It’s been a painful week for Tesla long investors. Contrary to the lies told by the Goldman Sachs analyst David Tamberrino (for which his close friends and family likely profited to the tune of millions of dollars), Tesla Model S and X have NOT reached peak demand. Here are 12 reasons why Model S and X demand will continue to increase short and long term:
1) Tesla isn’t allowed to sell cars in many states. In Alabama, Michigan, New Jersey, Texas, Utah, Virginia, West Virginia, Indiana, Arizona, and Connecticut, Tesla either can’t operate a store or has severe restrictions on the number or function of their facilities. These are just archaic legal hurdles that will be eventually defeated in court especially as states start to realize the amount of jobs and tax revenue they are losing. Once Tesla can sell its cars in all states, demand will increase.
2) A large majority of Tesla’s target market still don’t know that electric cars are available, or they have severe misconceptions about the price, performance, range, charging, battery longevity, and environmental impact of a Tesla. The Koch brothers and big establishment spend millions of dollars a year on a campaign of misinformation against electric cars in general and Tesla specifically. It’s a war against fake news, one that facts and truth will eventually win.
3) Tesla doesn’t advertise. There are no Tesla advertisements in magazines, or on billboards, television, or the web. Most sales are still due to word of mouth, media coverage, or tech savvy consumers researching Tesla on their own. Once Tesla actually starts to advertise, demand will only increase.
4) While Model 3 may cannibalize some Model S sales, the lack of availability of Model 3 to the general public (for new reservations) until 2019 will drive sales towards Model S. It’s a win-win situation for Tesla. Enthusiasm and media coverage for Model 3 will bring people to the Tesla stores where they will see the ready-to-bring-home-today Model S. A fully optioned Model 3 will likely be priced between $50,000 and $60,000. A lot of prospective buyers might just splurge $10,000 more and get a very well equipped base Model S rather than wait 1-2 years for their Model 3. http://teslaspeculation.com/2017/07/01/buy-a-new-2017-tesla-model-s-for-69500-and-get-32400-in-free-upgrades/
5) There is strong brand loyalty for Tesla. Current Model S and X owners (and future Model 3 owners) have a high likelihood of buying another Model S or X rather than buying another car (especially a gas car). As long as Tesla continues to expand and support the Supercharger network and as long as there are continuing software and hardware improvements to Model S and X, there is a growing base of existing owners who will most likely buy another Model S or X.
6) The Model S and X are both due for an interior refresh. Once that refresh occurs, there will be another spike in demand, due to owners of older Model S and X waiting for a significant interior update, and new customers who felt the relatively sparse interior of the current Model S and X was their one deal breaker. http://teslaspeculation.com/2017/06/23/whats-next-for-the-model-s-and-x-interiors/
7) In recent years, Tesla has made significant performance improvements to their base Model S and X and to their top spec Model S and X. The new base Model S 75 is significantly quicker than any competitor in the base Grand Coupe segment. And the Model S P100D Ludicrious is so quick it’s only real competitors are multi-million dollar exotics. This has created a performance gap for their midrange. Specifically, there is currently no Model S or X with a 0-60mph time in the 3.5 second range. We know from dynamometer testing that the Model S and X 100D performance is currently software limited so at some point Tesla should and probably will remove the limiter, thus creating a 3.5 second sub-$100k car that directly competes with the $110k-$150k Audi RS 7 Performance, BMW Alpina B6, Mercedes AMG CLS63 S Coupe, and Porsche Panamera Turbo. This will result in a nice bump in demand amongst owners of higher end competitor cars.
8) Once the Level 5 self driving software and the Tesla car-sharing network are deployed, there will be another spike in demand for Model S and X as functionality dramatically increase and cost of ownership dramatically decreases. If someone were to rent out their car several hours a day, they could offset most of their monthly payment if not make a profit.
9) Many people that buy a Tesla Model S or X are buying their most expensive car ever, often by a significant margin. It’s not uncommon for one’s Model S or X to be priced $10,000, $20,000, or even $30,000 above the premium gas or hybrid they previously owned, or the one they would have bought otherwise. In fact, many Tesla owners’ immediate prior car is the Toyota Prius. People buy a Model S or X for many reasons. Some like the technology or are early adopters. Some buy a Tesla for political, patriotic, or environmental reasons. Others buy a Tesla because of the significant gas savings. Regardless, demand for the Model S and X aren’t limited to the “traditional” buyers of $70k-$160k cars.
10) Tesla controls a lot of demand levers, many of which we aren’t even aware of. Without having to spend a dime on advertisement, Tesla can instantly increase demand through various low cost promotions (free and expanded supercharging, owner referral discount, project Loveday), hardware and software updates (new Autopilot hardware or software, performance improvements, new batteries), and media coverage (coast to coast self driving demo, unveiling events, awards, Elon Musk interviews). Despite recent price increases for the base Model S, the 100D, and P100D, orders and deliveries for Model S and X in the month of June have been one of the best in Tesla history.
11) China and India.
12) It’s hard to ignore the quadruple wow factor of experiencing Model S for the first time, either a friend’s car or one at the Tesla store. The first thing people notice is the elegance and modern styling of the Model S. Then when they enter the car they notice the large instrument cluster screen and the ginormous 17″ main touchscreen. Next they experience the Tesla grin when accelerating 0-60mph in 2.5 seconds (or even 4.3 seconds in the base Model S which is quicker than any other car in the Grand Coupe segment). Then comes the autopilot demonstration where for several minutes the car is literally driving itself, safely staying in lane, breaking, and accelerating while the dash shows awareness of the surrounding traffic environment. After some explanation about continuous software updates, buck-a-gallon equivalent home charging, free Supercharging for road trips, no required maintenance, various incentives (including tax credit, rebates, and HOV lane access) comes the zinger where the prospective buyer learns that a well-equipped base Model S is significantly less expensive than any other Grand Coupe on the market (Audi 7 series, BMW 6 GC series, Mercedes CLS, Porsche Panamera, Jaguar XJ, and Maserati Ghibli). These individual experiences, which occur daily around the world, increase demand in an immeasurable but personal, visceral, and significant way. http://teslaspeculation.com/2017/07/05/battle-of-the-grand-coupes/