Tesla’s new crossover SUV marks major stride
In its brief, 12-year life, Tesla Motors has transformed electric cars into status symbols, revived auto manufacturing in California, launched a potential revolution with home batteries and grown from cash-strapped startup to stockmarket darling.
And unlike nearly all of its competitors, it has done so while building just one car model at a time. Until now.
That will change this week when the eagerly awaited and long-overdue Model X crossover sport utility vehicle finally rolls out of Tesla’s Fremont factory and into the driveways of customers, some of whom placed reservations as far back as 2012. After years of offering only brief glimpses, the company plans to publicly unveil
the car, with its distinctive “falcon-wing” doors, Tuesday night.
It’s a major milestone in Tesla’s evolution — and a test.
Since the company’s first, limited-edition sports car, the $109,000 Roadster, hit the market in 2008, Tesla has been able to focus on one vehicle at a time. That attention paid off. Tesla’s Model S sedan, introduced in 2012 after Roadster production ceased, has heaped up a mantle-clogging pile of awards, along with steadily rising sales. The sedan’s base price ranges from $70,000 to $105,000 depending on the size of the battery pack and the configuration of the drive train.
Model 3 next
Now Tesla will begin its transition into an automaker with a portfolio of vehicles tailored to different customers, needs and niches. With Model X deliveries under way, the company plans to reveal the design for its next car — the $35,000 Model 3, geared toward middle-class buyers — next spring, with production scheduled for 2017.
“The Model X will show that they’re not a one-trick pony,” said Ben Kallo, a senior analyst with Robert W. Baird & Co. “They have a higher bar to meet than before, with the media and the auto-trade rags. But I also think they’ve gotten a lot better as a car company since they rolled out the Model S.”
The first version of the Model X Tesla will produce, the limited-edition Signature Series, starts at $132,000, before state and federal incentives are factored in. Tesla has not yet announced the base price of a standard Model X.
Kallo and other analysts won’t just be scrutinizing the car’s quality. They’re waiting to see if the Model X expands Tesla’s overall sales — or simply steals thunder from the Model S. Will the new electric SUV extend Tesla’s reach and attract new customers, or will it just cannibalize Model S sales?
“You have to look at the profile of Tesla customers,” said Karl Brauer, senior analyst at the Kelley Blue Book auto information service. “They’re tech guys. They want the latest and greatest. You’re going to have a guy who has no need for the Model X and will still want it because it’s the latest thing. So you will definitely see some cannibalization.”
And yet, the seven-seat Model X does not occupy quite the same niche as the Model S. And those differences could bring new customers to the brand.
Kirk Brown, a public relations executive in San Anselmo, often drives to the Peninsula to meet with clients — a round trip of 130 miles or more. He also has a 6-year-old daughter to chauffeur. And while he’d like to drive electric, no EV available to date has both the interior room and the battery range he needs. Hence his interest in the X, which boasts an estimated range of 240 miles per charge.
Available in 2016
“It really does look like the perfect car,” said Brown, 46. He wants a Model X to replace his 2002 Subaru Forester, on its last legs. “I’m old enough to remember when phones were these bricks that sat on the wall,” Brown said. “The Model X is an iPhone. What I’ve got is the old brick.”
He has not, however, put down $5,000 for a Model X reservation. An estimated 27,000 people have. But with Tesla warning that new reservations won’t be filled until the second half of 2016, Brown and other potential buyers are holding off. That makes gauging true demand for the Model X difficult.
“I’m not a person who can put down $5,000 and wait indefinitely,” Brown said. “If I can walk into a Tesla store, sit in one, test one and be assured that I can get it in six months, I’ll put the check down that day.”
Tesla’s one-car-at-a-time strategy certainly hasn’t bothered investors. Although the stock dropped 6 percent on Friday to close at $256.91, it’s worth nearly 10 times its value when the Model S was released in June 2012.
To retain its blue chip status, Tesla must now prove it can build multiple car models at once with no slip in quality. For all its accolades, the early Model S had its share of glitches, including balky door handles and software problems with its touch-screen display panel.
Most analysts expect to see at least a few similar issues with the Model X, despite all the time Tesla spent bug-hunting in advance. In August, CEO Elon Musk even referred to the Model X as “maybe the hardest car in the world to build” before quickly adding that it would “blow people away.”
Production improves
And yet, Tesla has far more production experience now than it did when the Model S was released in 2012. Tesla made just 3,100 cars that year. This year, it expects to build and deliver 50,000 to 55,000, counting both the Model S and the Model X.
“You’d think every possible problem would be resolved, but as we know from a hundred years of experience, it’s only when you get a bunch of cars on the road that some of these issues appear,” said John O’Dell, a senior editor at the Edmunds.com auto information website. “But I’m not expecting them to fall on their face with the Model X — not at all.”