Tesla Model X Missing Out On SUV Craze

Registration data compiled by IHS Markit shows that sales of the Tesla Model X SUV in the US have declined in the past two quarters. “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.”

The Model X is “the best car ever built,” claims Elon Musk. So why is it not a beneficiary of the luxury SUV craze? There are several reasons, not the least of which is that the Model X is an SUV only because Elon says it is. Compared to a Chevy Tahoe or Acadia, it fails one important test — carrying lots and lots of stuff.

Model X Not Really An SUV

Thanks to Elon’s insistence that the Model X have low aerodynamic drag to maximize range, the rear of the car slopes steeply down from the roof to the rear bumper. That’s great for making a car that looks good. It’s not so great for a vehicle that is supposed to be able to take a family up to the lake house with all their fishing gear, camping stuff, and lots of suitcases. Tesla got the Sport and Vehicle parts right but forgot about the Utility component.

In its rankings of 15 luxury midsize SUVs, the Model X comes in next to last according to Consumer Reports. “SUVs are popular because of utility, and this is an SUV that doesn’t have a lot of utility,”  says Jake Fisher, director of automotive testing at Consumer Reports. “The X was a big science experiment to say, ‘How far can we go?’ And they went too far.”

Elon Musk confirms what Fisher says. He told an audience of investors during an earnings call earlier this year, “Model X became kind of like a technology bandwagon of every cool thing we could imagine all at once. That is a terrible strategy.” He even let a large part of the blame fall on his shoulders, calling himself an “idiot” for allowing hubris to take the place of common sense.

Where The Model X Went Wrong

The Model X was supposed to be a spinoff of the Model S sedan, but as things went along, it got further and further away from its roots. The Model X cars coming off the line in Fremont today share less than 30% of their parts with the Model S. It is expensive to produce, which makes it expensive to buy. Other than the “cool” factor, many owners are less than thrilled with their Model X ownership experience. Tesla says some of the reasons for lower US sales of the Model X include working through a backlog of overseas orders and building up a fleet of vehicles for customers to test drive at Tesla stores.

Toni Sacconaghi is an analyst for Sanford C. Bernstein & Co. He wrote a report recently that summarized his ownership experience with his Model X as “not good.” His car needed to go to the nearest Tesla service facility, 60 miles away. four times during the first 4 1/2 months he owned the car. “Like many (most?) Model X owners, we had repeated technology issues with our car,” Sacconaghi wrote on May 19 report.  Not everyone is as negative as Toni Sacconaghi. 88% of Model X owners tell Consumer Reports they would buy another one.

Model 3 Buyers Will Expect More

J.D. Power and Associates says many Tesla customers see the company through “rose-colored glasses.” In focus groups, it says many people are hard pressed to admit a car they spent so much money for has so many problems. It thinks buyers of the lower priced Model 3, due to go into production in July, may be less tolerant of shortcomings in their cars.

“Model 3 buyers will not be as accepting of body panel gaps or misalignment,” Kathleen Rizk, director of global automotive consulting at J.D. Power, told Bloomberg during a phone call. “As millennials step into the Model 3, they are expecting it to work perfectly.”

Musk, to his credit, seems to have learned from the mistakes made with the Model X, especially the ultra-cool falcon wing doors, which have suffered from numerous glitches. “We’re making the simplest Model 3 first, like we did with S,” Musk wrote in a Tweet recently. “Didn’t do it with X, because I was an idiot.” Mistakes are the best teachers and Musk is an excellent student.

Source: Bloomberg