Naivgant Research Predicts 2014 Will be a Challenging Year For Tesla Motors

JAN 16 2014 BY ERIC LOVEDAY 45

Tesla Model S

Tesla Model S

2013 should be considered a highly successful year for Tesla Motors.

Tesla Supercharger

Tesla Supercharger

Aside from a few setbacks, which mostly affected only the TSLA stock price, Tesla whizzed through 2013 with hardly any issues, but Navigant Research thinks that Tesla will face a challenging 2014.

According to Navigant, Tesla’s biggest challenge in 2014 will be to scale up production of the Model S without reducing its quality.  We don’t see this as being an issue though, as Tesla has proven time and again that it’s able to slowly increase production with little to no impact on quality.

The other challenge Navigant sees is in the rollout of the US Supercharger network.  Navigant suggests it’ll cost Tesla Motors $62 million to expand the Supercharger network in the US in 2014.  Honestly, $62 million isn’t a lot of dough when an automaker has a market cap of $18.3 billion, so again we see this is a non issue.

However, we do agree with Navigant’s assessment that it’ll be challenging for Tesla Motors to sell the Model S in new markets, especially in the untested waters of China.  Model S deliveries in China are expected to commence before the end of Q1 2014.

The real 2014 challenge for Tesla Motors lies in getting the Model X to market.  It’s long been promised that the Model X will launch in 2014, so we fully expect Tesla to stick to that.  However, Tesla will then have two vehicle rolling down the production line for the first time in the automaker’s history.  Getting both the Model S and Model X out of the factory and into hands of buyers at the same time will be Tesla’s biggest 2014 challenge.  At least that’s how we see it.

Source: Green Car Congress

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45 Comments on "Naivgant Research Predicts 2014 Will be a Challenging Year For Tesla Motors"

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Tesla will surely overcome the challenges listed here. Elon and team have done a great job in the past and will succeed again. They have faced worse challenges before.

I’m not so sure. The Roadster was a quality disaster and they face new high end competition from BMW and Audi.

Audi?

Musk was not running the show during Roadster development/production. He actually, notoriously, (lawsuit included) fired the CEO (as chairman) and took the rains himself to fix Roadster production. Telsa has been a different company ever since, and the Model S is proof. Model S was, from concept to production, Musk’s work.

So far neither Audi nor BMW have showed any attempt at producing a competetor to Tesla. But you have to wonder how long they will have that segment totally for themselves and what will happen once they actually get competetors.

Won’t Model X cannibalize Model S’s demand? I think to many people, it’s still buying a ‘Tesla EV’, rather than Model S/X. So large portion of Tesla buyers may choose between S & X. My guess is that sales number of each model may not be much greater than 2013’s Model S sales.

Very good point.
Considering the platform is pretty much the same, it probably won’t be too big of a problem.

IMHO, selling the X may present more of a problem than anything. Much more expensive than the S.

It might be safe to assume that maybe battery swap will also be available for the X.

Good luck to them anyway!

I don’t think X will be much more expensive than S. Pricing has been guided to be “in line” with Model S. So take Model S and add 5k – 10k for AWD, which will also become an option on Model S (likely the new P85). On an $80k – $120k car, that amount is trivial.

She knows full well the stations are in their final testing phase. She’s only here to spread her irrational anti-Tesla vitriol, as per usual…. ***MOD EDIT***

Not really. So many Model S owners are waiting for the Model X b/c they love their Model S and they want a slightly larger version of that for their family winter car.

They key is whether the supply of the battery can keep up with the demand and how Model X will perform in real world range. Being taller and heavier, will it still have the 200 miles range for the 60KWh AWD version and what about the 85KWh version? 200 miles seem to be a “magical” mark that everyone EV maker is trying to hit.

I heard from a Tesla rep last weekend, they have ~7500 preorders for Model X. That is before pricing, final body style, and performance figures. Due to a combination of demand surge and production ramp, I think it will take until the end of 2015 for Model X to reach the same lead time as the Model S.

When the Model X comes out its game over for all SUV’s. The Model X will be on every soccer mom’s wish list and everyones SUV wish list. It will change the game.

Can you tell me how a Model-X is going to compete with a vehicle like a Honda CR-V or a Nissan Rouge? I mean, the price difference is astronomical.

I guess the MX will compete with the CR-V and Rouge the same way the X5 does. The same way Rolls competes with Civics, not by selling more per year.

GSP

Elon Musk: Challenge Accepted!!

I remember when Tesla was building 20 cars a month, and all the naysayers were freaking out about how hard it would be for Tesla to ramp up production. All the bleating and bahhing about it being impossible to ramp up 20 times more cars, and how Tesla could never do it.

I don’t think anyone would make that same mistake of underestimating Tesla’s ability to ramp again after being proven so wrong the first time. I guess some folks never learn from their mistakes.

They forgot to mention the long-promised quick change battery stations. 2013 has come and gone, where are they?

Should Tesla be earning significant ZEV credits for a capability that was promised but doesn’t exist?

Since you well know that ZEV stands for Zero Emissions Vehicle, you should also grasp how rhetorical and insipid your question was. 🙂

Before throwing stones, maybe you should first understand what he’s talking about.

The Model S gets extra ZEV CARB credits due to its quick battery swap feature, despite it only being unavailable at this point. (No stations.)

She knows full well the stations are in their final testing phase. She’s only here to spread her irrational anti-Tesla vitriol, as per usual…. ***MOD EDIT***

Anon, don’t be such a ***** when you respond to comments that you disagree with. CherylG made a valid point. The only person spewing vitriol is you.

Wow Anon, you certainly displayed your ignorance of ZEV credits and Tesla’s claimed battery swap capability with your posts. Lol.

I assume you therefore believe Tesla should be receiving ZEV credits for a capability that does not yet exist?

Should any electric vehicle that doesn’t emit any emissions get Zero Emissions Vehicle credits?

I heard from a Tesla rep last weekend that there are two Tesla swap stations in operation in California. Right now only Tesla employees can use them (dog-fooding process). He claimed they will be open to the public once they are satisfied with them.

That said, I do not think the Tesla Swaps will become a key feature for Tesla. Once people experience SuperCharging, swapping will seem like a bad value.

Swapping will be great for Taxi companies. The Hongkong taxi fleet is just one of many that would do great with battery swapping stations, being able to drive around 24/7. Imagine them putting in an order for 20 000 cars and 50-100 battery swapping stations.

It may not be a key feature, but consumers do value choice. Consumers will still desire the ability to choose swapping even if they never swap.

I’m confident they will be able to ramp volume on the S and keep reasonable quality.

On the other hand, I have my doubts about the X. The funky gull wing doors which make racks and some parking problematic are one issue, Another is the market for $100K luxury SUVs. There was a proven market for sedans in that range but less so for SUVs. I’m not saying it will be a failure but do think it won’t be a runaway hit like the S. I wouldn’t be surprised if the X sells at less than 1/3 of the S.

I share the similar feeling about the X. But there are many existing S owners who are willing to buy another Tesla…. Those are the “wild cards” out there…

In what time frame? The Model S is expected to sell 60 000 cars in 2014, the Model X is only expected to produce a few hundred in 2014.

If they can ramp up production to 20-30 000 Model X in 2015 then I’m impressed, not having anything to do with demand, only production factors and other limitations like battery shortage.

Not untill somewhere around late 2016 or 2017 will we be able to see how the Model X is performing compared to the Model S in terms of demand. So it’s a long time before we know if you’re remotely right or just plain wrong about your prediction.

In the DC region, I see a lot of Q7s and X7s and Infinity SUVs, etc. There is no end to conspicuous consumption. The Model X will do fine, probably about as well as the Model S in terms of market share.

Never mind the staggering number of Mercedes SUVs and CUVs…I fully expect the Model X to outsell their segment just as the Model S has.

Elon said the other day that the model x would enter volume production first half of 2015. Doesn’t that mean they’ve already slipped a lot?
That must explain the stock in the 170s….

Naivgant is under the impression it cost $500k to build a supercharger station while in fact it cost $150k for basic and $300k with solar panels and energy storage battery. Model X does not have gull wing doors, which use more horizontal room than conventional doors. Model X uses falcon wing doors, which have a pivot in the middle, and use less horizontal room than conventional doors. Falcon wing doors fit underneath an automatically retracted garage door in a standard garage. Some older non-standard garages do not have the horizontal width to accommodate a Model S. This issue will not significantly impact sales. There are some people that would prefer a sedan or SUV but purchased a Model S because that was the only available Tesla model. Of course each new entry will cannibalize some sales from models previously offered. Mercedes GL starts at $63k and tops off at $131k. MB sold 29,912 units in the USA in 2013. MB sold 13,303 S-Class sedans and 8,032 CLS 4 door coups in the same price range as Model S. Total 21,335 sedans vs 29,912 SUVs, granted the CLS starts at $72k. Anyone predicting Model X sales at 1/3 of Model S… Read more »
Dr. Kenneth Noisewater

As Steve Jobs would say, better to cannibalize yourself than have someone else cannibalize you. Plus, presumably the S and X will be on the same line, assembled side-by-side.

In some ways I think we have to consider the X factor in regard to Tesla.
That is, that an evangelical fervor must be taken into account. Some things can’t be quantified on a balance sheet, and some decisions might not seem the best way to go.
But I have faith in Tesla, though not in a religious sense, but in the sense that believe in what they doing, and they know how to do it.
Counterpose with the culture of GM and Ford say in well almost any decade since 1950, so as bad as they were, Tesla is that good in contrast.

Everyone can talk and say all the crap you want. Tesla is the best right now. And when the Model X drops its over for all SUV’s. Tesla will continue to succeed. Their own Model S is the greatest car ever made and one of the if not the best looking car out and the safest car in the world, so why the hell would anyone have doubts?

There are many doubts, mainly due to the price point. Most SUV’s are priced between 25k and 40k, not 80-100k….

Dr. Kenneth Noisewater

And most cars are priced between 25k and 40k. Your point is?

basementman — Porsche only sells cars in the US that start at $50K, and top out at more than twice that 80K-100K range you talk about. Yet they saw a 21% increase in their sales last year. Nobody would make a foolish claim like Porsche can’t succeed because their cars cost too much. They are successful, and continue to be successful.

Talking about price as if it were a deciding factor on whether a car company can be successful or not is a big red herring.

Man, that Red Model S looks great!

I don’t see those as particularly challenging. They have the floor space. Expenses like the network is mostly an issue in how it looks to the stock market, whether over or under profitable for the quarter. But they seem to have the dough to take a bit of loss. They were handed a billion dollars for free not long ago, remember. I would be more concerned about long term demand for such an expensive vehicle. Can you saturate the market. They are already outselling all cars in that price range and they intend to double… Also development of new car models longer term, will Tesla continue to be a one car carmaker? if they do they need to pull off hit after hit because profitability hasn’t really shown up yet. Things still feel very tentative, like a child out on its own for the first time, not really knowing what they are doing. Stuff like the 2.1ton weight of model S is not a sustainable design philosophy. The 100k$ Model S was supposed to be 50k$. 100+k$ loss on each Roadster. These are significant misses.. such elements are potentially lethal minefields. But Tesla has scraped by so far with almost… Read more »
Dr. Kenneth Noisewater

Things still feel very tentative, like a child out on its own for the first time, not really knowing what they are doing. Stuff like the 2.1ton weight of model S is not a sustainable design philosophy. The 100k$ Model S was supposed to be 50k$. 100+k$ loss on each Roadster. These are significant misses.. such elements are potentially lethal minefields.

When you can build reliable 500+Wh/kg cells for less than $75/kWh, give Tesla a call, I’m sure they’ll buy all you can make. Because that’s what it would take to get the costs and mass down to the points in your statement.

‘Navigant suggests it’ll cost Tesla Motors $62 million to expand the Supercharger network in the US in 2014. Honestly, $62 million isn’t a lot of dough when an automaker has a market cap of $18.3 billion, so again we see this is a non issue.’

Market capitalisation has not got a lot to do with cashflow, which is what the $62 million is about.
Tesla still runs at a loss, so spending more is always a challenge.

More power to their elbow, I say, but the challenges should not be underestimated.

Dr. Kenneth Noisewater

Tesla has nearly $800MM in cash and cash equivalents as of the quarter ending 30 Sep 2013, I think they can handle a few Supercharger installations.

Sounds like Navigant is trying to be a like a fortune cookie. Be sufficiently vague so that no matter what happens you will be right.