Another reason the Tesla Model three may eat into Model S sales
A fresh survey of Tesla owners proceeds to fuel one analyst’s concerns that the Model three may eat into sales of Tesla’s higher-end cars.
More than thirty percent of current Tesla owners in latest survey held reservations for the Model Three, according to a note sent Tuesday from Bernstein analyst Toni Sacconaghi. About seventy percent of those with reservations said they are likely to take delivery of the cars.
“Cannibalization by the Model three is clearly a risk — the fact that almost a third of current owners hold reservations raises concerns that the Model three may cannibalize sales of higher-end Tesla models upon launch,” said Sacconaghi in his note.
The survey questioned two hundred eighty six Tesla owners in different regions and countries online in July for information on such things as their satisfaction with their cars and service and their likelihood of repurchasing a Tesla.
Sacconaghi also noted two other data points that further support the argument that the Model three could menace sales of S and X models. Very first, Tesla’s inventory has grown “strikingly” in the last two quarters, and some data indicate Model S and X deposits have dropped meaningfully. That suggests “a pause in Model S and X request leading up to Model Three’s launch,” Sacconaghi said.
Tesla has said the Model three is not meant to be a replacement for the Model S, nor an improvement over it. The company has said the car will not suggest the spectacle and features found on its high-end cars.
The pricing for the Model three will vary over its base, depending on the features one adds. At a company event on Friday, Tesla said buyers can pay an extra $9,000 over the base price of $35,000 to get a car with an estimated 310-mile range, rather than the base range of two hundred twenty miles.
Meantime, Tesla’s entry-level Model S — the seventy five rear wheel drive — offers an estimated two hundred forty nine miles, yet starts at just over $70,000. The Model S still may suggest other features that will sway buyers willing to accept less range at a higher price, but the potential for some cannibalization is clearly there, Sacconaghi wrote.
Also noteworthy, twenty percent of owners with reservations are “unassured” if they will actually buy the car, and another seven percent said they are “unlikely” or “very unlikely” to do so, suggesting a “haircut” to Tesla’s current deposit total of more than 500,000 could be ahead.
And about sixty percent of all owners with reservations surveyed would be “less likely” or “much less likely” to buy the car if initial quality reports suggest Model three has the same kinds of problems that have affected the Model X.
More than a few customers said that they have trouble getting timely and satisfactory service for their cars, especially among Model X owners, the note said.
The owners surveyed visited a service center an average of 1.Three times in just over a year of ownership, and about thirty percent of them had to wait more than ten days for a service appointment. Just over twenty percent were not able to resolve their problem in one visit to a service station. In fact, seventeen percent of them needed three or more service visits to fix their issue, including twenty four percent of all Model X owners — a model that has particularly struggled with quality issues.
Tesla CEO Elon Musk acknowledged issues with the Model X at the company’s shareholder meeting in June. The practice influenced the car maker’s decision to radically simplify the design and customization options for Model Three.
Earlier in the year, Tesla President of Global Sales & Service Jon McNeill said the company would “apply brute force” to improve service. Tesla is in the midst of adding hundreds of approved assets shops run by third-party companies and eliminating under-performers from its current network.
That said, the vast majority of Tesla owners love their cars and many say they will never buy an internal combustion vehicle again, the note said.
Tesla emerges to inspire the kind of enthusiasm Apple’s iPhone generated among its fans and customers, Sacconaghi said. And that’s despite the fact that customer service for maintenance and repairs and other issues is a “relative powerless spot” for the company.
Sacconaghi found eighty five percent of them “love” their Tesla and eighty four percent “agree” or “somewhat agree” that it’s the most joy car they have ever driven.
And eighty three percent of them said that they were either “much more likely” or “more likely” to repurchase a Tesla compared with other cars they have possessed.
“Many Tesla owners may never comeback to internal combustion engine (ICE) cars and while many would consider other competitive electrical vehicle (EV) offerings, most emerge to be relatively loyal to Tesla, underscoring Tesla’s very first mover advantage,” Sacconaghi said in the note.
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