Tesla Model S
Before I start, and haters start saying how wrong I am, I would like to say that I have been bullish in this stock way before it began to be something trendy. I spoke about how Tesla is 5 companies in one, and how their value would rise to the levels we are seen nowadays. Unfortunately, Tesla turned direction and it is going to a path that will ultimately end with their mainstream status. They are fun to drive, well thought and a game changer for all the industry. But now that other car brands are launching new electric cars in a monthly basis they are falling behind because of this two main reasons:
1. Wrong market group
Their focus to have the quickest car, new features such as the autopilot, the “farting” seat, or the celebration mode and lately the very futuristic design of the steering wheel are little details that attract the innovators and early adopters. These kinds of features are not going to be used in daily life. I bet 99% of the Tesla Model X owners have used the celebration mode no more than once a month, the ludicrous mode no more than once a week and the “farting” seat only the day they discovered it.
They are the equivalent of the gadgets these people (innovators and early adopters) bought on Kickstarter and are now lost in the basement.
The amount of people in these two sectors is around 16% of the total users in the best case. But there is one more problem. People buying electric cars (me included) tend to buy it not because it is funny to drive, but because it is clean. They drive in a more clean and efficient way, trying to have the most range out of every single charge. Indeed even Tesla wants so, by having the “one pedal” driving (regenerating as much electricity as possible once you take your foot off the gas pedal and therefore braking, meaning you could even drive with only one pedal).
By the way, the launch mode is as stupid in an electric car as in a petrol car as demostrated by The Gran Tour.
Most of the people, and for sure the early majority, late majority and laggards will not see the fun in these features choosing their car by other factors such as quality, tradition, usability, reliability (we will come back to this later). None of these categories will be something people choose Tesla for; and only (and for the moment), a factor such as the residual value of the car to be resold will be something people will value of Tesla.
As time passes, other car companies have also changed their ways rapidly. BMW has electrified (at least as a Hybrid) almost every best selling model, taking away the range anxiety and offering a very decent 50+ km electric range. Even a major step is the one done by Smart with only 100% electric cars starting in 2020. Mercedes with the inclusion of the EQA, EQB, EQS and EQV joining what the EQC started, offering a range of cars not covered by Tesla such as the small SUV, the family van and the super luxury car (the one you don´t drive, but you are driven).
VW has also launched a big range of electric cars within their groups. From the very luxurious Porsche and Audi to the middle and lower brands such as the ID3 and 4 (also covering segments not covered by Tesla) or the awesome new Skoda Enyaq, a car many are saying is the best possible SUV and electric car to be bought right now. And this bring me to second and maybe biggest mistake of Tesla: (after the pic, the biggest mistake is not Skoda... keep on reading)
Skoda Enyaq - acknowledgement to Auto & Service Pia München
While the story of how the S model was forged is something worth another post, the rest of the cars are kind of a falling off a cliff thing. The model X seems to be the combination between a S model on steroids and a chair of the Star Wars Mos Eisley Cantina, the model 3 and Y to be cousins and the cybertruck something childish that neither the traditional construction world, nor the farmers will want to have. The cybertruck is the iPad way of saying “I am going to make you change your mind” but it really doesn't fit into the techy life of the people of california, the always active streets of New York or any landfield in the space between the two coasts.
While designing those models, the attention for details decreased in a ludicrous mode. While the Model S keeps things clean and tidy, with no bolts or plastic covers visible. The Model X started to have plenty of visible mistakes (such as the lake formed under the rear spoiler). Even in their latest presentation with their Model S Plaid you can easily see that that steering wheel is crying out loud “I am plastic”, while being the central part of a $122.000 car.
Detail of the rain water lake formed under Model X´s rear spoiler
Quality is something essential, at least in China and Europe, where we have very high standards with the luxury brands, and where Tesla is now only a rival because of the engine.
But let's not forget that, from the very beginning, it wasn't the idea of Tesla to be THE ONLY electric car producer. But their slow way of moving, their interest for unuseful things and the wrong designs and quality of the cars will bring the stock price down. Still it is not all bad, they have changed the world forever and for good! Companies such as Honda and Audi have stated this very same week their goal to stop producing ICE (internal combustion engine) cars within the next decade (2040 and 2026 respectively). The changes have been done for good, and there is no way of going back.
What should they do next? In my opinion, they should continue with only their present car models SEXY. They are the best possible selling cars for any city in the world. Forget the Cybertruck and the Semitruck, those segments have already been fulfilled by long-time players that have listened loud and clear to the call to action of Tesla and they are already producing good pick-up trucks and semi trucks.
Producing not only high performance cars (that is something people will use only once) but high quality cars will make them more attractive to be used as a daily car, taxi, Uber,... and will open doors to new countries such as India, where the roads are so bad that not having a high quality cars will destroy the brand image.
Last but not least, they should focus also on battery production, AI and autonomous driving, and modular factories... things that they could easily sell to others setting new standards while growing market cap in products where profit is way bigger as in the car industry.
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