ rating of the Model S and concerns about reliability: The annual auto issue of Consumer Reports came out last week and I’ve posted the pages that mention Tesla here. CR gives the Model S a perfect 100 road score and the highest Owner Satisfaction score in its category, but only an overall score of 77 due to (from the write-up on page 65): “tight access, restricted visibility, and range limitations, especially in cold weather…Reliability has dropped to below average.”
Regarding the latter, the Model S is one of only 22 models in red on The Worst of the Worst (page 67) for reliability: “The true stinkers are shown in red; they’re models with much-worse-than-average overall reliability based on multiple years of data. We recommend skipping all of them.”
If you look at the details, however (page 96), the reliability issues don’t seem as worrisome: the Drive System has gone from worst to best from the 2012 to 2015 model, In-Car Electronics went from below-average in 2012-14 to above average in 2015, so the only remaining below-average area is Noises/Leaks.
In summary, it appears that people love their Model S’s overall and are willing to overlook a smattering of minor issues that come up too often.
(A Tesla shareholder and early Model S owner, who’s #6 in line for a Model X, joined us last week for the test drive. He thinks the Model S is the greatest car ever, but is considering switching to the X for more room because because he will have a third child soon. His comment about the CR’s ratings: “I think owner satisfaction is the score that matters. It is nothing but joy to drive, and you can see small issues being fixed proactively.”)
Later via email, I asked the salesman about CR’s ratings. Here was his reply:
It is also important to keep in mind that many cars used in this survey were some of the very first Model S’s to come off the production line. This gives them a higher chance of finding flaws as our cars in the beginning did have kinks that needed to be worked out, and eventually they were. This is where our customer satisfaction comes into play- the 97% customer satisfaction rate that we have shown truly speaks for our service team. This gives us a higher customer satisfaction than any other car company. I’m glad that you also pointed out the fact that our reliability actually has increased dramatically as well.
- Safety features: The Consumer Reports auto issue had a section on safety features called “Safety at Any Price”, which I’ve posted here. I asked the sales rep if the Model X has all 10 of the features CR mentions. Here was his reply:
I am confident that every safety feature on this article is covered on the Model X, if you purchase the autopilot package. If you’re interested, the article below by Car & Driver compares Tesla autopilot features to BMW, Mercedes, & Infinity. What is eventually discovered is that our cars semi-autonomous driving is almost twice as reliable as the others. I’d argue that the autopilot & safety sensors on the Model X or Model S are the best you can get in the industry.
Semi-Autonomous Cars Compared! Tesla Model S vs. BMW 750i, Infiniti Q50S, and Mercedes-Benz S65 AMG
A Short Seller’s Comments
I sent my write-up to a friend who is short Tesla’s stock and he shared some comments:
Tesla’s rollout of its new Model X has been a disaster, with various enthusiast forums reporting myriad problems with its “falcon-wing” doors, seats and general build quality, as well as a very low confirmation rate for the refundable “orders” the company claims to have. And those orders that do exist are being delivered in ultra-slow motion as Tesla-which despite years of delays clearly did inadequate Model X testing-attempts to fix the vehicle’s problems (although of course its massive size problem is unfixable).
Those doors are bumping into garage ceilings and constantly malfunctioning, and apparently targeted SUV buyers find it to be a huge problem that the rear seats don’t fold down.
In addition to its design, manufacturing and quality problems, the X’s $5,000-$7,000 premium to a comparable Model S sedan will be a huge sales-limiting factor, as nearly all of the luxury competition prices its premium SUVs considerably less expensively than its premium sedans. For instance, the most basic “X” with no options and only 220 miles of range (and unavailable until late this year) starts at $81,000 with only five seats standard; by comparison, the all-new seven seat Mercedes GLS starts at an estimated $65,000, a five-seat Porsche Cayenne at $58,000, a BMW X5 at $55,000 and the beautiful new (and award-winning) Volvo XC-90 at just $44,000.
You wrote re. CR: “the Drive System has gone from worst to best from the 2012 to 2015 model…”
…and yet the noise/replacement issues generally don’t start happening until around the 30,000-mile mark, so you won’t see them yet on a 2014 or 2015 model. I have a friend who spoke with EV engineers at several top companies and they all think – after having done teardowns – that the Tesla motor design is junk, completely incapable of long life under the rapid acceleration that Musk likes to promote so heavily.
In the forums they’re still replacing drivetrains starting at 30,000 miles. And sure they bend over backwards to keep customers happy, but that combined with a product racking up thousands and thousands of dollars in warranty service doesn’t make for “a business model.”
As for autopilot, Tesla is only more reckless than the others (perhaps because Musk doesn’t care if he gets sued because the company has no net assets, LOL). The new Mercedes E-Class (out next month) has 23 autopilot sensors to Tesla’s 14, and thanks to Tesla’s “pressure” Mercedes is supposedly thinking about giving it a lot more autonomy than it was originally planning to do. When that happens, it will be much safer than Tesla’s and equally capable.
Regardless, I’m not saying that Tesla is a terrible car if you can live with the range limitations/restrictions (especially on a cold winter day, when you’d be lucky to get 150 miles out of it) and don’t mind it constantly being in the shop for repairs (not on your dime, on the company’s)… I’m saying it’s a terrible BUSINESS lead by a lying management team.
Options
On Tesla’s web site, each buyer gets to custom-design their own car. I’ve posted pictures here of the car my wife and I spec’d out (pics 1-2), which happen to be the same color and interior as the one in the showroom (pics 3-4). Pics 7-13 are of the three cars that were outside for test drives.
The first option is to pick among the three base models:
The 90D is $13,000 more than the 70D, which gets you a bigger battery, which gives you longer range (which we care about), faster acceleration and higher top speed (which we don’t). (It’s another $20,000 for the P90D and another $10,000 for the “Ludicrous Speed Upgrade”.) We chose the 90D.
After you pick the exterior, interior and trim colors and decide if you want tricked-out wheels, you choose among five, six or seven-seat configurations:
Pics 7 & 8 (below) show the 6-seat configuration (with space between the seats in the second row) and this shows the 7-seat configuration that we chose:
Here are the various other options (and what we chose):
- Autopilot Convenience Features ($2,500) (yes)
- Premium Upgrades Package ($4,500) (no)
- Subzero Weather Package ($1,000) (yes)
- Ultra High Fidelity Sound (17 speakers instead of 9) ($2,500) (no)
- Towing Package ($750) (no)
- Accessory Hitch ($200) (yes)
So here’s the summary of what we spec’d out:
Cost
There are two options: buy or lease. Here’s the buy option:
So it’s $108,650 all in, then 14 months from now I’d get the $7,500 tax credit, so that’s $101,150. That’s pretty pricey!
And here’s the lease option:
All leases are 36 months. The salesman said the option to buy at the end of the lease was lousy, so we should assume that we’d just return the car.
If so, here’s the math: $7,138 upfront plus 36 months at $1,443/mo. equals $59,086, or 58% of the cost to own the car. Not much of a deal methinks – though this 90-day option is worth something:
Happiness Guarantee
On October 25th, 2014, Elon Musk announced significantly lower lease payments. Along with the lower payments, every vehicle lease comes with the Tesla’s Happiness Guarantee. If you don’t like our car for any reason in the first 90 days, you can just return it and your remaining lease obligation is waived. While you cannot immediately lease another Tesla vehicle, you can upgrade to a higher optioned vehicle for a fee to cover the new vs used value difference. Contact us for more information.
Delivery
The salesman said if we ordered now, we’d likely get the car by late summer or early fall (no guarantees).
Please let me know what you think in the comments below!
Please note, I have no position in the stock.
