Model X: Under the hood of Tesla’s SUV strategy
- by Los Angeles Times
- Sep 30, 2015
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“They are in uncharted territory,” he said.
At the unveiling in Fremont, about a mile from Telsa’s factory, the cult of Tesla crowded into an industrial space for the elaborate debut, long in the making.
“We flew in for the day,” Barry Smith said. “It’s a little bit crazy.”
Tesla originally said it would start manufacturing the Model X at the end of 2013, with sales to begin last year, but the program is behind schedule. Part of the delay was because Tesla could not use many of the same parts for both the X and the S, Musk said.
“As a luxury crossover, the Tesla Model X is in one of the fastest-growing segments of the North American market, so it is well-positioned to add volume for a manufacturer that needs additional volume and economies of scale,” said Jack Nerad, an analyst at auto price information company Kelley Blue Book.
The new vehicle greatly expands Tesla’s market and could help it break out of the male-oriented customer base that supported its first car — the discontinued Roadster sports car — and the Model S, said Dan Dolev, an analyst at Jefferies Equity Research.
“Tesla now has a family car,” Dolev said. “I think that will appeal to a lot of moms who are driving their children around.”
Americans purchased only 82,000 high-end luxury sedans last year, just 0.7% of the U.S. auto market, according to Kelley Blue Book. But consumers purchased nearly 400,000 mid-size luxury SUVs — the segment that Model X matches — last year, accounting for 2.4% of auto sales.
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Almost 30% of the people trading out of Tesla Model S cars for a new vehicle are purchasing sport utility vehicles, according to an analysis of transaction data by car shopping company Edmunds.com.
“Tesla can capture those Model S owners who either want something larger or would like an SUV to add to their personal fleet,” said Jessica Caldwell, an Edmunds.com analyst.
Tesla expects sales to grow now that it has entries in what amounts to about 3% of the U.S. auto market. The electric car company expects to deliver about 50,000 vehicles this year — including sales in overseas markets. Dolev said all but about 4,000 will be Model S cars. Wahlman said Tesla won’t get beyond producing more than 1,000 crossovers this year.
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