Model X Questions we would like asked at Quarterly Earnings Release

MaxK · Feb 7, 2015

As a Sig X reservation holder and shareholder, these are some of the Model X related questions I would love to have an analyst ask and for Elon to answer during the Feb 11th conference call following the earnings release.

Deliveries:
1. The Model X prototype was first shown in 2012, production for testing of the final version began in November 2014 and customer deliveries have been announced to be as early as July 2015 – When will the final product be shown publically, especially to the 20,000+ reservation holders, who have waited for more than 3 years in some cases?
2. There was a cell phone video posted on the internet recently purported to be the Model X. Can you confirm that was the Model X?
3. Do you expect the first deliveries in July of 2015 and how many units do you project to deliver in 2015?
4. Do you expect the Model X to cannibalize sales of the Model S?
5. Has the launch of the dual motor Model S resulted in Model X reservation cancellations in favor of Model S 85D orders?
Technology:
1. The ability to make incremental battery improvements have been mentioned by Tesla on many occasions. It has been about 3 years since the launch of the Model S. Will the Model X take advantage of incremental improvement in battery technology and use a battery cell with a higher energy density than the battery currently used in the Model S?
2. What is the projected battery size / range offerings of the Model X?
COST:
1. How will the price of the Model X compare to a similarly equipped Model S 85D?

gjunky · Feb 7, 2015

Those would all be about the same questions I would like to have answered.

You statement on start of delivery in July is not correct though. What was said was that deliveries would start in Q3. This could also be September. I would like to know what his new estimates are for deliveries in 2015. At one point Elon stated there would be around 15K deliveries in 2015 but that was before the last delay (Q3/2015).

MaxK · Feb 7, 2015

gjunky said:
Those would all be about the same questions I would like to have answered.

You statement on start of delivery in July is not correct though. What was said was that deliveries would start in Q3. This could also be September. I would like to know what his new estimates are for deliveries in 2015. At one point Elon stated there would be around 15K deliveries in 2015 but that was before the last delay (Q3/2015).

Thanks for the reply. I was very specific in my question to say "as early as July 2015", which is part of the delivery window previously announced. This was intentional to use the earlier date as a basis for an answer from Tesla, rather than leaving a 3 month window of July 1 to Sep 30. If we were ask if deliveries were to be in the 3rd quarter, then nothing new would be learned. If we were to ask if deliveries would begin by September, again nothing new would be learned. I then later ask again if deliveries would start in July 2015, with no reference to him actually promising that specific month. The intent of the question is to change the discussion from quarters to months.

gjunky · Feb 7, 2015

MaxK said:
Thanks for the reply. I was very specific in my question to say "as early as July 2015", which is part of the delivery window previously announced. This was intentional to use the earlier date as a basis for an answer from Tesla, rather than leaving a 3 month window of July 1 to Sep 30. If we were ask if deliveries were to be in the 3rd quarter, then nothing new would be learned. If we were to ask if deliveries would begin by September, again nothing new would be learned. I then later ask again if deliveries would start in July 2015, with no reference to him actually promising that specific month. The intent of the question is to change the discussion from quarters to months.

It is all good. The more we can find out the better. I just meant that July was never promised but I would certainly love to see it early in Q3 instead of late.

tga · Feb 8, 2015

I'd like to see hard numbers on towing capacity, although that's probably to specific a product feature for an earnings call.

5000+ lbs of towing capacity would be a game changer for me - I'd sell my truck and reserve an X, rather than waiting for a Model 3. I wouldn't mind having one less vehicle, if I could make it work.

NigelM · Feb 8, 2015

MaxK said:
Thanks for the reply. I was very specific in my question to say "as early as July 2015", which is part of the delivery window previously announced. This was intentional to use the earlier date as a basis for an answer from Tesla, rather than leaving a 3 month window of July 1 to Sep 30. If we were ask if deliveries were to be in the 3rd quarter, then nothing new would be learned. If we were to ask if deliveries would begin by September, again nothing new would be learned. I then later ask again if deliveries would start in July 2015, with no reference to him actually promising that specific month. The intent of the question is to change the discussion from quarters to months.

Not sure if I see the point. It's (understandably) a moving target so Tesla would be foolish to commit to a specific time and, even if they did, there's a history of missing those hard targets anyway. ;-)

MaxK · Feb 8, 2015

NigelM said:
Not sure if I see the point. It's (understandably) a moving target so Tesla would be foolish to commit to a specific time and, even if they did, there's a history of missing those hard targets anyway. ;-)

Let me try and help you understand. As project timelines are developed, the time frame used to discuss the project is wider, the further from the expected completion date. A long term project may start out referring to a decade for completion. As time passes, this will narrow to a specific year and then a specific quarter. it is expected that a specific month will be offered as the completion nears and eventually a specific day will be given for a specific delivery. The point of the question is that we are 188 days +/-45 days away from announced deliveries. This close to deliveries, it is reasonable, even expected, that the discussion convert from quarters (90 day period) to months (30 day period).

On your second point, I do not agree that is understandable that deliveries continue to be a moving target. It has been more than 3 years since the first prototype was presented to the world. The first deliveries have been delayed on too many occasions. These delays begin to call into question the management team's ability to execute. As a Sig X reservation holder, I am glad that Elon wants to avoid the Sig S problem where the Signatures were not as good as cars that followed shortly thereafter. However, a strive for perfection is a trip down a never ending rabbit hole. The Model S, in my opinion, is the best car available today, but it is not a perfect car. Tesla has announced that Model 3 sales will start in 2017. That is less than 3 years from now for first deliveries. The ability of management to deliver the X in 3.5+ years since first prototype is a direct reflection on their ability to deliver the Model 3 in less than 3 years with no prototype yet available. As a shareholder, that is troubling.

I want to say that I believe the X will be the best car available when it launches and I believe that Tesla is an amazing company and Elon is brilliant in each of the companies that he runs. However, I am a realist and believe that the execution of the X program does not reflect well on their ability to deliver and their communication with long term deposit holders has been less than stellar.

bonnie · Feb 8, 2015

MaxK said:
Thanks for the reply. I was very specific in my question to say "as early as July 2015", which is part of the delivery window previously announced. This was intentional to use the earlier date as a basis for an answer from Tesla, rather than leaving a 3 month window of July 1 to Sep 30. If we were ask if deliveries were to be in the 3rd quarter, then nothing new would be learned. If we were to ask if deliveries would begin by September, again nothing new would be learned. I then later ask again if deliveries would start in July 2015, with no reference to him actually promising that specific month. The intent of the question is to change the discussion from quarters to months.

They're not rookies. If they don't want to be locked down to a specific month (vs. quarters), they won't be. You may as well ask them to give a specific month (rather than quarter). You'll get the same result as if you try to trick them with word games. My two cents.

MaxK · Feb 8, 2015

bonnie said:
They're not rookies. If they don't want to be locked down to a specific month (vs. quarters), they won't be. You may as well ask them to give a specific month (rather than quarter). You'll get the same result as if you try to trick them with word games. My two cents.

I might disagree with the not being rookies comment. They, especially Elon, have gotten out in front of themselves a number of times and have to roll back what was said. Some would call this a rookie move.

I do agree that they won't do what they don't want to do. I am just saying that 188 days +/-45 days from announced delivery, it is appropriate to expect that they begin to narrow the +/-45 day portion of the target launch. Whether or not they do what is appropriate, is entirely up to them. As shareholders and deposit holders, we can only hope that they do.

No word games intended. When you want information, the formation of the question is critical to get the desired answer. it is also my experience in life that you rarely get what you don't ask for. Therefore, asking the question greatly increases the likelihood of answer, but does not guarantee an answer.

bonnie · Feb 8, 2015

MaxK said:
I might disagree with the not being rookies comment. They, especially Elon, have gotten out in front of themselves a number of times and have to roll back what was said. Some would call this a rookie move.

I do agree that they won't do what they don't want to do. I am just saying that 188 days +/-45 days from announced delivery, it is appropriate to expect that they begin to narrow the +/-45 day portion of the target launch. Whether or not they do what is appropriate, is entirely up to them. As shareholders and deposit holders, we can only hope that they do.

No word games intended. When you want information, the formation of the question is critical to get the desired answer. it is also my experience in life that you rarely get what you don't ask for. Therefore, asking the question greatly increases the likelihood of answer, but does not guarantee an answer.

My point, of course, is why not just ask the specific month for deliveries to begin, rather than playing games with how you word other questions. Sometimes direct questions receive direct responses. And if not, that tells you something, too.

I'm not convinced that Elon's mistakes are mistakes. Just my opinion. I don't believe he's a rookie and he'll answer what he wants to answer, in the way he wants to answer it.

NigelM · Feb 8, 2015

MaxK said:
Let me try and help you understand. As project timelines are developed, the time frame used to discuss the project is wider, the further from the expected completion date....

I understood that (I used to run companies with manufacturing operations also), I meant I don't see the point of beating around the specific date issue as Tesla will do what they feel is appropriate, that may or may not match what you or I feel is appropriate.

MaxK said:
On your second point, I do not agree that is understandable that deliveries continue to be a moving target.

We can agree to disagree here. Tesla is in the beta testing phase; testing sometimes gives you the results you want and sometimes forces you to change things. That's why I'd call the release date a moving target, although maybe "movable target" is a better phrase.

MaxK said:
It has been more than 3 years since the first prototype was presented to the world. The first deliveries have been delayed on too many occasions. These delays begin to call into question the management team's ability to execute.

I'm happy to question a lot of things but I'm not sure that Tesla has failed to execute on this one. They have been production constrained until recently and are still supply constrained, even now. Drives me nouts waiting for my X but those constraints are hardly a failure of execution.

MaxK said:
As a Sig X reservation holder, I am glad that Elon wants to avoid the Sig S problem where the Signatures were not as good as cars that followed shortly thereafter.

I have Model S Sig #282 and I have no idea what you're referring to.

MaxK said:
Tesla has announced that Model 3 sales will start in 2017. That is less than 3 years from now for first deliveries. The ability of management to deliver the X in 3.5+ years since first prototype is a direct reflection on their ability to deliver the Model 3 in less than 3 years with no prototype yet available.

Less than a month ago Elon said Model 3 is to come "in about 3 years", I read that as 2018 (as did most other people). See my comment above on production and supply constraints; one of the reasons for building the gigafactory is to supply batteries for Model 3....not sure how you expect them to sell cars without batteries?

MaxK said:
As a shareholder, that is troubling.

If Tesla were building cars with no supply of batteries to put in them you'd probably be even more troubled, and rightly so. ;-)

MaxK said:
However, I am a realist and believe that the execution of the X program does not reflect well on their ability to deliver and their communication with long term deposit holders has been less than stellar.

Again, note the production/supply constraints; we need to be realistic about those also. Now on the subject of "communications" there have been plenty of instances where calling their performance "less than stellar" is being polite in the extreme; they're still learning as a company and hopefully they are going to grow out of some of those bad habits.

Nubo · Feb 8, 2015

bonnie said:
My point, of course, is why not just ask the specific month for deliveries to begin, rather than playing games with how you word other questions. Sometimes direct questions receive direct responses. And if not, that tells you something, too.

I'm not convinced that Elon's mistakes are mistakes. Just my opinion. I don't believe he's a rookie and he'll answer what he wants to answer, in the way he wants to answer it.

I agree. The question doesn't need to be complex: "What's the current timeline for Model X"? I really doubt that any amount of preamble or question-framing is going to muscle them into saying anything they didn't already plan on saying.

SteveG3 · Feb 8, 2015

MaxK, given your X reservation, I can see why you want answers to all of these questions. I also can understand why the moving timeline for the launch of the X is frustrating as a reservation holder. It's hard enough to wait, and then to hear you have to wait more- frustrating, no question about it.

As a shareholder I can see why you want to know, but I think it's very likely that if Tesla does not publicly discuss these points this week it will be because it is not in our interest as shareholders for them to discuss them (despite Elon's tendency to want to let everything out).

As far as Tesla' execution... I greatly appreciate that they are driven by what's rational in the long-term rather than dancing to Wall Street expectations, or anyone else's notion of what's appropriate (with the caveat above, that, yes, those with X reservations have taken something of a hit due to delaying the launch of the X). I think there's room for improvement on how they communicate, but I don't think Tesla would even exist today if they made decisions based on appropriate expectations of those of us outside the company rather than their own measure of the best path forward. Borrowing from Elon, in my view, reasoning by analogy does not lead to a Tesla Motors.

On the last earnings call in terms of Model X deliveries Musk basically said-

I don't know... I'm not trying to be deceptive, but given the nature of production ramp ups, I'm sharing the same level of uncertainty that I have.

That's the improvement I hope Tesla is making- just describing the level of uncertainty in future projections more clearly, but not making any changes in their willingness to delay launches if it's a net positive.

FOCUSEV · Feb 8, 2015

I want a Model X, but if it can't tow or go on mild dirt roads I have no use for it. I guess what I mean is TESLA needs to at least give some real specs for the vehicle. It has been nearly 3 years and it is still all hype and speculation. SUV buyers want hard facts.

BerTX · Feb 9, 2015

FOCUSEV said:
I want a Model X, but if it can't tow or go on mild dirt roads I have no use for it. I guess what I mean is TESLA needs to at least give some real specs for the vehicle. It has been nearly 3 years and it is still all hype and speculation. SUV buyers want hard facts.

If I were you. I'd prepare myself for some disappointment (which can happen when you get your desires too intertwined with your expectations).

The car will have features of an SUV and features of a minivan, but it will not be, nor was it ever planned to be, either. It is built on a car chassis, which the very definition of a crossover. It's ground clearance will be only slightly, if any, higher than the Model S it is based on. I wouldn't plan on taking it on any road that the Model S can't travel. It's designed as an AWD road vehicle.

As far as towing, the reason the Model S does not have a towing option is that the frame is not designed for it. Tesla has recently warned against towing with the Model S. Mind you, not stated that they don't support it, but that it is not safe. This is a relatively new development, going against their attitude previously. I assume they have made some add-on improvements to allow MX towing, since they have announced that it will be able to tow. They are still limited, however, to the MS skateboard with add-on reinforcements and the weight constraints necessitated by range preservation. Tesla said MX will be able to tow as much as vehicles in it's class, which got interpreted as be able to tow what an SUV can tow -- but again, it isn't an SUV, it's a car. I expect the towing capacity to be at or below 3000 pounds.

roblab · Feb 9, 2015

BerTX said:
If I were you. I'd prepare myself for some disappointment (which can happen when you get your desires too intertwined with your expectations).

The car will have features of an SUV and features of a minivan, but it will not be, nor was it ever planned to be, either. It is built on a car chassis, which the very definition of a crossover. It's ground clearance will be only slightly, if any, higher than the Model S it is based on. I wouldn't plan on taking it on any road that the Model S can't travel. It's designed as an AWD road vehicle.

As far as towing, the reason the Model S does not have a towing option is that the frame is not designed for it. Tesla has recently warned against towing with the Model S. Mind you, not stated that they don't support it, but that it is not safe. This is a relatively new development, going against their attitude previously. I assume they have made some add-on improvements to allow MX towing, since they have announced that it will be able to tow. They are still limited, however, to the MS skateboard with add-on reinforcements and the weight constraints necessitated by range preservation. Tesla said MX will be able to tow as much as vehicles in it's class, which got interpreted as be able to tow what an SUV can tow -- but again, it isn't an SUV, it's a car. I expect the towing capacity to be at or below 3000 pounds.

How am I to know when Tesla says anything???? I have always towed a trailer. I had the trailer hooked to the car only yesterday. Tesla never sent me an email, although I have published pictures of my Model S with the trailer on it. I am sure Tesla saw those pictures.

I could suppose that driving the Model S, itself, is not safe, as there have been fires, accidents, and death in them. Driving with a trailer can be safe, or not, depending mainly on the driver, experience, and the road conditions. The driver has to decide what weights are OK to tow, whether or not his trailer is loaded correctly, whether the trailer tires are properly inflated, etc. Many who tow a trailer are not educated or aware, I am afraid. But that does not make towing a trailer behind a Model S inherently unsafe.

MaxK · Feb 9, 2015

NigelM said:
I understood that (I used to run companies with manufacturing operations also), I meant I don't see the point of beating around the specific date issue as Tesla will do what they feel is appropriate, that may or may not match what you or I feel is appropriate.

My question about deliveries was "Do you expect the first deliveries in July of 2015 and how many units do you project to deliver in 2015?" I believe that is a rather specific question. Are you saying that we shouldn't even inquire since "Tesla will do what they feel is appropriate"? Of course they will do what they want to do. The goal of asking is just to get them to tell us what that is. I really don't get what your issue is with asking the question.

NigelM said:
We can agree to disagree here. Tesla is in the beta testing phase; testing sometimes gives you the results you want and sometimes forces you to change things. That's why I'd call the release date a moving target, although maybe "movable target" is a better phrase.

Tesla should not be in the beta testing phase at this point. The alpha product was presented in a very public display 3 years ago today. Testing of the alpha and beta units should have been done over the intervening 3 years. In October, they began pre-production testing. Pre-production testing takes the beta design and implements the manufacturing process to build that design. At this point, to meet the announced delivery window, they need to have a final design with tooling ready or near ready and finalized parts specified to suppliers in preparation for production within 187 days +/- 45 days.

NigelM said:
I'm happy to question a lot of things but I'm not sure that Tesla has failed to execute on this one. They have been production constrained until recently and are still supply constrained, even now. Drives me nouts waiting for my X but those constraints are hardly a failure of execution.

This is were we will never agree. The ability to deliver a project on time is a failure of execution. Once may be a minor failure, twice not so good, three times - losing confidence, four times = failure to execute! The alpha was shown in 2012 with deliveries announced for 2013 and deposits taken. That date (note they picked each of the dates with knowledge of their own supply constraints) each of the subsequent dates have been missed. From your post about the date slipping again and an article I read online today, the date may slide further. Note: you are assuming that supply constraints have anything to do with the delays. Maybe you have info you can share specifically about the X delays related to supply constraints. If this is the cause, what has changed from Aug 2014 (production line overhaul) to now to improve supply? What will change in the next 180 days to improve supply? Is it your position that they for X they sell, they will have to sell 1 less S due to these constraints.

- - - Updated - - -

I would like to edit the initial message in this thread (my post) to add towing specification request. How do I edit a post?

NigelM · Feb 9, 2015

MaxK said:
My question about deliveries was "Do you expect the first deliveries in July of 2015 and how many units do you project to deliver in 2015?" I believe that is a rather specific question. Are you saying that we shouldn't even inquire since "Tesla will do what they feel is appropriate"? Of course they will do what they want to do. The goal of asking is just to get them to tell us what that is. I really don't get what your issue is with asking the question.

I have no issue with anyone asking the question...but you think Elon/Tesla don't realize you/we want to know the answer to that one? Tesla will tell us all when they feel they can; frustrating as that may be, that's the way it is.

The rest of it isn't worth rehashing IMO and has been covered plenty of other places.

timf · Feb 9, 2015

MaxK said:
Tesla should not be in the beta testing phase at this point. The alpha product was presented in a very public display 3 years ago today. Testing of the alpha and beta units should have been done over the intervening 3 years. In October, they began pre-production testing. Pre-production testing takes the beta design and implements the manufacturing process to build that design. At this point, to meet the announced delivery window, they need to have a final design with tooling ready or near ready and finalized parts specified to suppliers in preparation for production within 187 days +/- 45 days.

The definitions you are using for "alpha" and "beta" are different than what Tesla considers Alpha and Beta. The vehicle shown 3 years ago was for all intents and purposes a concept car. It was used as a show car to demonstrate the design direction and unique features of Model X. A year later, they introduced an updated concept car which has been paraded around the world and shown ever since. It is unlikely any significant testing has been done using it as it has remained in the same show-ready condition for the past 2 years, not to mention the design has changed considerably since then.

Tesla's terminology more closely follows that of software development. The Alpha cars are early builds that are designed to test specific systems, but may not be fully functional. These were built in August 2014. The Beta cars are functionally complete and allow for full on the road testing, but may still have flaws. This is the phase we are in now, and started in November 2014. The key to listen for next is when the Release Candidate cars are due to be built. This means that all the major systems have checked out and they are nearly ready for production.

The Model S timeline was roughly T-18 months for Alphas, T-12 months for Betas, and T-3 months for Release Candidates. The Model X appears to be condensing this down somewhat, so there has to be a certain degree of confidence in the design to be able to go from Beta to Release in only 9 months. We may not see a public reveal until they reach the Release Candidate stage, which would fit with the schedule of about 3 months out.

BerTX · Feb 9, 2015

roblab said:
How am I to know when Tesla says anything???? I have always towed a trailer. I had the trailer hooked to the car only yesterday. Tesla never sent me an email, although I have published pictures of my Model S with the trailer on it. I am sure Tesla saw those pictures.

I could suppose that driving the Model S, itself, is not safe, as there have been fires, accidents, and death in them. Driving with a trailer can be safe, or not, depending mainly on the driver, experience, and the road conditions. The driver has to decide what weights are OK to tow, whether or not his trailer is loaded correctly, whether the trailer tires are properly inflated, etc. Many who tow a trailer are not educated or aware, I am afraid. But that does not make towing a trailer behind a Model S inherently unsafe.

I'd like to retract the statement about the trailer towing with the Model S. I went back and looked, and what they are saying is not that towing is unsafe, but that the added hitch compromises the safety of passengers in the rear jumpseat in a rear collision.

I was wrong, as I had thought it was towing that they were nixing. I have no idea what the towing capacity of the MS or the MX is. The chassis might be plenty strong, and it must be if they are promising towing.

I doubt, personally, that there is a safety issue in the MS with the tow hitch added -- I suspect it is a CYA thing and no actual testing has been done.

Sorry.

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