
Tesla's Model X Was a Mistake - Shivetya
http://www.autoblog.com/2016/02/05/tesla-model-x-mistake-opinion/
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fossuser
This is overblown and the stock price being low is probably short sightedness
(again) on the east coast due to oil prices.

The Model X enabled Tesla to use the same core as the Model S while building
and testing some new features during the construction of their giga-factory
that will enable the Model 3. It also allows Tesla to stay in the press during
that time (demonstrating new features, talking about the new car etc.).

While delivery is a little delayed they've already sold over sixteen thousand
Model Xs - I don't agree that it was a mistake.

~~~
dragontamer
Stock price isn't low at all. TSLA is still considered a bigger company than
Fiat / Chrysler... by a significant margin... at its current price.

East Coast guys are thinking "wtf? How can Fiat / Crysler / Dodge / Jeep / Ram
/ Ferrari COMBINED" be worth less than a company who currently only makes two
cars?

~~~
toomuchtodo
Imagine if GM owned ExxonMobil. That's a better example of what Tesla is (an
energy storage company that sells a product that uses their core product).

~~~
Riod
Except Tesla licenses their battery tech from Panasonic. Says so in the 10-K.
Anyone else is free to make a deal with Panasonic

~~~
dragontamer
Tesla has their own battery technology. But the chemistry belongs to
Panasonic, who creates cells.

You combine cells (like the 18650) together to create batteries. The
Gigafactory is trying to make 26650 cells, which should be more efficient in
cars than the 18650 cells (which were originally designed for laptops)

Tesla's use of 18650 was highly innovative. They "hacked" growth into their
company by taking advantage of the scale and scope of laptop manufacturers.
But now that TSLA is one of the largest users of Lithium Ion in the world,
they need to come up with a more efficient, car-specific cell design now.

~~~
Riod
That's exactly it. They haven't yet. Right now what they do is assembly. Look
up what Chanos said about Tesla.

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strictnein
I'm not sure this makes sense:

> "Tesla, like most Silicon Valley companies, uses most of its revenue to
> finance research and development for new products. Rolling out new products
> with minimal required development is crucial to this strategy"

Those sentences just don't follow. They spend lots on R&D and they need to
roll out new products with minimal R&D?

And I'm pretty sure the majority of their revenue is spent building the cars.
They did around $3.2 billion in revenue and sold 35,000 cars. Unless they
somehow have unheard of margins of 50-60%, that means Tesla spends the large
majority of their revenue on building vehicles.

To me, this community blog post reads like they started with the contrarian
clickbait title, and went from there.

~~~
apendleton
It's clumsily worded, but I think what they were going for is something like
"Tesla, like most Silicon Valley companies, uses most of its revenue to
finance research and development for new products, so profitability depends on
maximizing the returns on that R&D investment." The idea was that the R&D
necessary for the Model S was intense, and the hope was to be able to extract
more value from that investment with another vehicle that largely reused Model
S's tech.

~~~
colechristensen
It's just not a software company and too many people don't get that.

They're building their brand and developing their technology and supply chain
with elite vehicles developing the potential for profit explosions when
they're ready to release a commodity vehicle to the masses.

------
_ph_
Some decisions taken when designing the X might have been a mistake. But it
would be too simple to blame all onto them. While initially, the X was planned
as a minor bodywork modification of the Model S, the crazy success of the S
gave Tesla the money and the time to make it a larger refinement of the S
platform. In the meantime, the S also kept being updated.

So the X is rather still part of the S platform and the real cheaper car will
still be the Model 3. In that sense the Tesla plans did not change much. While
not many X were delivered in 2015, they seemed to have started mass production
literally in the last weeks of the year. They should be building several
hundred of them per week now.

That the X is even more expensive than the S is not a bad thing, considering
that they have about 20k orders backlog. As long as they can sell any S or X
they make, there is no hurry for the "cheap" model. Revenue per car is more
important that total car number sold.

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sandstrom
I agree with most of this analysis.

I think the reason they did the X was that when Model S was brand new they
expected the market to 'max out' at ~20k vehicles a year (which wasn't
unreasonable looking at other, similarly priced, niche premium brands).

So, they wanted a SUV to sell more cars. Now, as everyone (especially Tesla)
knows, Model S has been selling very well. So in hindsight it was a big waste
of time/resources. But I can see why the mistake was made.

~~~
_ph_
Why was it a waste of time/resources? From all we know, the X might even sell
better than the S, the preorders are crazy. Which would make Tesla a much
larger company than selling the S only.

~~~
SuperChihuahua
But they would have sold even more if they ignored the X and prioritized 3
which is the ultimate goal because they need the money

~~~
bronson
Can't prioritize the 3 until the gigafactory comes online. Not point to making
lots of cheap chassis if you don't have the batteries to put in them.

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vvanders
The one thing that article totally misses is the Dual Motor drivetrain that
was developed for the Model X was what enabled the 85D/P85D/P90DL which moved
the Model S from "awesome" to "supercar" territory.

Also, there was many similar slow rollout/complexity issues with the Model S
first shipped, I'm sure they'll be fine.

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gizmo
Over-engineering the Model X is in my view clearly a mistake. Not a huge
mistake though.

The big problem for Tesla is scaling up. Producing the model 3 at scale at a
40k price tag is much harder than anything they have done so far. It has taken
competing car companies decades to get to the point where cheap reliable cars
just roll of the factory line. Just quality control alone is a huge problem at
scale. Sourcing all materials at scale is enormously difficult. In
manufacturing scale is everything.

In terms of interior design and finish Tesla is way behind BMW. They don't
have the factories BMW does or any of the infrastructure and operational
expertise. Tesla won't be able to compete in more the price sensitive "3"
segment.

Perhaps Tesla would have been better if they only produced fast luxury cars.
Too late for that now, though. The stock is priced based on promises of a mass
adoption of the Model 3. A promise that they can't possibly deliver on. Unless
Elon pulls another rabbit out of his hat. Wouldn't be the first time.

~~~
_ph_
While I did not have the chance yet to compare an X to the BMW offerings, it
is a notable fact, that Tesla in the meanwhile for both the X and the S is
working with the same German companies which supply BMW and Audi. The interior
of the X is made by a company usually doing Audis, and the suspension is made
by Continental. They also have Bosch components, Harman audio etc. That should
put them quite close in quality to the German brands.

~~~
gizmo
I've heard many people express disappointment at the fit and finish of the
model S (cheap components, water leakage, etc), but nothing quite as harsh as
the review in BGR:

> The fit and finish of a Tesla, especially a $140,000 Tesla, is quite frankly
> embarrassing. Panels with gaps, cheap plastic components, a decade-old
> Mercedes shifter, and none of the high-end amenities of luxury cars. The
> doors are, quite frankly, crap. The leather is medium grade at best. The
> seats are terrible (disclosure: I have not sat in the brand new Model S
> seats, though they are still one piece with no power-adjustable lumbar,
> etc).

I don't know if the Model X is better.

[http://bgr.com/2015/01/14/tesla-tsla-sales-market-data-
model...](http://bgr.com/2015/01/14/tesla-tsla-sales-market-data-model-s-d/)

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capkutay
This may be my personal taste but does anyone else think that it's just ugly?
I saw one in person the other day and it really looks like a big snail,
especially compared to the sleek looking Porsche and BMW SUVs in the same
price range.

~~~
LeifCarrotson
Are you talking about the BMW X5 and Porsche Cayenne? I think those are rather
hideous vehicles. The designers clearly tried to retain some of the sedan
branding and looks in front, just much taller, and weren't sure what to do in
the back. Heck, a Chevy Suburban looks better! At least it has a consistent
design philosophy!

~~~
newman314
BMWs still suffer from Chris Bangle's legacy of flame surfacing.

Personally, I think the Macan is a much sharper interpretation than the
Cayenne.

Tessa's design is blander and doesn't really have a brand specific cue other
than that horrendous nose. That large piece of plastic over what would be
traditionally the inlet just doesn't do it for me.

~~~
charlesdm
The Porsche Cayenne has been around for a long time though, and is in need of
a refresh. The Macan is sparkling new.

~~~
bborud
The Cayenne looks like it is about to surface with a mouthful of krill.

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vadym909
I'm not sure what the author is getting at but I think the Model X is a
mistake- mostly only because of the falcon doors. 1\. It is too ostentatious
for most people - especially in its biggest market- the bay area. You can hide
a gold iphone or Rolex watch but you can't hide when you open the falcon door
while dropping off your kids to school. 2\. The door also drastically reduces
the headroom for the 2nd row and it feels like a Nascar racing car with all
kinds of bracing in the back. About making it easy to get into the 3rd row is
not really true. It is no different than any 3 row SUVs. The tall fixed
headrests also limit visibility in the back rows. 3\. I think Elon is a
pragmatist and if he decides to change the falcon doors to regular doors, I
think the ModelX will trump Acura MDX and BMWX5 in Sales very easily.
Everything else in the ModelX just blows everyone else out of the water.

~~~
gozur88
>It is too ostentatious for most people - especially in its biggest market-
the bay area. You can hide a gold iphone or Rolex watch but you can't hide
when you open the falcon door while dropping off your kids to school.

For a lot of people the whole point of paying $130k for a car is that other
people know you can pay $130k for a car.

Also, is the SF bay area really Tesla's biggest market? There aren't that many
people in SF compared to, say, Los Angeles.

~~~
dtparr
Hmm, now I'm curious what the heat map for, say, > $100k cars looks like,
though I'm guessing perhaps something like:
[https://xkcd.com/1138/](https://xkcd.com/1138/)

Maybe what I really want is 100k cars per capita?

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callesgg
High stock prices does not mean a company is doing well.

It just means that people used to think the stock of the company would go up.

Following that: low stock prices does not mean a company is not doing well.

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FussyZeus
I think mistake is a strong word. It clearly wasn't part of the original plan,
at least where it was, and did take (and continues to take) a lot of time and
effort on the part of Tesla to get it to market already. However, Tesla was
moving into SUVs eventually, they would have to, and the X if nothing else
provides a ton of useful data and experience to them down the line.

Best idea? Probably not and maybe a little premature too, but the article
makes it sound like Tesla's going out of business because of it and I don't
think it's nearly that bad.

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noipv4
Tesla should get Model 3 out quickly. That's where the meat of the market is
at ~30K USD. That's where Tesla will learn what real customer service is.

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melted
Couch infantry is at it again. Stock price doesn't mean a damn to a company
unless it's about to issue more shares. It only has any meaning to people who
own its stock. Model X is a good product, and one without peer in the luxury
segment. Who gives a shit what some jerkwad analyst thinks about the stock?

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jernfrost
Kind of early to start making conclusions isn't it? Stumbling world economy
and record low oil prices. Not exactly a receipt of Tesla success.

I'd give at least 6 more months before concluding anything.

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kevinstubbs
Elon took a risk, it didn't pay off, and maybe hurt Tesla in the short term.
They learned a lot of lessons from it and survived, so this should help them
in the long term.

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bborud
I think it is amazing that after a decade in the mainstream spotlight,
journalists still don't seem to do their homework.

Simpleminded twaddle.

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njharman
Tell me in 3 years if it was a mistake. Until then you're guessing out your
ass, hoping to drive traffic to your blog.

~~~
sixQuarks
Not only that, why is he all of a sudden claiming this now, AFTER the stock
has tanked? If he felt that way, he should have been talking about it when the
stock was much higher. it's easy to say things after the fact.

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elchief
So, decent plan, imperfect outcome?

~~~
D-Coder
Story of my life.

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tn13
Tesla in general looks like a big mistake to me. Whatever good things Tesla
has seen so far is probably because Musk's own personality and PR rather than
the actual performance of the car itself.

~~~
njharman
What kind of performance? Consumer Reports rated so highly they had to redo
their test (it got over 100%). It's acceleration is near supercar territory or
just "really fucking fast" with out ludicris. 98% of owners said they'd buy
again. Compared to super cars and high end sports cars it's corning sucks.
But, 1)remember S is a 4 door sedan not a sports car 2) like to see any
electric car with more than 40mi range do better. And I think it's range is
one of the top for production electric vehicles. S has met or beat sales and
all Tesla models have large pre and back orders.

So, really, what performance are you referring to?

~~~
tn13
I don't have much faith in Consumer Reports may be they wanted to be in good
books of Mr. Musk.

