Elon Confirms S & X Are Chopped Liver

[john85775]

On today's Tesla investor conference call, a question was asked about stabilizing Model S and X sales.

Elon's response: "S & X are nice. Without them we can't spell S3XY. Hehe. I love the main reason. Hehe. A reason is we want to spell S3XY. Not the main reason. The story is fundamentally 3 and Y. "

He then said S/X is not important in the long term, and in the context of the 3, Y, pickup truck and semi, S & X will stabilize at 80k-100k per year and represent around 5% of total sales essentially as a niche product.

This came after reiterating there will be no refresh for Model S / X.

But it was the first part of his response -- that the models are basically living on in the product portfolio as a placeholder -- that made me queasy about replacing our 2018 X with a Raven.

This post in the roundtable echoes my concern:
Tesla, TSLA & the Investment World: the 2019 Investors' Roundtable

 

[VT_EE]

It's not really any different than 7-Series is to BMW. I suspect most of their profit comes from high-volume, lower margin vehicles like the 3-series.

 

[TMThree]

The profit margins on the S and X aren't massively higher than on the 3 because if requires so much manual labor to build. Significantly higher than any of their competitors.

For Tesla to reach its goal of changing the automotive industry, they need mass market appeal. S and X were always niche products given the cost.

 

[john85775]

It's not really any different than 7-Series is to BMW. I suspect most of their profit comes from high-volume, lower margin vehicles like the 3-series.

The concern is more around priorities than economics: I don't think you'd ever hear BMW executives say the 7 series wasn't getting updated and wasn't important to them.

 

[Silicon Desert]

Hey chopped liver has a lot of protein and provides about 100% of the RDI. So I expect the model X and S will still provide 100% of driving satisfaction.
It sounded like Elon was referring to those cars not being as important to the bottom line in the future. Makes a lot of sense. Not that he is going to fry it up for you to eat

 

[john85775]

Did you hear him on the call? Highly dismissive of the S/X whenever it came up.

 

[VT_EE]

The concern is more around priorities than economics: I don't think you'd ever hear BMW executives say the 7 series wasn't getting updated and wasn't important to them.

Major improvements like a new suspension and motor, new battery, new interior, etc are all considered "minor improvements" by Musk. We call a new interior a refresh, he doesn't. He is also motivated to get people to order vehicles now instead of next year.

 

[qdeathstar]

Did you hear him on the call? Highly dismissive of the S/X whenever it came up.

I think he was trying to soothe his ego... model three cannibalized a lot of the higher profit vehicles and harrumph! They weren’t important anyway....

 

[Gwgan]

S and X are being eclipsed by 3 and Y will make them a very tiny slice of the pie. At some point without modular wiring and single stamp body they will be relics and production will be halted. If Roadster 2 has enough of the new tech then maybe lux sedan and suv models will be reborn but none of that is priority.

 

[john85775]

S and X are being eclipsed by 3 and Y will make them a very tiny slice of the pie. At some point without modular wiring and single stamp body they will be relics and production will be halted. If Roadster 2 has enough of the new tech then maybe lux sedan and suv models will be reborn but none of that is priority.
View attachment 433865

How is this paradigm different from any manufacturer ? Not a good way to build brand goodwill.

 

[Gwgan]

How is this paradigm different from any manufacturer ? Not a good way to build brand goodwill.

Not sure what you mean by that. Toyota sold about 2 million cars in the US last year, Lexus about 300,000 and the luxury brand is no less for the smaller volume. What seems different is that Tesla starts innovation in the larger volume product. IMO when it no longer makes financial sense to retool/redesign S and X to incorporate the new tech they will just stop making them. I don’t doubt that there will eventually be a diverse product line with 100,000 Roadsters, a few hundred thousand luxury cars, and a few million 3/Y but the dfficult-to-manufacture S and X of today will not be part of that future.

 

[john85775]

Not sure what you mean by that. Toyota sold about 2 million cars in the US last year, Lexus about 300,000 and the luxury brand is no less for the smaller volume. What seems different is that Tesla starts innovation in the larger volume product. IMO when it no longer makes financial sense to retool/redesign S and X to incorporate the new tech they will just stop making them. I don’t doubt that there will eventually be a diverse product line with 100,000 Roadsters, a few hundred thousand luxury cars, and a few million 3/Y but the dfficult-to-manufacture S and X of today will not be part of that future.

Difficult to manufacture, high cost, low volume cars are highly important to several large brands because they serve as halo products bringing in high net worth clientele. Dismissing the products outright, which is what Elon did on today's call, was a very curious move.

 

[pete8314]

Best thread title I've seen in a while

And yes, Elon was quite dismissive about S & X. Every brand needs a halo product, but it seems he's focused on production efficiency, which neither the S or X in their present form meet that criteria. I think Tesla needs to be really careful, there's plenty of existing S owners waiting for an interior refresh, but if they leave S & X on the vine and only focus on the Truck and Y, then they're leaving money on the table. I get the exterior might not change since there's far more cost in doing that, but the interior pales in comparison to most of it's peers. It's nice, but it's no longer $100k+ nice.

 

[glide]

If they don’t update the S soon I am out.

What other company leaves their flagship product to rot on the vine? The 3 is not remotely attractive to me. The Y is somewhat better with the hatch but still not compelling enough to get me to bite.

 

[Gwgan]

Elon likes his fast cars and we have Roadster as Halo. The S and X have served the mission and obviously his thoughts are elsewhere so this is another way Tesla is not like other car companies.. We will get a new large SUV when he has grandkids, unless driving and ownership are obsolete then we will get lux cabin robocars.

 

[destructure00]

The S and X are a means to an end more than they are halo models. The 3 and Y are that end. It's all part of the bigger plan for Tesla.

The Secret Tesla Motors Master Plan (just between you and me)

 

[buckerine]

I agree with another poster that if the S and X aren’t updated, we might have to go back to a gas car for one of our two cars. Not ideal, but we’re not getting another X at this point.

 

[Xenius]

I agree with another poster that if the S and X aren’t updated, we might have to go back to a gas car for one of our two cars. Not ideal, but we’re not getting another X at this point.

I don't understand this thought process. The current Model X (raven) is the best Model X they've ever produced. But it doesn't have a slightly different interior so you don't want it? Ok.

 

[Asterix187]

Porsche Taycan it is then next time.

 

[ItsNotAboutTheMoney]

Priority is Model 3 and Y, which should provide the revenue they need.

S and X are in an increasingly competitive space. Sales moved to competitors and Model 3.
Tesla can't afford to rebuild them right now. It will just continue to make small tweaks.

So Musk will just dismiss questions about them. He's not going to say that Tesla can't afford to update them.

High end development likely now focused on the Roadster, which may then feed back into the S and X.