May 30, 2017
Tesla's Model X misses out on nation's SUV hunger
Not everything Elon Musk touches has been a runaway sales success.
While Tesla's Model S has been a hit and thousands lined up to order the upcoming Model 3 sedan, the Model X sport utility vehicle hasn't met the chief executive officer's expectations. Model X deliveries have yet to keep pace with the Model S, as Musk predicted, and U.S. registrations of the SUV have slipped the last two quarters, according to IHS Markit.
Musk has chalked up challenges with the Model X to making the vehicle too complicated. Features including the double-hinged falcon-wing doors have constrained production and contributed to a costly $82,500 starting price. For Tesla, the lack of cheaper and easier-to-produce configurations has meant missing out on roaring demand amid America's SUV boom.
"Luxury SUVs are really hot right now, and the Model X should have been a big hit and broadened Tesla's audience," said Michelle Krebs, an analyst with Autotrader.com. "You don't hear a lot of buzz about the Model X, and when you do, it's the negative stuff."
Musk said on an earnings call this month that there's enough demand for Tesla to sell 100,000 Model S sedans and Model X SUVs combined this year. Tesla worked through a backlog of Model X orders from overseas markets and built up supply of the SUVs in its test-drive fleet during the first quarter, both of which impacted U.S. registrations, a spokeswoman said.
Tesla's growing pains with the Model X have been well documented, and Musk has been candid about challenges with the SUV's doors and independently operable second-row seats. Several features were difficult to engineer and dependent, in part, on multiple components and suppliers. When the carmaker fell short of its first-quarter 2016 sales forecast, it blamed "hubris in adding far too much new technology."
"Model X became kind of like a technology bandwagon of every cool thing we could imagine all at once," Musk said during an earnings call earlier this month. "That is a terrible strategy."
Consumer Reports magazine rates the Model X second to last in its ranking of 15 luxury midsize SUVs. The Model S, by comparison, scores as the No. 2 ultraluxury car.
"SUVs are popular because of utility, and this is an SUV that doesn't have a lot of utility," Jake Fisher, director of automotive testing at Consumer Reports, said in a phone interview. "The X was a big science experiment to say, 'How far can we go?' And they went too far."
Tesla has said it's made significant improvements to the Model X using over-the-air software updates, and offers in-person repairs for hardware issues.
And many Model X buyers report loving their SUVs, regardless of reported issues with faulty sensors, defective door seals or even balky sun visors.
Market researchers at J.D. Power say Tesla customers view the company through "rose-colored glasses." After conducting focus groups, J.D. Power said in a March report that it was hard for affluent buyers who had spent so much money on their vehicle to admit flaws.
That loyalty may not last as the company reaches a younger, more urban demographic with its upcoming models, the market research-firm predicts.
The Model 3 sedan — Musk's push into affordable mass-market automaking — is scheduled to roll out in July. Tesla is also planning a semitruck and a compact SUV called the Model Y.
Musk, too, will be holding Model 3 to high standards. He's said a simple design and stronger supply chain should spare the sedan from the complications that plagued the Model X.
"We're making the simplest Model 3 first, like we did with S," Musk wrote in a tweet Monday. "Didn't do it with X, because I was an idiot."
The Seattle Times
By Dana Hull