Tesla recently launched the long-awaited Model X. Though the car is great, it isn’t perfect as it has weighed on Tesla for the last few years. The EV firm can surely learn some lessons from the Model X to ensure that the roll-out of its next car, the Model 3, is smoother.
A car should be simpler to make and fix
Some of the obvious lessons that Tesla can learn have been detailed in a report from Learn Bonds. Tesla CEO Elon Musk himself acknowledged that the Model X is too complex. “I’m not sure anyone should have made this car,” Musk said at the launch event. And its complexity is surely one of the main reason for its several delays.
ValueWalk's Raul Panganiban interview with the founder of ValueWorks, Charles Lemonides. In this interview, we discuss the opportunities he is seeing in the market today. Q2 2021 hedge fund letters, conferences and more Interview with ValueWorks' Charles Lemonides ValueWalk's . . . SORRY! This content is exclusively for paying members. SIGN UP HERE If you Read More
Since the Model X has been hard to make, it will be harder to fix. A simple recall could come at a big cost for the firm as the Model X has many moving parts, the report says. Another issue with having so many moving parts is that it becomes difficult to make the car in big numbers. This could be the reason Tesla delivered only six vehicles at launch. The EV firm will have spent big money on research to get the Model X right. Though profit margins may be high, burning cash on research (though necessary) “isn’t a sustainable model,” the report says.
All these points indicate that Tesla must focus on making a car that is a lot simpler than the Model X.
Tesla must ensure these for Model 3
Tesla must also exercise greater control over the press. The way they deal with the press before or at the time of launch, reflects “the lack of a cohesive fact base,” the report says. Despite Musk expecting the car to cost less than $90,000 once production is ramped up, it was all over the media that the Model X will sell for over $130,000.
It shows that Tesla has “lost control of the press” even though Musk spent some valuable time with them on the launch date. Tesla’s Model X event, though it grabbed headlines, was a “bit of a disaster,” as many of the Model X’s special features were not communicated properly. So for the next time, the company must ensure that due time is given to communicate the features which could matter to buyers.
Tesla must also keep quiet on some revelations, the report says, referring to the Model 3 release date in 2017. Tesla unveiled the Model X three years ago, but it did not go well for the company as the car faced several delays. If Tesla fails to meet the Model 3 schedule as well, it will result in negative headlines and hurt investor sentiment as well.