Will Tesla Motors Inc Model X Cannibalize Model S Sales?

Will Tesla Motors Inc Model X Cannibalize Model S Sales?
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One expert says Model X will account for about 90% of Tesla’s sales by 2016

Tesla’s forthcoming Model X SUV crossover has been plagued by delays. But repeated delays have failed to deter buyers from placing pre-orders. Model X reservations have crossed 20,000, and still counting. The Palo Alto-based EV maker is expected to start delivering the SUV in the third-quarter this year. Some buyers may not get it until early 2016.

Tesla aims to sell 50,000 units of Model X in the first year

As the Model X release date approaches, a big question before investors is whether the new vehicle will cannibalize Model S sales. Tesla aims to sell at least 50,000 units of Model X in the first full year of launch. Until now, a major reason Model S has been selling well is customers did not have much choice inside a Tesla store. There has not been any major competitor to Model S. It was the first choice of customers keen to get behind the wheels of a beautiful, high-quality, and fast all-electric vehicle.

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But that may change with the launch of Model X. The current Model S serves the high-end consumers with deep pockets and a zeal for stylish and sophisticated vehicles. Tesla’s upcoming vehicle will serve the same segment. Morgan Stanley analysts expect Model X to be priced 5-10% higher than Model S, which costs $71,000 for the base model. The crossover was recently spotted in California.

Why Tesla Model X may hurt Model S sales

Model X will be more attractive than Model S. It will have a better interior, a newer design, and the much-hyped falcon wing doors, says Seeking Alpha contributor Anton Wahlman. It will be the cool new thing. With the two vehicles targeting the same customer base, buyers are more likely to go for the newer Model X. American consumers’ love for SUVs will be a big positive for Model X. Americans prefer large crossovers and SUVs, and Model X fits the bill.

What’s more, Model X will likely have a better resale value. More and more Model S cars are entering the used car market at lower prices. This may not seem like a big factor, but if you are buying a premium Tesla vehicle, you’d want the newest model that still has some scarcity value.

Once the Model X is launched and the initial delivery time declines from several months to the usual time frame, demand for Model S is expected to go down. Wahlman says Model X will account for about 90% of Tesla’s sales by 2016.

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  1. I prefer to compare the Model S and Model X in the same way you might compare a Panamera to a Cayenne. Using a blantant generalization, large luxury sedans appeal to mature, business executives and CUVs appeal to the family focused. Revenge of the Soccer Mom – I don’t want a mini van- I deserve better.

    FYI. Over 50% of Porsche America sales are Cayennes, the Panamera, approx. 13%. In most countries (Germany excepted) the Model S outsells the Panamera handily. If (when) the Model X does for Tesla what the Cayenne
    did for Porsche , Tesla will have its’ hands full ramping up production fast enough. The X will be a huge winner for

  2. I apologize for the idiot remark. You are right. Some people like big butts and they cannot lie. Some people prefer finger paints to renaissance art. Some people think that a Fiero looks as good as a Ferrari. Who am I to judge?

  3. Or if you want something that seats seven, including two small children, you could get the Model S. Or if you want something with as much cargo space as a minivan you could get the Model S. And if you aren’t looking for something uber fast, you could save a lot of money by not getting the performance version of the Model S and settle for something that goes from 0-60 in 5.4 seconds, which is the base Model S.

    Or you could ask if you are looking to get a sedan or an SUV, and whether or not you need a performance vehicle and whether or not you need AWD. The latter questions are ones that any car buyer would ask and it won’t be different with a Tesla. It’s the notion that it would come down to an S or an X rather than whether it will come down to a Tesla vs any brand of sedan or SUV that’s a strange one.

  4. All that assumes that Tesla somehow made a mistake and that its customers bought the car despite its interior instead of because of it, among other things. It won’t appeal to everybody, but they weren’t trying to be the next Mercedes. It might be nice if they had a different line of cars with a different focus, but if they start making cars that aren’t Tesla-like, they will lose their identity.

    As it is, you can get the standard interior, or up to $10,050 worth of interior options, but even with all those it will likely seem spartan to you. That doesn’t even include the panoramic roof and premium sound system which are technically interior features. If you count those, then you have $15,050 of upgrades for the interior.

  5. How many Model S owners traded in an SUV for one? How many people bought a Lexus SUV instead of a Lexus sedan? The Model X might take away sales from a Lexus SUV if it comes down to which SUV to get, and might make the difference between getting a Tesla or not getting one for somebody shopping for an SUV. But this misses the point.

    It’s like saying that the Model S took away sales from the Leaf since they are both electric. I don’t doubt that there are some people who might have otherwise bought a Leaf, but the primary reason people buy a Model S is that they want a Model S. The only circumstance under which they might compete would be for somebody dead set against buying an ICE vehicle, but a person might have become that way from owning a Model S. The traditional base for the EV camp likely consists of people who shun SUVs.

  6. The high priced offerings are really neat but I too am looking forward to something more in the $30,000 to $40,000 price range. *keeps fingers crossed*

  7. I have not seen a source for this information other than Mr. Musk’s interviews. He tends to exaggerate but that man sure seems to know how to achieve his goals.

  8. Will offering a new model eat into the sales of the old model? It might but it should not be a problem for Tesla though as they will likely sell every vehicle they build… If the person who is looking to but a new X model cannot get one right away then he or she may buy the S instead.

  9. A heavier and bigger Model X makes sense for those who need to carry more people and stuff only. But Model S is already a very roomy car and although it has a market leading EV range, still range is the single most critical parameter and there is no way Model X can beat or match Model S with the same battery.

  10. You know all yahoo writers were trained in fiction, they just make stuff up out of nothing. Fact is used Teslas are extremely rare to come by. Yahoo is really totally full of crap.

  11. Which means nothing even if they did…the manufacturing is ‘order in, product out’…no cars are normally built that don’t have a buyer. Haven’t these people learned how Tesla operates yet?

  12. Agree, the Model S is serving a different segment. Personally I would have loved to see a more sporty designed version of the Model S platform. A Model S P85D derivative with a look more like a Lamborghini or Ferrari would have been more nice for me personally than the heavier Model X. For now, my preference is Model S between S and X.

  13. What idiot thinks the X is more attractive than the S? That is like saying a Cayenne is more attractive than a 911. Unless of course you mean attractive in that customers will flock to it. Which they will because people like SUVs for some reason.

    Falcon wings are cute, but I would not buy a car for them. The X may have a new interior, but the Model S and D have recently got that fixed too. Since it isn’t actually wider than the S it won’t fit fat Americans any better, but the higher ceiling is good for tall people.

    Since I am neither tall nor fat, I’d prefer the car that will be faster, handle better, get better mileage, and look better.

  14. He got the info from a short article. It is disclosed in the short article. But I guess when you quote short sellers as experts, you don’t have to disclose? Shame on Vikas

  15. Anton waltman an expert? He is a well known Tesla short seller. A joke. Vikas, you should know better spreading FUD. While the X should sell more than the S, both should increase in sales as Tesla tries to keep up with demand. Imagine if Tesla advertised.

  16. I love Tesla but the Model S needs a more luxurious and less Spartan interior. I am sure the Model X will have a nicer interior and I am equally sure before long the Model S interior will be upgraded to match the Model X interior so an improved interior will not be a reason to buy a Model X.

    The rest of the article makes equally asinine conjectures.

  17. Tesla will be producing vehicles at its Fremont factory at full capacity for the foreseeable future.

    Whether the sales mix is 9:1 or 2:1 in favor of Model X does not really matter much. Both of their production lines will be fully flexible.

    If anything, more Model X means higher average selling prices and margins for Tesla.

  18. I personally like the Model S, the X is more suitable for females or guy with kids. Because of the ride height, the X will suffer on efficiency and have less range. I plan on getting the Model 3 when it comes out for sure. As long as it is under $40,000.

  19. There is no reason to cannibalize sales. If you want it to be uber fast personal transport.. you buy the S. If you have a couple of kids, or you like a higher seating view, or have kids and parents, you buy the X.

  20. Certainly one of the dumbest freakin’ articles I’ve read in a long time. There hasn’t even been a Tesla for sale on Craigslist in the Chicago area for at least 6 months. The two vehicles are very different, so I don’t know where this guy is getting his info from.

  21. Why would the Model X cannibalize Model S. It doesn’t happen with the X5 and the 5 range of BMW, it doesn’t happen with Mercedes. The stronger Tesla gets the more the bears are struggling to get the stock down with the most insane purposes.
    And that Anton Wahlman is certainly not a reference. That’s a guy paid by the big 3 to write FUD and BS about Tesla. He doesn’t know nothing……

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