This was the case when some Tesla lovers took to Twitter during recent days and weeks to express their sadness and disappointment over Tesla canceling tours of the electric carmaker’s massive factory in Fremont. Some tweeters even mentioned how they had planned their vacations around the tour and that their trips just wouldn’t be the same without being able to swing by to see where all the Model 3, Model S and Model X magic takes place.
Elon, Fremont tours cancelled even although booked. Anyway to still get it? Vacation already planned specifically for tour. Wont be able to do again in number of years.
“Elon, Fremont tours cancelled even although booked,” said Twitter user Erik Hendrix. “Any way to still get it? Vacation already planned specifically for tour. Won’t be able to do again in number of years.”
The “Elon” referred to in that tweet was, of course, Tesla CEO Elon Musk. And as Musk is known for being a big fan of Twitter, it should come as little surprise that he saw the message and replied back with “Sorry to hear that. Will fix.” Musk later tweeted in response to other disappointed fans: “Part of the factory is being upgraded, but tours will continue around the parts that aren’t.”
This move seems baffling because it is essentially making the more expensive car feel cheaper. We do understand it, however, because having the same interior on three different models will likely lower costs for Tesla. Along with the interior change, the facelifted Model S is expected to pack a bigger battery with a whopping 400-mile range.
Tesla reportedly cancelled factory tours earlier this month to remodel some production areas to accommodate a planned refresh of its Model S sedan, and to prepare for production to begin on its upcoming Model Y crossover SUV. Those production lines are expected to begin work on vehicles later this year.
The Model S hasn't been facelifted since 2016 but according to CNBC, Tesla is planning to update its larger sedan. Reports indicate that Tesla's car plant in Fremont, California is currently being reorganized to build the new Model Y and a facelifted Model S.
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Apparently things worked out for Hendrix, who later tweeted that Tesla came through with what sounds like a pretty active swing through some of California’s top tourist attractions heading south on Interstate 5.
Factory tour on Monday which is back on. Then towards LA for Magic Mountain or Hurricane Harbor, San Diego for USS Midway and SeaWorld, then Phoenix and then back home. Bit over a week trip. 🙂
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Demand for the S and X have fallen off a cliff in recent months, especially in Europe where mounting EV competition has put pressure on Tesla.
Tesla has repeatedly cut prices on its highest-margin vehicles in an attempt to move metal; this helped contribute to the punishing loss in Q1 2019.
A refresh may help shore up some demand for Tesla's flagging Model S, but the benefits will likely only be marginal; declining demand and increasing competition are here to stay.
Rumors have been swirling for months that Tesla (TSLA) would soon announce a refresh of its aging Model S luxury sedan. Despite repeated denials from CEO Elon Musk, it appears now that there is substance to the story after all. According to reports from company insiders, the electric vehicle (EV) company now plans to launch a revamped Model S this fall.
Unsurprisingly, the refresh news has encouraged Tesla bulls who have been sweating over falling delivery numbers and repeated price cuts. But their enthusiasm may be somewhat misplaced. While the proposed refresh may help juice up flagging demand to an extent, it will likely not be enough to restore Teslas dominance of the luxury EV market in the face of new and enticing competition, as well as market saturation of its own offerings.
Model S refresh or no, Teslas recent trend of margin compression and punishing losses appears set to continue for the foreseeable future.
Few will deny that the Model S was a groundbreaking achievement when it was first released in 2013. Tesla defied its doubters by successfully designing, building, and selling a high-end EV with performance specs that astonished many at the time. But 2013 was a long time ago.
Musks repeated poo-pooing of a full-scale Model S refresh had caused many Tesla fans to worry, so the report that a revamp is indeed on the cards has sparked some enthusiasm. It appears likely now that the redesign will follow the far more spartan interior layout of the Model 3 sedan, a concept visualized last year by Electrek:
Whether the Model S of 2019 is substantively different from its 2013 forebears is, ultimately, immaterial. What really matters is whether people are buying the car. And that has increasingly become a serious problem.
Tesla dealt another blow when Barclays calls it a niche carmaker
Tesla delivered 27,550 Model S and Model X vehicles during the quarter, thus missing its year-end target by roughly 600 vehicles. Worse still, deliveries in the quarter were down by roughly 900 vehicles compared to the same period in 2017.
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Tesla at first attempted to pass off this precipitous drop in deliveries as temporary and due to seasonal demand issues. The company rolled out this same ploy again just a few months later when reporting deliveries for Q1 2019, which saw an even more severe demand drop for the Model S and Model X, with combined deliveries of just 12,100 units for the quarter. Clearly, the oft-repeated claim that the Model S and Model X were production constrained can now definitively be declared dead.
This week has seen Tesla introduce a string of clever teasers in China, each one being designed to raise awareness and excitement for the impending arrival of the locally-made Model 3, which will be produced in Gigafactory 3. Following a cryptic teaser on Monday, a price guessing game on Tuesday, and the announcement of Model 3 pre-orders on Wednesday, Tesla has rolled out yet another social media teaser on Thursday, which seems to be an encore to Tuesdays guessing game.
Moreover, demand has failed to pick up in Q2. InsideEVs estimated that Tesla delivered a mere 825 Model S units in the US in April, well down from historical norms, as well as compared to just the previous month. Meanwhile, European deliveries of the Model S have cratered in recent months. Indeed, sales continue to lag Q2 2018 by a rather staggering margin:
Demand for the Model S has clearly fallen off a cliff in Europe, while US delivery estimates offer little in the way of succor. There appears to be little Tesla can do to change this underlying demand problem. A refresh will probably help, but the Model S appears to be a dying platform at the moment.
Read Elon Musks email to Tesla employees about accelerating Q2 deliveries
The demand situation appears set to deteriorate further still as competition mounts. The Jaguar i-Pace and Audi e-Tron, two vehicles designed to compete with Teslas existing lineup, have recently hit the market in Europe, and demand has proven very strong indeed:
This sad story of dwindling demand in the face of mounting competition appears set to continue for Tesla for the foreseeable future, as Audi and Jaguar push into the US market, even as other fresh competitors hit the scene. The Porsche Taycan, for example, promises a whole new era of high-end EVs muscling in on Teslas traditionally protected turf. Taken together, this all adds up to an ugly picture for Teslas future prospects.
Today, the Model S looks increasingly long-in-the-tooth. Musk has claimed repeatedly that a full Model S was unnecessary, since the model is constantly being improved. Most recently, he pointed to the April refresh, which saw upgrades to the drivetrain and vehicle range in addition to more minor tweeks.
The prospect of a Model S refresh will likely help juice up demand for a while, but it is likely to offer no more than temporary relief to a deteriorating outlook and, if the recent semi-refresh is anything to go by, a full-scale revamp may end up doing little to move the needle. Indeed, Tesla has already cut its prices since the April refresh, with the Model S now starting at a mere $71,250. Evidently, the
While Tesla has refused to say so publicly, it appears that it has come to terms with the secular drop in demand for the Model S and Model X. Indeed, the reports of the refresh appear to suggest that the new Model S and Model X will be assembled on a single line, making room for future Model Y production at Teslas overstuffed Fremont plant. That plan matters, since it suggests that, even with a refresh, Tesla expects to be winding down production numbers to well below the previously stated 100,000 units per year.
Tesla is faced with an existential threat in the form of collapsing demand for its highest-margin products. Model S deliveries once helped form a supportive high-margin backbone to Teslas operations.
Now, repeated price cuts have eroded those margins substantially, even as lower-end Model 3 sales further compress earnings. Without the bulwark of the Model S, it is hard to see Tesla ever making another profit.
Investors would be unwise to bet on a Model S refresh to turn around Teslas flagging fortunes. Ultimately, Tesla is stuck in a bad situation. It found it nigh impossible to make profits even when it could squeeze out higher margins and faced only token competition.
Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.