Elon Musk's main worry about the record-setting Tesla Model 3
Tesla delivered a record number of its electric cars in the past three months: 95,356 vehicles.
But what that number doesn't show is how many of those cars were the car company's newest Model 3 sedan: 77,634 cars. That means only 17,722 Model X and S were ordered and delivered, down more than 20 percent from last year. This has Tesla CEO Elon Musk a bit concerned for the future of his original car lines, as it seems the Model 3's success is coming at the cost of his other vehicles.
During a second quarter earnings call Wednesday, Musk called the Model X SUV and Model S luxury sedan "great products," but not from a volume standpoint. Instead, he's focused on the company's newer cars, including one that hasn't even started production. "The future of Tesla is primarily the Model 3 and Model Y," he said.
The Model Y, the compact SUV unveiled earlier this year, is only starting to prep for production at Tesla's Fremont car plant, but is expected to start manufacturing by fall 2020. Musk has pegged the company's ongoing success on the lower-cost SUV, anticipated as a high-demand car. The Model X starts at $84,000. Musk has promised the Y will be closer to $40,000.
He admitted that S and X demand "should be higher" and pondered aloud about a "false expectation in the market that there's some overhaul in the S and X market." But there's no new designs for the Tesla classics, he assured, just consistent improvements to the cars during each new production. The Model S first arrived in 2012 and the X in 2015.
Musk gave credit to the theory that the Model 3 is cannibalizing X and S sales. "I think there's some cannibalization," he conceded.
But still, "The S and X are nice," he noted with a laugh. "Without them we couldn't spell 'sexy.'" All of Tesla's car names rearranged make up the word "S3XY." But the waning sales are worrying for the company's profitability. Automotive analysis firm Edmunds didn't put much weight into Tesla's record deliveries. Jessica Caldwell, Edmunds executive director of insights, wrote in an email, "Model S and Model X are getting stale and Tesla needs to do something to keep shoppers interested in these higher profit vehicles."
Tesla wasn't profitable again this quarter, losing more than $408 million and pulling in lower-than-expected revenue of $6.35 billion.
The record numbers are also tied into a rush to receive as much of Tesla's dwindling federal tax credit for its electric vehicles. The once $7,500 subsidy is down to $1,875 and will be gone by next year.
Without that incentive, things might be looking less sexy for Tesla.
Topics Electric Vehicles Tesla Elon Musk
Sasha is a news writer at Mashable's San Francisco office. She's an SF native who went to UC Davis and later received her master's from the UC Berkeley Graduate School of Journalism. She's been reporting out of her hometown over the years at Bay City News (news wire), SFGate (the San Francisco Chronicle website), and even made it out of California to write for the Chicago Tribune. She's been described as a bookworm and a gym rat.
