In this video I’ll cover why it could make sense for Tesla to introduce a new Model S and X in 2019.
Lifecycle offering of battery packs at Tesla
Tesla has a long history of cycling out battery packs for one reason or another. They’ve introduced lower battery packs, software downgraded lager packs, new performance packs, and larger standard packs all with the purpose of spurring demand.
Their longest production pack was the 85 kWh pack, producing it from September 2012 - February 2017, a total of 42 months. Next is the 75D, which they recently discontinued in January 2019, which was produced fro 33 months. Third, we have P100DL, which is available now on Tesla’s website. Three battery packs are tied for fourth longest produced, the P85, P85+, and 100D.
Of these I mentioned the P100DL is the longest running performance pack and the 100D is the third longest non-performance pack.
As you saw last week, Tesla introduced V3 of Supercharging which allows Teslas to charge at a peak rate of 250 kW. Strangely, the Model S and X owners weren’t invited. And the only mention of the two vehicles was in a Tesla blog posts stating, “We’re launching V3 Supercharging for Model 3, our highest volume vehicle, and we’ll continue to expand access as we review and assess the results of millions of charging events. We will increase Model S and X charging speeds via software updates in the coming months. V3 Supercharging will roll out to the wider fleet in an over the air firmware update to all owners in Q2 as more V3 Superchargers come online.”
As I mentioned in my previous video, Model 3 was designed from its genesis to take the high powered V3 charging due to its larger internal charging cable and battery cooling architecture. It’s my understanding that current Model S and X do not have this design. How easy it is to update the S and X cooling architecture, I’m not sure, but it is likely it would need to be redesigned.
The phasing out of battery packs
After Tesla retired the 75 kWh battery packs in S and X, the moved to a Standard Range and Long Range naming convention. After only 4 weeks, Tesla discontinued the Model X Standard Range. After 6 weeks Tesla discontinued the Model S Standard Range. This now leaves only the Long Range 100 kWh battery as the only option for both vehicles.
What reason does Tesla have to remove options from their flagship, luxury vehicles? Could this simply be a simplification of the production process for S and X?
Could they be trying to phase out 100 kWh inventory before introducing a new version? If we go back to the Model S battery lifecycle chart, Tesla has only ever offered one battery option once - back in 2013-2014.
Some people have said it is because they’re putting more focus on the Model 3. I’m not so certain that’s the case since it is a proven product with a very healthy profit margin.
Gross margin is ~25%
Model S and X are Tesla’s longest produced vehicles, with a 25% gross margin, and an established production track record. A 25% gross margin for the Model 3 won’t be seen until later in 2019 according to Tesla.
What better way to goose sales than to make a battery pack range and charging increase
70K-100K Model S and X
On the $35,000 Model 3 press call Elon is asked a question about production and addressing a larger addressable market by Bloomberg’s Tom Randall. He shares that Tesla expects to produce 350,000-500,000 Model 3s and 70,000-100,000 Model S and X.
The last time Tesla produced 70,000 Model S and X was 2016. This tells me they’re at the very least thinking about a drop in S and X sales. This is likely due to weak demand this quarter, Q1 2019.
What is the best way to spur new, fresh demand? A refresh of some sorts.
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