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What's Wrong With Tesla's Model S Sales?

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Tesla used the Roadster to prove that an electric car could be fun, quick, and have a long driving range. The Model S built on that foundation to show that electric cars could also be more practical and even safer than gas powered cars. Immediately, the Model S won many awards.

Even recently in 2019, Motor Trend went back and looked at all of the cars its reviewed and crowned the 2013 Model S as the best car its tested in its 70-year history.

It’s been a revolutionary car.

The Model S of today has changed dramatically from the Model S of 2012. It has 80% more range, Autopilot hardware capable of Full Self Driving one day, and a better ride quality.

However, sales have been collapsing.

In 2019 after the Federal Tax Credit went from $7500 to $3750, Model S sales fell by more than 50% in a single quarter.

Everyone was expecting a refresh. Even during the Model Y event, many people were hoping that there would be a “one more thing” - a new Model S/X. However, there was nothing.

Tesla finally updated the Model S in April with adaptive air suspension, more range (from 325 to 370 for Model S), and quicker charge rates. A great update, but no visual changes. In fact, other than a blog post Tesla never highlighted this change.

Without anything visual to know that it’s the newest, latest model it’s a tough sell. Even new colors or a chrome deleted body would be enough to show that it’s the latest trim.

Furthermore, at $80,000 (8/7/2019) it looks expensive compared to the Model 3. That’s more than twice the price of a Standard Range Plus Model 3, and $25,000 more than the Performance Model 3 - which so happens to be faster.

While the Model S may have more features (air suspension, better ride quality, power tailgate, etc), Tesla doesn’t do a good job at informing customers on their website. Since Tesla shifted its sales process to online - it’s incredibly important to highlight these features. There’s also a limited number of stores and Tesla is more focused on opening new service centers than stores. Without being able to test drive the two cars side-by-side it’s difficult to show that the Model S is better - or even better than someone’s older Model S. This makes it very easy for Model 3 sales to cannibalize Model S sales.

During the conference call, Elon Musk called it a communication error. He’s definitely right, and Tesla fixing this error would help Tesla be profitable.
Category
Electric Vehicles

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