When do S and X spell trouble? When they’re Tesla’s aging models that they’re determined not to change. Last month TESLA CEO and founder Elon Musk tweeted that “there is no refreshed Model X or S coming.” OK, then!
Sales Slide 20%
But the Model S and X, which debuted in 2012 and 2015 respectively, have seen sales slide 20% in the second quarter of 2019. The newer Model 3 has seen substantial sales partly offsetting the S and X slumps, but the 3 has less profit built into the price than the S or X. The Model 3 has a list price of $36,200 (lowered earlier this month) while the Model S starts at $79,990.
Compounding the drop in S sales and rise in 3 sales is that the newer technology found in the 3 means it has a better range. Tesla advertises 325 miles range for the C while the S tops out at 285 miles range. So consumers see a car over twice the price with 40 miles less range.
Human Nature of Old
But technology and price aren’t the only factors slowing down Model S and X sales. Whether it’s human nature, short attention spans, or just the need to make a change periodically, consumers like new. New design, new features, new input; whatever it is consumers become less interested in vehicles as they age. It’s harder to sell a new-old car than a brand-spanking-new, new car.
So the Model S and, to a lesser extent since it’s a newer design the Model X are both aging out of demand. There have been virtually no changes to the S or X throughout their lifespans. Yes, the S lost the black grille-like patch on the front in 2016, but that’s all. No interior upgrades, no technology bumps, just the elimination of a painting step on the line. You would think that helps lower the price slightly.
Nine Years Catchup
In 2020 the S will be nine years old, which is unheard of for a car in this price range and segment. In those nine years, other companies have seen the electric light and are pouring billions of dollars into development. While Tesla has a head start, they should have utilized the time to make their S and X as competitive as possible by refreshing the designs and maybe upgrading the battery system.
On paper, it’s still plenty tough to knock a Tesla. You almost have to have something against the brand to not see the advantages over other offerings. But we know that more competitive brands are ready to pounce, and when their cars hit they will feature specifications and designs that will capture media attention. It will be harder for Tesla to market a nine- or 10-year-old model with sizzling “new” or “improved” tags. Plus, the car they’ll be showing looks like the same car they showed in 2012.
Tesla has lowered prices on some models and eliminated lower-range versions without raising prices, so they are aware of their position. Maybe they’ll make periodic cuts as a marketing tool–we know it will be a good sales tool. But, holding steady has never worked in the ever-changing world of pushing new iron off of lots.