Article Worth A Read From 'The Fool'

[Bulletproof]

I've met Daniel Sparks and was impressed with him. He is one of those rare journalists who truly gets and understands Tesla. He really grasps the company's fundamental business model and strategy. He's one of the few I keep up with.

 

[jvonbokel]

People buy the S for many reasons, and some S owners have never owned a car in that price and size class. But comparing the Tesla S to the Mercedes S class is certainly valid.

Agreed. I drove a '97 S-10 Pickup before my S, and had the S not been available, I would be driving a Mustang. That doesn't mean I think the primary competition for the S is pony cars or 15yr old pickups. It's just how it worked out for me. I think Tesla has been clear in marketing materials to label the S as a "performance sedan" rather than a "luxury sedan", so I do think you could make a case that the MB S-class is not its chief competition, but rather sports cars, but then they just don't look like they'd be in competition. On paper, and in appearance, the S-Class is very comparable, so it makes sense for Tesla to set their sights on that as a benchmark. If you disagree, that's fine, and you're not obligated to "buy" Tesla's chart, or their cars, or their stock, but I know from driving it, that I wouldn't choose any other car, regardless of price/features, because the driving experience is simply incomparable.

For example, last weekend I went to a Cars & Coffee event at StlMotorcars, where they sell cars from Bentley, Rolls Royce, Maserati, Lamborghini, Bugatti, Lotus and Aston Martin. As I looked around at all the beautiful cars, some of which could've been on posters in my childhood bedroom, I realized that I wouldn't buy any of them even if they were half the price of my S, because they wouldn't be as fun to drive, and the gas costs at 10-15mpg would make them more expensive in the long run. Granted, as my story above would imply, these are not cars I would have ever considered in the first place, but it just reinforced my belief in Tesla regardless. They made a car in a price category that I never would've considered, and not only got me to consider it, but to buy it, without even advertising it to me. That, to me, is impressive in itself, and says quite a bit about the Model S.

 

[TesAus]

I think that the chart was prepared by Tesla based upon price bracket/size for the U.S. Market and doesn't necessarily transfer to all overseas markets. Tesla applies their "fair pricing" policy to overseas markets whereby they take the U.S. Price, adjust for exchange rates, add a nominal amount for shipping then any local taxes.

In Australia the extra margin that the German marques add to their cars (not luxury car tax, import duties or shipping costs- pure additional profit) means that the model S is comparable to a well speced 5 series/E class. Even though it it is still a relatively expensive car it is competitively a bargain compared to the typical luxury sedan competition.

 

[Olle]

It seems like the common sentiment in this thread is that Model S expands the market and takes buyers from all segments, not that much from the models in the chart.
Does this mean that the Model 3 might not only outsell the 3-series and its competitors, but eclipse them by a wide margin by taking car buyers across the board?

 

[Cattledog]

It seems like the common sentiment in this thread is that Model S expands the market and takes buyers from all segments, not that much from the models in the chart.
Does this mean that the Model 3 might not only outsell the 3-series and its competitors, but eclipse them by a wide margin by taking car buyers across the board?

Absolutely. I am an architect and work with a LOT of Prius owners. All itching for a Model 3 as green cred. Others itching for it because they think our Model S' are boss. I'm expecting a dozen Model 3s in the first couple years, out of about 80 architects. I may be low by half. It will be a cult car, especially if they come out with a sedan and small SUV at the same time. Tesla, are you listening, that's a clue. Model 3 SUV is a bigger deal than Model 3 sedan, trust me.

 

[Rockster]

It seems like the common sentiment in this thread is that Model S expands the market and takes buyers from all segments, not that much from the models in the chart.
Does this mean that the Model 3 might not only outsell the 3-series and its competitors, but eclipse them by a wide margin by taking car buyers across the board?

I think you've nailed it. The Model 3 will not only attract EV enthusiasts but will also pull buyers from every market segment. And with its attractive price point, the Model 3 will outsell every mainstream analyst's predictions.

 

[dgpcolorado]

...Does this mean that the Model 3 might not only outsell the 3-series and its competitors, but eclipse them by a wide margin by taking car buyers across the board?

That seems likely. Surely the car will draw buyers from a wide range of vehicle preferences and experience.

I am interested in the Model 3 but the cars it will replace are a LEAF and a '96 Jeep Cherokee. I know absolutely nothing about BMWs — save that they have passionate fans and advocates, for some reason — and couldn't tell the difference between a 3, 5, or any other model. Nor do I have the slightest interest in any of them. I also care not one whit about 0-60 times and other track-type performance characteristics that are beloved by so many here.

I'd venture to guess that there will be others like me who will buy the Model 3, and its similarity to BMWs, if any, will go completely unnoticed by us.

 

[physicsfita]

That seems likely. Surely the car will draw buyers from a wide range of vehicle preferences and experience.

I am interested in the Model 3 but the cars it will replace are a LEAF and a '96 Jeep Cherokee. I know absolutely nothing about BMWs — save that they have passionate fans and advocates, for some reason — and couldn't tell the difference between a 3, 5, or any other model. Nor do I have the slightest interest in any of them. I also care not one whit about 0-60 times and other track-type performance characteristics that are beloved by so many here.

I'd venture to guess that there will be others like me who will buy the Model 3, and its similarity to BMWs, if any, will go completely unnoticed by us.

+1

I'm a very happy Prius owner just looking to get a car with lower emissions that meets my rather high-mileage needs (about 40,000 mi/yr). An added bonus is that for me, a Model 3 would probably pay for itself in fuel savings, just like my Prius has done versus my old VW Beetle (let alone my old Chrysler K cars and Ford Escorts!). I've had exactly zero desire to take a car out on a track, and I can only distinguish BMW models by reading the nameplate. Heck, I can only identify BMW's by their logo in the first place! The only other car I'm seriously looking at is the Volt, although I am reserving judgment on the Bolt -- the charging network will be a key concern for me. All I care about for performance is being able to floor it to get out of the way of being sandwiched by a merging semi, although I do enjoy beating nicer cars off the light thanks to the motor in my hybrid -- it's particularly handy at one particular on-ramp on my commute. :smile:

 

[JohnSnowNW]

I guess I'll add to the cacophony of people replacing their vehicle with a Tesla that would never have considered another vehicle at this price-point, or heck even one in the 5/E class. The Model X will be replacing my Suzuki SX4 AWD, and the Model 3 will be replacing our Mazda 6. Neither my wife nor I really cared about vehicles, outside of functionality, before Tesla came about. However, the damn cars are just so compelling (never having to go to the gas station, safest cars on the road, AWD, falcon doors, etc...) that we basically can't fathom not owning one (or two).

Anyway, yes, if Tesla can deliver a sleek and functional 200+ mile EV, for $35k, you'll have a whole hell of a lot more people in a similar situation to us. I can, without a shred of doubt, name 100 people I associate with that would buy one within the first year of release.

 

[fortytwo]

To put it the other way around, I was/am in the market for a car the size of an E- or 5-. The Model S is too big for what we like. We bought it because it is so much better. We would not have stepped up to S- or 7- series vehicles. Whereas I feel if I was in the market for those in the first place, the Model S would have been much more obvious competition.

Same here. I drove 3 new Mercedes cars in 9 years - E-class, R-class. I would not have purchased an S or 7-series as I do not want to spend that kind of money on a "stupid" car. Ordered a Model S two weeks after an infectious test drive last May. This week we are picking up my wife's Model S. Model X was ordered 2 weeks after taking delivery of the first Model S. BMW, Mercedes or any other carmaker in that class would never extract that kind of money out of me.

 

[mspohr]

I'm probably a good example of an "alternative" customer.
I have never considered purchasing any of the cars in the "competitive" chart. My Model S replaced a Fiat 500 that was only 4 years old and did not need to be replaced... I was very happy with the Fiat.
However, I was looking for a replacement for my older Land Rover so I ordered a Model X. Then I took a test drive in the S and ordered one the same day. Fortunately, they introduced the D so I switched my order to an 85D. I now have all wheel drive and it's just the best car ever.
I would never have spent $100,000 on any ICE car. It just wasn't even remotely a consideration. I was interested in (fuel) economy. I wasn't interested in "performance" but that is the best thing about the S.
I think this shows that Tesla is capable of expanding the market beyond the traditional "luxury" market and that is why I think the S is such a success, the X is such a success and the 3 will be a roaring success. Just in the past few months I probably have 10-15 people who have told me that they will buy a Model 3 when it comes out. I'm sure it will hit all of the right buttons for styling, performance, and range.

 

[Borka]

What is REALLY interesting about the chart and the conversation, is the rarity of individuals who really did cross-shop Model S against S-class / 7 series alternatives. I think I saw one person above say that was the alternative they considered, with almost everybody else talking about nearby alternatives. Small number and selective sample bias absolutely - this is still a conversation that exists around the Model S and not around the Mercedes S-class. Model S is rewriting the definition of what makes a buyer at different price levels, and I expect similar behavior when Tesla has an SUV / crossover format.

The fact that the Model S is bring a large number of buyers into its segment despite many limitations cited by the very same buyers of the vehicle (too big for what I wanted, not as much luxury as I'm accustomed to at this price point, doesn't seat as many as I really wanted, didn't have AWD, ...) doesn't mean that the Model S is placed in the wrong market - it means that the Model S is so attractive, it is sucking buyers that would otherwise be buying some other vehicle (and typically much cheaper) into a market they wouldn't otherwise participate in.

Model S is dramatically increasing the size of the market it participates in.

I too find this very interesting. I believe this will also be the case for the model 3 and I think I'm an example of this myself.

I too would fit in the category of alternative customers. I don't care much for cars.I just need it to drive myself and my family around. I have never considered buying a new car before as I see it as a waist of money (due to the rather big loss of value the first few years). Probably wouldn't go higher than 100 - 150k SEK (about $12-18k) if I were to buy a car now.

But now I'm waiting for model 3 and will buy it as soon as there's a 7(or more) seater version.

 

[jbcarioca]

The last few posts made me think of a closely related point. For the last 15 years or so all the cars for my spouse and myself have been in the BMW 3-series, MB C size range or smaller. Not necessarily cheaper, but definitely smaller. Our preference has been for smaller for years. When I looked at the S the only thing holding me back was the huge size; I did not want anything so large and my spouse did not even want to ride in it, much less drive it. Then the P85D happened and we bought it anyway. We both love it, but she still will not drive anything so huge. Only yesterday we agreed we'd place an order for the Performance version of the III the very second we can do so. In the meantime the S is still the best car choice I have ever made.

 

[Model 3]

I too find this very interesting. I believe this will also be the case for the model 3 and I think I'm an example of this myself.

I too would fit in the category of alternative customers. I don't care much for cars.I just need it to drive myself and my family around. I have never considered buying a new car before as I see it as a waist of money (due to the rather big loss of value the first few years). Probably wouldn't go higher than 100 - 150k SEK (about $12-18k) if I were to buy a car now.

But now I'm waiting for model 3 and will buy it as soon as there's a 7(or more) seater version.

I'm in the same boat as you (Except that I would say "I don't care much for new cars." I love old cars - and I'm good with a 4/5 seat car.)

Model 3 will be the first ever new car I will get, and that just because I won't wait for it to get down in that price area as used...

 

[Spidy]

The fact that the Model S is bring a large number of buyers into its segment despite many limitations cited by the very same buyers of the vehicle (too big for what I wanted, not as much luxury as I'm accustomed to at this price point, doesn't seat as many as I really wanted, didn't have AWD, ...) doesn't mean that the Model S is placed in the wrong market - it means that the Model S is so attractive, it is sucking buyers that would otherwise be buying some other vehicle (and typically much cheaper) into a market they wouldn't otherwise participate in.

Model S is dramatically increasing the size of the market it participates in.

Well, that's the question. Is it actually getting people into the market or is it a new market? Can you actually call it market, when 90% of the people would not consider buying any other car in that "market" apart from a Tesla Model S?

Is this the same market?

 

[Spidy]

For those comparing a Model S to an E class or 5 series, would you please stop as you are making no sense. The only real competition for us was the S class. We absolutely did not care for the E class (or the 5 series). IMHO the E Class used to be more upscale and a better vehicle in the lineup than what it is today. If you go with any of the following attributes, it is the S class that competes more with a Model S.

+ Seating comfort for 5 adults

mercedes s class rear seats - Google Search

And apart from that I doubt 5 people sit much more comfortable in a S-Class compared to a E-Class, if at all they both suck compared to a Model S because they don't have any space for your feet.
http://static.usnews.rankingsandreviews.com/images/Auto/izmo/358124/2013_tesla_model_s_rearseat.jpg
http://static.usnews.rankingsandrev...68955/2015_mercedes_benz_s_class_rearseat.jpg
http://static.usnews.rankingsandrev...72499/2015_mercedes_benz_e_class_rearseat.jpg

+ Large trunk space

2015 Mercedes-Benz S-Class Interior | U.S. News Best Cars
2015 Mercedes-Benz E-Class Interior | U.S. News Best Cars
2015 Tesla Model S Interior | U.S. News Best Cars

The difference seems absolutely insignificant compared to the Model S

+ Weight class

I will remind you on that when you compare the Model 3.

+ Exterior dimensions

Like a BMW 3 Series and Toyota Camry? And there are probably even worse examples.

+ Epitome of technology for the auto manufacturer

So then why did you use the 7 series and not the i8?

 

[Hugh Mannity]

I was not even in the market looking for a new car, and I have never owned a car anywhere near the size of the S. But the S is so compelling and so clearly represents the future of the automobile that I just had to have one. So I sold my 1959 Porsche and my wife's Prius and bought an S. Never looked back. Then sold my Porsche Cayman to buy a Tesla Roadster to go 100% electric. .

yeah i kinda sorta think like you too. i am getting the X but if it were not available i would not in a million years get a cayenne or Q7 or anything else similar because they are guzzling petrol behemoths. its all about the low emission combined with the practicality

 

[adiggs]

Well, that's the question. Is it actually getting people into the market or is it a new market? Can you actually call it market, when 90% of the people would not consider buying any other car in that "market" apart from a Tesla Model S?

Is this the same market?
...

Though I agree with what you're saying Spidy, and I personally wouldn't choose the other one, yes - they are still the same market. The market definition when trying to assess potential volume and how well sales are doing is primarily in terms of price. Though there is more limited ability to substitute a pickup truck for a Model S and vice versa, there is still some ability. And clearly, there is a high level of substitution available between an Merc S class and a Model S. The value in establishing the correct market and then assessing Model S volume is we gain a sense of the potential Model S sales (ability of buyers to purchase), as well as ground ourselves against the established norms for the general auto industry.

That connection to what is expected based on decades of experience with the auto industry helps us understand just how very different Model S is.

We also get a better sense of what Model S demand will be like some distant day in the future when Tesla and/or the general market offers a full range of BEVs from multiple manufacturers (if they survive) that fill all the nooks and crannies of the market that are currently being served by a single car.

 

[neroden]

But if you want to know what the MS is competing with then ask the buyers what car they would have bought INSTEAD of the MS had the MS not existed.

A used Toyota Echo? An Aptera?

The Tesla Model S is hitting multiple target markets at once, making it hard to classify. I was trying to minimize gasoline use.

 

[GuyHall]

this chart from the article says it best.
View attachment 85610

ICE manufacturers should take note.

So, did Tesla grow that market segment or take sales away from other Mfgs?