Morgan Stanley analyst Adam Jonas issued a lower target for Tesla on Wednesday, saying the automaker’s SUV price tag is too hefty for the carmaker to meet its production volume goal for 2016.
Jonas wrote that the $130,000 SUV is just too pricey (via Business Insider):
Even allowing the Model X (average transaction price) to decline over time through the introduction of lower-spec models leaves what we believe to be a higher-priced vehicle than we expected that may struggle to meet the volume expectations of the market and our forecasts.
If you remember correctly, Jonas was the analyst that called for Tesla’s stock to effectively double because he had a good idea for the automaker, which he said was the world’s most important.
Jonas slightly revised his target to $450 from $465, so the “overweight” rating requires some context. Nonetheless, Jonas’ small turn reflects a reality for the automaker that they probably already know: Tesla will need an affordable car soon if it hopes to turn a profit by 2020.
I thought they also have a Model 3, that will be…allegedly.
I thought the X was supposed to be the affordable one, and it’s what it seemed like was publicized all along. But people tell me now that I’m wrong, and the X was always supposed to be expensive.
Affordable – not really – but there was a ton of initial squawking that the Model X would be cheaper than the Model S, and by a wider margin.
Yes, lower cost versions will trickle in and Tesla needs profit, so focusing on the high end, more profitable models makes the most sense.
It is one slick vehicle, but the pricing is no where near what was being said 4 years ago – and the Model S was supposed to have come down in price as the years ticked by due to scalability, volume, and most importantly, improvements in battery technology. None of that has come to be.
Can Tesla survive as a luxury niche maker? Why not – other luxury niche makers survive. The vehicle is aspirational, and Americans in particular eat that stuff up.
The X is the SUV version of the S, and from a basic marketing perspective, no one would offer more product for less money. Therefore, the X *must* be priced higher than the S.
But perhaps if they get enough production rolling, they might drop the price on the S and X, but until they get competition, I don’t really see that happening.
Tesla, disappointing even fanbois.
Way to flip-flop on a dime, Adam.
Adam Jonas is the king of “This will happen, but if it doesn’t, that would make sense too.”
Every piece of prognostication he spews has an out.
This is the guy that basically said, “Tesla will launch and Uber like service by March, unless they don’t.”
Clap Clap Clap. There is some industry insight…
I know a guy like that at work. It’s like he was trained by Jesuits to be non-decisive or confrontational. He’s semper gumby to a neurotic degree.
The most notorious assholes there are better tolerated by the workforce than that guy.
I know a guy like that at work. It’s like he was trained by Jesuits to be non-decisive or confrontational. He’s semper gumby to a neurotic degree.
The most notorious a$$holes there are better tolerated by the workforce than that guy.
Bleh, I’m glad I don’t have to work with any people like that. I enjoy hearing certain opinions and frank discussion at work.
Me, too. The people I like best there are the locals from blue-collar/farming backgrounds who will get in your face if they have a problem with you.
They’ll also have your back if they think you’re on the level.
So far in my career, being vocal about my opinion has really worked for me. I dunno if that works in all careers, though.
I’m too dim and lazy to remember a tranche of lies and false promises so I always go with honesty or a zipped lip.
Hasn’t always been optimal for my own interests but where and when it works, it’s the only way to office.
“I dunno if that works in all careers, though.”
Some messengers, when delivering the truth, get shot.
Like that old German saying: “Wenn der Hahn kräht auf dem Mist, dann ändert sich das Wetter, oder es bleibt wie es ist.”
When the rooster crows on the manure pile, the weather will either change or stay the same.
It would be stupid for Tesla NOT to take every dollar they can from the early adopters. They can lower the price of the X when demand stops outpacing production.
I kept calling out the P85D for being overpriced. Now you see, with the Model X, low-balling the numbers hides nothing.
These things are horrendously overpriced toys for the rich – directly subsidized by liberal environmentalist hippies stupid enough to support them. And the funny thing is that after having bought into Tesla stock, I’m a direct profiteer of those who criticize me for telling the truth about the pricing.
I think they are awesome performing cars but the interiors are weak.
I could lease a P90D, but why do that when I could have both Hellcats for that price?
Perhaps if it was your children dying in the middle east to secure oil and pipelines, you might develop instant empathy and political understanding of the real cost of oil. or maybe not…
Oh for the love of God are you kidding me? Rather than write a long piece why don’t you learn about where oil is actually coming from:
https://www.thetruthaboutcars.com/2014/12/ur-turn-truth-oil/
https://www.thetruthaboutcars.com/2015/01/ur-turn-truth-oil-part-two-good-bad-ugly/
https://www.thetruthaboutcars.com/2015/03/dude-wheres-cheap-gasoline-truth-oil-part-iii/
Only one OPEC nation is in the top five oil producing nations in the world. The largest oil producer in the world? The United States.
The amount of oil the US imports has dropped to decades long lows, and of all imports, OPEC Nation (and not all OPEC nations are in the Middle East and hate us) imports will make up about 28% in 2015. Of those, Saudi Arabia is close to 40% of all OPEC Nation imports to the US. Our largest import partner? Canada. Mexico and Saudi Arabia trade places with each other month-to-month for the number two spot.
The price points indicate that the company needs to set price points that are that high in order to reduce its losses. Tesla can’t afford to charge less.
The base model will be about $80K, they have something like 30,000 pre orders, the car is more than competitive with others in its class and price range, fuel is free and the supercharger infrastructure is growing, and as the giga factory comes on line the profit margins will grow. Hard to see the problem here.
“fuel is free”
I can smell patchouli. Thought that went out in the ’80s.
When it comes to Tesla, Aaron finds it impossible to tell TTAC, which is the (eventual) $80k starting price. He routinely states it as $130k, which only applies to the earliest special editions, which are fully pimped.
Nobody talks about $45k Camrys, but they exist.
The most expensive Camry is about $35K.
All I could manage on a fully-loaded Hybrid XLE Camry with special paint and all dealer accessories was $37,080.
Yeah, I didn’t add the accessories. Only special paint.
OK, I got one up to $38,245. My bad on the $5k hyperbole.
But my point remains: a stripped Camry can be had for $23,905, and average MSRP is probably around $28-30k. Nobody refers to the Camry as a $38k vehicle.
The ratio between a stripped Model X and the top Model X is about +60%, similar to the Camry, but the only one you hear about from Aaron is the top version. I just think it’s disingenuous reporting.
I agree that the $130K number is used around here like it’s the base price. I’d be interested to see what the ATP of the X though.
I guess you could pay $45K for a Camry.
2016 Toyota Camry Hybrid XLE
Exterior: Blizzard Pearl
Interior: Black Leather
Options:
Entune™ Premium JBL® Audio with Integrated Navigation and App Suite
Convenience Package
Power Tilt/Slide Moonroof
Technology Package
Safety Connect
Qi-compatible wireless smartphone charging
Dealer Accessories:
Rear cargo tray
Carpeted floor mats
Glass Breakage Alarm Sensor
Hideaway Cargo Net
Remote Engine Start
Alloy Wheel Locks
Rear Spoiler
Base Price: $30,140
Options: $ 5,767
Delivery: $ 835
=======================================================
$37,137
Additional Dealer Markup
Spoiler paint and install $ 999
Alarm install $ 500
Remote engine start install $ 750
Nitrogen filled tires $ 200
VIN etching $ 999
Paint protection package $ 1,299
Window tinting $ 750
Carpet protection package $ 250
Dealer prep $ 199
Bend over, breath deep, this is going to hurt fee $ 2,499
Cash Back (when financed through Toyota Credit: -$ 500
============================================================
Final Price (just wait until we sell you an ESP) $45,082
There you go – the mythical $45,000 Toyota Camry. It does exist!
I didn’t say it was the starting price. That’s the price of the Model X, right now. Regardless, it’s not my assessment that the cars are too expensive, that’s what Morgan Stanley wrote. The $25K price premium is too much over a Model S for the company to meet production targets. They seem to think that the sweet spot would have been $5K-$10K more.
“Nobody talks about $45k Camrys, but they exist.”
The same logic applies to the nonsense claims that cars are too expensive because the average (I’m not even sure if it’s median or mean) new car ‘costs’ $32k. (Never mind that’s what people actually pay, not what’s available that meets their needs.)
Tell me more about how electricity is free.
“Included with purchase of a correctly equipped car” — is that better?
How much do I have to pay in order to get this correctly equipped car with “free fuel”?
$75k for the base Model S 70D. It used to be that Supercharger access was reserved for higher trim levels or was an expensive option. Not anymore, apparently.
Are most people charging at the Supercharger network? Are they not charging at home?
I honestly don’t know.
“Included with purchase of a correctly equipped car”
So it comes with it’s own powerplant… who buys all the oil or natgas?
And will this powerplant still let me see the lake out front?
Simple!
First you get a Mr. Fusion and pay the $23,000 option fee to Tesla. Then you can take any household scraps you have lying around and turn it into fusion power. Next, you need to time a lightning strike while travel in “ludicrous” mode at 88 MPH for the boost of 1.21 Gigawatts of power.
All of this is free electricity. Static electricity, fusion power from household scraps. Come on! It’s 2015! Cubs win World Series! Watch Jaws 19!
For $23k, I could install at least 4 kW (likely even 6 kW) solar PV system, which in my area produces enough electricity to drive a Tesla 13k+ mi/yr (or 20k mi for a 6 kW system).
Fuel is free for Nissan Leaves too.
Is this SUV worth 3 Nissan Leaves? There are ways to save children in ME, much easier way, if you tighten fuel economy standard for SUVs instead of jumping into EV.
Will three Leafs accelerate to 60 in under 4 s?
What other minivans are selling for $80k?
2016 Toyota Sienna Limited Premium with $35K ADM.
I thought the reason the X is so expensive is because Musk has gotten so good at playing the conspicuous consumers of self-righteousness that he expects the first year’s demand to be sufficient that he can make everyone buy the top of the line model. If there isn’t demand for $132K+ X-cars, then he’ll sell the $80K+ ones that EPA janitors can afford.
It is expensive because they couldn’t ramp up production yet. If you can sell all the $132k top models because you can only make so many, good for you. Just remember to reduce prices when you run out of customers.
Seriously? TTAC has always had a hatchet out for Tesla. But complaining about a car with a very high up front list price and a very low TCO just betrays how stupid the whole thing has gotten.
Figure 145K for the car, over 8 years, buying the service package, paying for just electricity and assuming depreciation in the moderate range – you end up with a very price competitive SUV.
And its mind-numbingly ugly from the rear 3/4s…
Following the development of the X, I never had the impression that it was supposed to be cheaper than the S. It is a bigger S with more battery and spendy doors; why would it be less at all?
Never sell more of your product for less. Doing so would cannibalize the S. Even an MBA knows the X has to be priced higher than the S.
Sell your product for the maximum amount people are willing to pay for it. It’s common sense.
Why do people even pay attention to Morgan Stanley after the Tesla/Uber comments and the 2009 debacle?