Tesla Is Cutting Back On Model S, X Production Hours

Tesla Model 3


Tesla is making changes to push through anticipated adversity.

It appears 2019 is going to be a tough year for automakers and many big businesses alike. However, many legacy companies likely have enough of a foothold that they’ll be able to push through relatively unscathed. This is especially true for some OEMs that are continuing to push gas cars and changing their business model to primarily produce popular trucks and SUVs. For Tesla, it could be a different story. While the automaker’s market cap is strong since it has invested so much capital into the future, profits have been almost nonexistent.

In addition to the above, Tesla recently sold its 200,000th car in the U.S., which means the $7,500 federal EV tax credit is now in its sunset phase. In order to help consumers, the company has lowered vehicle prices. This may work to put a bigger dent in Tesla’s profits, since it reduces margins. However, if the automaker can continue to improve efficiencies and streamline production, the situation could be offset. Added to all of this, Tesla has promised a base Tesla Model 3 with a $35,000 price tag. With the tax credit going away, people are becoming even more eager for this vehicle to finally arrive.

In an effort to make ends meet and bring the “inexpensive” Model 3 to market, Tesla recently announced that it’s cutting 7 percent of its full-time workforce. The brand is also eliminating the popular Tesla Referral Program, along with its least expensive Model S and Model X 75D vehicles. Rumors this week pointed to Model S and X production cuts as well.

Now, according to Reuters, Tesla has admitted that it’s reducing production hours for its flagship vehicles. A Tesla spokesperson told the publication:

As a result of this change [elimination of 75D models] and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.

These changes, along with continuing improvements, give us the flexibility to increase our production capacity in the future as needed.

Tesla also shared that additional details will come at next week’s earnings call, which will happen on Wednesday, January 30, 2019.

Source: Reuters

Categories: Tesla

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136 Comments on "Tesla Is Cutting Back On Model S, X Production Hours"

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It sucks how Tesla keeps killing off the cheaper versions of the S, 60D, now the 75….so much for making an affordable EV. Prices keep going up. 35K Model 3? How many years has it been now? Why not make a 40kwh Model 3 or S? If the batteries are the most expensive part, that should lower the price by alot! 150 miles of range is enough for many people!

50 years at least!

50 zillion years at least!

Tesla has moved the lowest price of a Model 3 from $49,000 + destination fees to $44,000+ destination fees.

The Model S with its construction, scale and features will always be an expensive vehicle. The make something cheaper, they have to achieve larger scale and that is something they are still aiming to do with the Model 3.

if that’s the case, dont claim to be a mass-market car.

It will be a mass-market car, it’s just taking longer than expected because Elon promises impossible timelines and Tesla screwed up with the production ramp-up of the M3.

So Tesla screwed up or Elon?

$600 million dollars in the positive in Q3 is a screw up many wish they could pull off on such production volumes.

Ed, back in 2014, the Leaf sold just over 30,000 cars in the US that year. It turns out that it outsold more than half the car models sold in the US by doing so. So any car model that sells more than 30k per year in the US is by definition mass-market.
Tesla sold 25,000+ Model 3’s in the US last MONTH. It is most assuredly “mass-market”.

Yeah, I agree. Be an electric BMW, Audi or MB. +/- $40k is about the lowest price EV that can be profitable for at least the near to medium term. Tesla can’t be Toyota or Honda, at least no yet. Tesla can proudly claim to be a premium vehicle maker. More important to get the $40+k model Y with the now most popular body style out there than to lower prices.

Re. the model S and X. I read (in a business article on the web so it must be right…) that there is no current work being done on the next generation S and X. Disappointing if true, though Tesla, like everyone, has limited resources, both financial and human. Think what a new current development S or X could be. Good by high end BMW, Audi, MB…..

Many preordered years ago on the assumption they would receive a $35K vehicle with the full $7500 federal tax credit…

+ maybe some regional incentives, like a brand new BMW 3 Series, except better for $25K! Makes sense that there were plenty of takers.

Unfortunately we can’t always get what we want….

But if you try sometimes you just might find…
you get what you need.

Tesla never promised everyone would get a $35k vehicle with the full $7500 tax credit. Anyone who did even a small amount of research on Tesla would know that Tesla has a long ramp up on each of their vehicles, and that they’ve started with the more expensive versions first.

Majority of day zero/one (in person or online) reservation holders were non-Tesla owners, Musk’s Model 3 transcript was this: “And then in terms of price, it will be $35,000. And I want to emphasize that even if you buy no options at all, this will still be an amazing car. You will not be able to buy a better car at $35,000 or even close even if you get no options. So it’s a really good car even with no options.”

There seemed to be three major problems…1, Tesla had to use more human labor then expected and two, 2, majority bottlenecks in the gigafactory, 3, the “body guy” which Musk stated had been fired, did not do a good job in terms of ease of assembly…

Do you know anything about production and cost?

Tesla is the leader in range capacity, I don’t think they want to fall into the lower segment as other automakers, that’s why I think they should somehow manage to make mid range the base model

In other case if they make 220 mile range Model 3 for 35 000$, Hyundai Kona (and many others) will be very very competitive with 258 miles and 36 450$, especially if you account that Hyundai still has 7 500$ federal tax at their hands

Model 3 220 miles – 35 000$ / 31 750$
Hyundai Kona Electric 258 miles – 36 450$ / 28950$

2 800$ more for having 38 miles less
I don’t know, sounds like a no brainer for me

That part of it has always been apparent. There has always been a clear, comfortable, profitable space for Tesla as a high end car maker. Those of us who’ve always doubted the ability of Tesla to succeed as a low end mass market maker have pointed out the difficulties of entering that space and surviving. It would be impossible for Tesla to enter the same market segment as Hyundai. For one, it will quickly bankrupt Tesla before they arrive. So, they won’t even try. If they do end up in that space, it would also kick off a firestorm of competitive price cutting by VW, Chevy, Toyota, and Hyundai and it will result in everyone else ending up bankrupt as well. That’s what happened to the airline industry. The winner in that war was Jetblue who wasn’t the challenger or disrupter, but the last one to the game after everyone else was already maimed and comatose. I’m sure that the more sane members of Tesla’s board are firmly pressing the brakes on those moves to prevent obvious disaster.

No brainer…that’s why everybody buys a Ford Focus and nobody a more fancy car like BMW 3 Series, why pay more for something that essentially does the same thing right?

Seriously though, I do agree that MR should be entry level because it has the sort of range that’s quickly becoming the new normal. Unfortunately Tesla is struggling to produce Model 3 at mass market production cost so I don’t anticipate it throwing in extra capacity for less money anytime soon.

Its a nobrainer for me as well. Ill pick the model 3 before the Kona for sure

Meh… I personally have picked the M3, but I’ve suggested the Kona to others who were not as emotionally invested in Tesla. The Kona seems like a fine entry into the EV space. I chose the Tesla for reasons other than price, like its supercharger network, and its ability to drag the other manufacturers into the EV space.

Tesla offered the lower range Model S before the Model 3 was out as they wanted to get as many sales as possible, but they didn’t want the 3 to eat into the sales of the S, so that’s why they created a bigger divide. Tesla did previously (very very early on) make a 40kWh Model S but the sales numbers were awful so they soon dropped it.

While making a 40kWh Model 3 is doable for Tesla, I reckon they won’t produce it because they’ll get more people whinging about the limited range than the benefits it would bring. Media and short sellers would have a field day by then jumping off the back by saying misleading articles like “Tesla in trouble as it has now cut Model 3 range to 150 miles”.

To be clear: the pre-orders of the 40k Model S were “awful.” The 40k Model S was discontinued before a single one had ever been delivered to a customer.

The Model X 60D suffered a similar fate, announced July 2016 with coil springs and software limited battery, was killed in October 2016 and the air suspension was made standard…

Not true. Some were produced and delivered.

There were a few hundred people with Model S 40 reservations, and they all received software-limited 60’s. Many of them have been upgraded by now to 60’s, either by owners upgrading the battery, or by Tesla enabling them when reselling them as CPO cars.

Tesla tried very hard to get all those S40 reservation holders to upgrade to an S60, offering many incentives. I’ve even read a comment from one guy who claims an S60 was delivered to him despite the fact he only paid for an S40.

I don’t know how many S40s were actually delivered, but from various comments I’ve read about it, I think it must have been a rather small number.

All the S40s were really software limited S60s. There was no S40 that had a 40kWh pack.

Everyone who paid for an S40 got S60’s that were software limited to only use 40 kWh worth of pack. So yes, everyone got S60’s.

There was a 40 for sale in Austin.

Tesla didn’t actual make a 40kWh Model S – they sold a 40kWh. The 40kWh Model S where just a crippled 60kWh Model S. I’m sure it was in the best interest to not sell many of those given you where basically getting and 60kWh Model S from a cost prospective. Also it would have been expensive to actually engineer a 40kWh pack.

What about a 190 mile model 3 at 33000?
Hope Tesla launch the SR at 34500.. than its better than promised

That would indeed be a much better deal than promised, especially since the US dollar has depreciated another 3%, making even hitting the 35K number a 3% lower price when measured in real dollars. $35K just isn’t as valuable and won’t buy as much as it would just 1 year ago.

Because Model 3 blurred the line between itself and Model S. You can get a P3D for cheaper than a lower end Model S with much better performance and better range. Also you get a much better battery and motor with Model 3. Probably killed the demand for Model S 75kwh battery. Now they drew a line that clearly makes Model S a much more premium vehicle. Now we just need to wait for the revamped Model S and X with the new battery and new motors and redesign. I am hoping Model S will be available with 150 kwh battery… that would be pretty amazing.

Only if you’re a range-monkey who lives on a drag strip. A low end Model S is a much better car than a high end model 3, any day.

I agree, but quite clearly many others do not.

I agree with this.

The Model S is a boat. If you’re 75 and want a car that’s the size and comfort of your living room (think 1970s Cadillac, then Model S is the car for you. If you want the latest technology & design, in a fun to drive “zippy” car, Model 3 is for you.

The Model 3 cannot comfortably seat 5 adults, despite its 5-seater claim. For those that regularly road trip with an entire family of adults or near adults, the Model 3 is cramped. It’s really the only thing I don’t like about the car. Other than that, its fabulous. I struggled with whether to get the S or the 3, but the allure of getting a fully loaded 3 for less than an entry level S won me over. Also, even with the smallness of the 3, I had a hard time fitting it in the garage. With a Model S, I would have to remove the mirrors :-/

Idem for me. I have 3 children and it was perfect in the model S that we test drived. But we ordered a model 3 since even the model 3 will be difficult to parc in my garage (Europe), probably 1 cm left to close the door.

Model 3 is not a family car in the US. The average US family has 2 kids and a dog. Unless you want your dog’s butt on your child’s lap, the hatch behind the S makes it infinitely more practical. I drive an i3, which is only half the size of an S – but it is the hatch that makes it even an option.

Backseats in Tesla model S are terrible low. You sit with your knees high up.

The back seats in the TM3 have been improved and are now more comfortable, altho the problem with your knees being high still exists.

Bigger battery would just slow you down on a drag strip. A 150kw-h S would just be a cruiser. Maybe a police cruiser?

What if the number of configurations of adults, children, dogs, and luggage is more important to you than either range or the 0-60 number? The low end model Ss excelled at that.

I disagree, I vastly prefer driving a 3 to an S.

It’s just the product cycles. 75D goes away with the launch of the new packs sharing the more dense less expensive cells already in the Model 3. So instead of the 75D and 100D, we ‘should’ get a new longer range 350 mile 100D and 400+ mile 125D, but holding at the 75D and 100D current pricing. Either way, the Model S and X were NEVER marketed as ‘affordable’ EVs, these are the top of the line for Tesla.

But this reduction in 75D also frees up production hours that can be moved to add to the current production hours to produce the base Model 3 in higher volume. The thought behind this change is not rocket science……but Tesla can do that too.

How the heck does freeing up production hours on the Model S/X line add production hours to produce the Model 3 production line when they’re two distinct and separate lines and the Model 3 production line is running st 100% capacity. Tesla can’t assemble a Model 3 on the Model S/X line.b

“….so much for making an affordable EV. Prices keep going up.”

Well, if you ignore the fact that Tesla recently lowered the price for all its cars by $2000…

It’s amazing how many people seem to think Tesla ought to sell cars at a price which will lose them money. 🙄

That was Elon’s idea

Tesla knows the sales numbers and costs of the 75.
Dropping the 75 version of S and X will improve their profit margins for the company.
Also, the Model 3 is probably displaying the sales of the 75 S and X.

Tesla should take a long hard look at BMW and MB option lists, and duplicate for the Model 3 Performance version for higher profit.

“Dropping the 75 version of S and X will improve their profit margins for the company.”

It certainly would if they could still sell 100k S/X per year. But that doesn’t seem to be the case.

This is about keeping the good margin configs all around. There are still Teslas for the price of a 75D, they are well-optioned Model 3’s. The S/X are more expensive to make, so if the 75D customers can be steered toward the easier-to-build 3 in a higher config, it’s much better for the bottom line.

Assuming they’re no longer production constrained on the Model 3.

Two thoughts:
1) “….so much for making an affordable EV”. No Tesla in any configuration to date can be thought of as “affordable”!
2) “Why not make a 40kwh Model 3 or S?” Tesla’s been there, done that, with the S. It was a bust.

You’re asking why they keep eliminating cheaper S/X versions at the same time you’re asking why isn’t the 35k Model 3 here yet? That is a contradiction when you look at their goals. Tesla is executing on their business plan of the last 15 years. The only reason they made cheaper S and X vehicles earlier on is because the 3 wasn’t out yet and they are always trying to make their vehicles as affordable as the business can sustain without sacrificing on technology and on what makes their products exciting. Now that the 3 has been out for a while they are finally in a position to ready for the base priced 3, so it was time to get out the axe again. Also making a Tesla that goes 150 miles is looking backwards, not forwards. Tesla has to balance pushing the technology envelope with affordability. Their answer isn’t to put out a lackluster car, it’s to vertically integrate, scale up, and streamline production over many months or years. While many will claim they promised the base 3 right away when production started, this is actually not the case. In keeping with their plan, they started with more premium… Read more »

“many will claim they promised the base 3 right away when production started”

They promised it in November, 2017. It was on their web site from August-October of that year.

SR battery, not base configuration without PUP. That was never promised at the time. Yes, they had to delay the SR. Thank you Captain Obvious.

The web site specifically said $35k version would be available in November, 2017. It wasn’t until 2018 that they started work the “SR available in X months” gambit.

The 75 was the best selling model in Norway. What is left is really expensive.. and it has hurt sales.
The range was good enough for many people, that is why they bought it.

And that is why they will buy Model 3s now.

Are you familiar with the roads in Norway? I’m curious if the smaller Model 3 might be more suitable, and since its cheaper, perhaps it will be even more of a hit. I’m not familiar at all, but I’m guessing that the I-Pace and the Taycan will be decent competition for the high end, at least until people see how the battery degradation and fast charging capabilities are, but there’s not much competition in the mid-range end, other than the Kona.

Darren — You clearly never read Tesla’s “Secret Plan”. The S/X were NEVER planned on being the more affordable of the models that Tesla planned on offering. That was always the Bluestar/Model E/Model 3. Stop the revisionist history.

What you get for the price has been going up, not prices. You make it sound like the price is going up on the same car with the same features. This is historically inaccurate. What Tesla has done instead is to continually offer better and better vehicles, without even raising prices for inflation like the rest of the industry has been doing. Measured in real dollars (after inflation) you get WAY more vehicle for your money today than ever before.

150 mile EPA rating isn’t enough to reliably go between all Superchargers in every weather condition at every speed without having a comfortable margin still in the battery (greater than 10-20%).

They need to move forward on the Model Y now that the Model 3 is ‘under control’ and shipping with RHD to the EU and China. Of course they still need to build the Model 3 so it is profitable and they can get the SR version out. I don’t think you’ll see a < 200 mile Tesla. Need that bigger battery for charging speed as one example. Plus mass customers don't want to 'hear' anything < 200 mile … especially in winter driving. Mass market and not early adopter mentality now.

A bit of a catch 22 situation for them, they need to ramp up M3 production for the base version which may require more capital but they also have a $930m Bond due at the end of Q1.

“they also have a $930m Bond due at the end of Q1”
That is the likely driver for all this cost cutting recently.

Very doubtful there’s just one single cause. I think it’s almost certain that another factor influencing Tesla’s decision is the general downturn of car sales, and increasingly strong signs of a downturn in the economy, both in the U.S. and worldwide.

With the stock where it is , that’s huge driver because it will use up 1/2 their cash

If the stock was over 360 different story

I am sure Elon can easily “pump up” stock price with some of his “well timed” twitts.

Then again, maybe he learned not to do it again with SEC settlement.

Bunny — Based on Q218 and Q318 numbers, Tesla is on track to have $4B in cash at the end of Q418. And by March 2018 the trend is that they will be even higher than that, with China factory construction coming out of local financing instead of cash on hand.

Tesla had over $3B in cash at the end of Sept. 2018, after just 3 months of ramp-up.

How exactly does less than 1B add up to 1/2 their cash? Please show your math….

Cost cuts won’t move the needle in the five weeks until the 920m payment is due.

Cost cuts are about showing profits, or at least non-GAAP profits, in Q1 despite significant headwinds.

From article Tesla said: “As a result of this change [elimination of 75D models] and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.”

If Tesla can now through gained production efficiencies make the same amount of Model S with fewer production hours it is logical and should be expected for Tesla to reduce production hours accordingly.

Something to keep in mind is that Tesla Model 3 production includes improved upgraded production processes since earlier generation Model S/X production process… certainly those improved Model 3 processes learned that are portable to Model S will be incorporated to Model S/X over time as those processes are stabilized and validated by Model 3. In part that may be what we are seeing here.

I fully expect the same Tesla naysayers (like Bob Lutz) that have repeatedly said Tesla needs to find ways to reduce production costs to survive will now that Tesla has done that with Model S ( though production hours efficiency gains) say that it is somehow indicative that something is wrong at Tesla.

I think the simple answer is the demand for the Model S/X are softer with the Model 3 production in full swing. That also explains why they increased the gap between the high end Model 3 and the low end Model S.

The “fog of Tesla” is strong in this case…
What effect did reducing hours have on production rate? I heard they cut the night shift. Hard to image that a few optimizations offset the loss of a shift.
Reducing Model X/S production (if that is the case) to build the standard model 3 would clearly reduce overall profit.
Time will tell. Tesla clearly dosn’t need to tell us the real impact.

@F150 said: “…What effect did reducing hours have on production rate? …”

Basic logic/math would suggest the effect would be higher cars/hr line exit velocity… hence needing less production hours for same volume of cars.

If that’s a hard concept to get your head around think of a garden hose… if you turn an upstream knob that results in more exit volume of water from the hose-end that means less on-time is needed for the same exit volume of water.

Hence why Tesla reduced production hours for Model S.

“I heard they cut the night shift.”

Where specifically did you hear this? That doesn’t sound plausible. It would be obvious very quickly so it shouldn’t take long to dispel. Very quickly we should have a verdict on your source and what you proffer.

I heard it, too, from a couple different places. Plus Tesla said they cut S/X production hours, and there’s no practical way to cut half a shift.

Your claim makes no sense. If the night shift was only 7% of their production, it deserved to be cut.

To be very clear, EVERY SINGLE CAR MAKER whether they are ICE or EV cuts production EVERY SINGLE Q1 of EVERY SINGLE YEAR.

Car sales are seasonal. Even the F150.

Most carmakers cut production in summer as they prepare for model year changeover. They do not usually cut in Q1.

> “…we have reduced Model S and X production hours accordingly.” They say they are reducing hours, but what isn’t being said is whether they are reducing Model S and Model X production quantities. One has to assume that they are cutting production, as a sudden cut to workforce like that must inevitably result in a reduction in output, at least in the short term (uness those workers were just standing and watching the machines). So the real question is what are the underlying driving forces behind all of this. The bear case is fairly easy to state: reducing demand, no more money left, they have to fire everyone. It’s a bit of an extreme position given that the company made a profit last quarter and is set to do so again, but there is likely to be some element of truth in it, inasmuch as they wouldn’t have fired lots of people if there weren’t cost saving implications and a need to do so. Indeed, Musk said as much in the letter. The bull case is that the Model S and X lines are old and inefficient in comparison to the newer Model 3 lines. There are strong reasons,… Read more »

This is horrible news. The Model S and X are the cash cows at Tesla. Car & Driver reports also that there is “no program” under way for a refresh of the S and X. I find this hard to believe, but perhaps the future of Tesla lies in the high volume Model 3 and the upcoming Model Y and over-the-road truck. Eliminating the S and X would certainly simplify the production process…but at a great cost. Stock price at $287 is also a big problem for the upcoming bond payment – they are now a long way from the conversion price.

Do Not Read Between The Lines

They cut the 75s, not the 100s. Model 3’s going global now, which will hit low-end S/X sales.
If they can upsell some to the 100D, or move them to the P3D, they’ll be happy.

> Car & Driver reports also that there is “no program” under way for a refresh of the S and X. Remember what Musk has said, that Tesla doesn’t do refreshes; it does constant improvement instead. There doesn’t have to be a program under way for a refresh; just that one of the improvements they might do would be to bring the interior in-line with Model 3, and another might be to change the battery pack to the same Model 3, etc etc. The end result might be a completely different car, but it wouldn’t be a ‘refresh’ in the traditional auto industry sense. > Eliminating the S and X would certainly simplify the production process They certainly are not eliminating these models. Reducing production and available options, yes, but not eliminating them. It’s fairly clear that there are strategic reasons for doing this, over and above cost cutting. What those reasons are is up for speculation at the moment. My feeling is that they may be looking to do a wholesale upgrade of the production lines for these models. They’ve learned a lot from the Model 3 ramp, and the S and X lines must now be looking a… Read more »

“Car & Driver reports also that there is “no program” under way for a refresh of the S and X. I find this hard to believe…”

I find it impossible to believe. Tesla has already postponed switching the MS/MX over to using the less expensive 2170 cells; my guess is that won’t be put off much longer, now that the bottleneck of Model 3 battery pack production has been eliminated.

What I do believe is that Tesla is keeping its plans for a major refresh of the Model S (and later, the Model X) under a tight information blackout, to prevent the Osborne Effect.

> Car & Driver reports also that there is “no program” under way for a refresh of the S and X

Car and driver is incorrect.

“Car & Driver reports also that there is “no program” under way for a refresh of the S and X.”

Can you please provide the link saying that? I can’t find it in google and Car & Driver.

If there are production efficiencies, then Tesla shouldn’t be reducing production hours, it should be making more cars. Instead, they choose to fire people. I thought Tesla was always touting how their demand is higher than supply? And remember, these are the higher margin cars.

Here’s what you do Musk; give the “new” 100S a different front and rear fascia…At least then everyone knows you’re driving a brand new 100 and not a potentially 3 year old 60 or 75…

Only reason to cut production is lack of sales. That does not bode well for Tesla that its top end, highest margin vehicles are not selling enough to warrant an increase in production and, in fact, requires a decrease in production.

Tesla contacted me (I still have a $1k Model 3 deposit) and said they have unsold Model 3’s arriving daily and can deliver a car in 24 hours. So production of Model 3 seems to be exceeding sales.

Perfectly understandable. The MS/MY are old designs that are costly to build. Best thing to do is milk the high end versions as much as possible while focusing on the new platform M3/MY versions (and beyond).

After the better part of a decade it’s time to start saying goodbye to this platform. It enabled the transition of Tesla from a boutique builder (Roadster) to a volume manufacturer (M3). Job done, RIP!

you’d think after 6-7 years of production, Model S production costs would have gone done significantly compared to when they first rolled off the line.

It’s my theory the Model S and X will be discontinued completely at some point in the future, with Tesla focusing solely on Model 3/Y/whatever else is in their pipeline, plus Elon’s pet projects (semi, roadster 2020 ,etc…).

@bro1999 said: “It’s my theory the Model S and X will be discontinued completely at some point…”

Likely that theory of @bro1999 will prove to be wrong… same as his several other past @bro1999 Tesla theories/predictions have been proven wrong.

CDAVIS theory: Tesla will continue to maintain a signature top-end sedan & SUV; likely that will continue to be the Model S and Model X. Same as Mercedes did not discontinue their S-Class after bringing online the higher volume lower cost C-Class.

It amuses me when people call the Model X and SUV. It’s a hump-backed Model S. At best it’s a crossover/CUV.

@CCIE said: “It amuses me when people call the Model X and SUV…”

I challenge @CCIE to point out a competing SUV to Tesla Model X that this is a more true statement:

“Model X is the safest, quickest, …with standard all-wheel drive… has the most storage room of any SUV in its class …” – source: https://www.tesla.com/modelx/

It’s not an SUV. It’s a car with a hump back. Similar to the BMW 3 or 5 series GT.

It’s a minivan with gee whiz doors that make the roof unusable.

Oh, good grief. Tesla has figured out a lot of ways to cut costs with the Model 3; methods including a shortened/ simplified wiring harness, and a new battery pack design using cheaper 2170 cells.

Tesla is certainly going to want to put some of these improvements into the Model S and Model X. That points to a major refresh coming, and it may be coming soon. That could well be at least one of the reasons for the reduction in production, as well as the elimination of the 75 kWh battery packs.

No real reasons to cut Model S/X since they are halo products. In addition, Model X sales are actually growing which helps the bottom line.

Nah, they will beat their old designs like a dead horse.

@Bunny said: “Nah, they will beat their old designs like a dead horse.”

I agree with many of Bunny’s insightful comments (especially on the topic of commercial trucks) but not with this comment.

Seems to me that Tesla is very careful to create well thought out clean (non-faddish/non-gimmicky) designs that hold up well to time which is a huge value benefit to those that purchase a Tesla. I feel my 2015 Model S is still very design relevant today even though my 2015 Model S is pre the 2017 front-end design refresh. I do not at all think the current Model S or Model X is a design “dead horse”… the opposite is true.

What current example is there of a large family sedan or SUV (EV or ICE) that has a more today relevant design than Model S/X? I’d argue that Model S/X are today ahead design wise of anything else on the market.

Model S is simply an aging product at this point, this business has a fashion element to it at the high price points, old products do not do well. It was introduced in July of 2012 so its 7 years old and past its peak, Tesla needs to become 100% focused on the 3 and Y platform’s cost and production quality to maintain and edge in the inevitable EV market share battle that will emerge in 2020. If they cannot get the M3 to a sustainable position of cost and quality the model X and S will not save them. Its all about the unit cost in this business and that requires high volumes sustained over time.

@Andy K said: “…It [Tesla Model S] was introduced in July of 2012 so its 7 years old and past its peak…”

Mercedes S-Class was introduced in 1972…

Does that make 2019 Mercedes S-Class “old and past it’s peek”… just because of the introduction date of S-Class?

Answer: No.

In a few years I look forward to trade my 2015 Tesla Model S (which I purchased new) for a new Tesla Model S… I’m confident my future new Model S will not be “past its peak”. In the mean time I keep getting OTA updates on my 2015 Model S… my car keeps improving with age!

What car maker today makes as good or better large family sedan than the Tesla Model S?

You are confusing platforms with market segments.

The current Mercedes S-Class has absolutely nothing in common with 1972 version you mention, other than the name.

Sure Tesla can maintain a flagship product position in the lineup, but it won’t necessarily be based on an aging platform like the current MS/MX. At some point it will be replaced with something that includes newer technology, and of course the inevitable cost reductions. It could still carry the same badge/name, but little else.

@QCO said: “You are confusing platforms with market segments…”

No confusion here…

Point which I was trying to make which for whatever reason is lost by many here is that the Model S has not been a static model.

From the time Model S was introduction in 2012 through today it has continually evolved literally on a near monthly basis.

The 2012 vs 2019 Tesla Model S are significantly different cars although yes they carry the same name and same basic model styling (excluding the 2017 front refreshed). There is an effort by some out of ignorance or design to frame Model S as a Tesla model that has had little change since its introduction six years ago… which is *absolutely* incorrect.

“Compare An Old [2014] Tesla Model S P85 To A New [2018] P100D…There have been not a few changes.” -source:

This is not going to end well..

For you maybe and not ending well for the shorters in general.

“Tesla has admitted that it’s reducing production hours for its flagship vehicles”

Why does the wording make this sound like a negative? Less hours is a good thing if it doesn’t change the number or cars or increases production rate.

Have they said they’re reducing production numbers or increasing them? I believe they said they’re making more, no?

Model X and S sales were not growing that well, or growing at all.
There are several things that will pressure sales.
No more “let’s buy before tax credit reduction”, no more Netherlands effect, models are getting old, model 3 pressure in Europe, more competition from others, increased price of the cheaper versions.
Except for the EV market that is growing I don’t see many factors pushing model X and S up.
If Tesla manage to sell more of them during 2019, I’ll be very surprised – not without a big price reduction.

“…. and because of improving efficiencies in our production lines, we have reduced Model S and X production hours accordingly.”

What is needed is a press release like:
“…. and because of SUBSTANCIALY improving efficiencies in our production lines, we have reduced Model 3 production hours BY 50%.”

Except they are announcing PRODUCTION CUTS not a statement on number of hours to build a car. They are going to increase the delivery time. As noted below, production of Model 3’s is so high that local PDX Tesla sales is offering 24 hour delivery on a car.

Stretching that to 90(?) days allows them to lay off workers, be more efficient in the cars they do produce including fewer flaws that have to be fixed in the field, save on supplier costs and inventory, have deposits in house longer earning more interest at the bank, better cash flow control.

That is all good and smart for Tesla to do but it does hint at slower sales and for a company like Tesla that just got volume to a point to make a profit, lower and slower sales is going to get investor’s attention.

With 75kwh models being cancelled, it is normal for production to drop. The main question is why Tesla cancelled 75 models? Was the demand suddenly dropped once the tax credit was cut in half?

I always predicted that the $35k models will be cancelled or will have a very short production run. Now we are getting close to the point when it becomes obvious.

Eventually Tesla should go upmarket. They cannot compete in every segment. They should target $100k Model S/X and $60k Model 3/Y market. They will be smaller but sustainable. Going big too fast will result in overcapacity and financial trouble when economy goes sour.

1) Every car maker cuts production every single Q1. Car sales are seasonal, and every car maker reduces production and hours this time of year.

2) Tesla has been repeating the exact same pattern lately that they have gone through in the past right before announcing a significant model improvement for the Model S.

3) Rumors of Tesla’s decline have been going on for a decade, and every single time folks think they’ve read the tea leaves that somehow Tesla is on the decline, Tesla answers with large double-digit increases in total sales and higher profit margins.

Model Y will beat all of Model 3 + S + X numbers put together.
Musk knows it.