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Model 3 superior to Model S would cabbage Model S sales

Model 3 superior to Model S would cabbage Model S sales

My worlds are about to collide here.

Red Sage ca us | March 20, 2016

FLAGGED!!!

moorelin | March 20, 2016

Must be an autocorrect for cannibalize? But I expect (optioned) 2017 Model 3 to be close to, if not better than current Model S.

carlk | March 20, 2016

I believe BMW 3 could "cabbage" Audi A4 sales, and the other way around too, but neither could "cabbage" 750iL or A8 sales.

MarlonBrown | March 20, 2016

Size does matter. I agree with the poster saying the BMW 5 series have not been significantly hurt by the 3 series. Even though they look pretty much the same car, but in different sizes! Same it applies to A6 vs A4, etc. We have examples over and over to contradict that and it proves people really care about the size. Personally I do not like big cars and the Model S I perceive as too big for me. Even if I had the money I prefer the BMW 3 series size, which I drive now.

Timo | March 21, 2016

I agree with MarlonBrown. Model S and X are too big for me and Roadster too small (and too expensive and too impractical). I think Model 3 would be car for me, but since I have not yet seen any clues about what it actually will be I can't say for sure.

Tstolz | March 21, 2016

Individual tastes vary a lot. That is why we don't all drive the same car. I fully expect that not all will like the M ☰ ... though plenty will. Price sensitive people and those that want a smaller vehicle will opt for the M ☰.

People always have a hard time understanding that the market is rapidly expanding as more compelling choices are added. M ☰ isn't stealing a piece of the pie ... it's making the pie bigger.

jordanrichard | March 21, 2016

I don't think Tesla cares if the Model ≡ takes away sales of the MS as their ultimate goal is to get as many EVs on the road as possible. So if you buy a Model ≡ instead of a S, that still means 1 less ICE on the road. If one has a MS and trades it in on a Model ≡, that just creates another CPO MS.

As far as eroding BMW 3 Series and A4 sales, I have been saying for a long time that it is bigger than that. The Model ≡ will also effect Accord and Camry sales. There is evidence that many buyer of the MS jumped from $25-$30K cars to the MS. It stands to reason that the same will happen for those typically in the low 20's market to jump up to the Model ≡.

BTW and I haven't seen any mention of this yet today, but ≡ is now the official logo for the Model 3. The logo is the same exact font as the letter "E" in the T E S L A script. Take that Ford.... :-)

PhillyGal | March 21, 2016

@jordanrichard +1

carlk | March 21, 2016

@jordanrichard

+2. Most people who are in the market for a 70K+ plus car would likely still go for S or X. Most people in the $25K to $60K market will go for the 3 and Y. Eventually Tesla will have six or seven models with each capable of eroding markets from Camry to S class to 911 to F150.

Tropopause | March 21, 2016

Mmm... cabbage.

Tropopause | March 21, 2016

carlk,

I believe Tesla will drop the Model S 70(D) variants to increase the price spread from Model 3 to Model S. Model S 100 will begin at $90k.

Ankit Mishra | March 21, 2016

@jordanrichard
I respectfully disagree. You are right about Tesla's goal. But Tesla reached this level of success by following a certain formula. It is that people love sexy cars, they love innovation, they love practicality, they love performance etc and they are ready to pay a premium for that. Tesla made expensive cars and used that money to progress. Tesla has been able to make a desirable brand image in the market. Now, just because Model 3 is going to be launched doesn't mean that Tesla should drop everything that bought it here. The sales of Model S and X will continue to hold extreme importance to Tesla even after introduction of Model 3. They are the higher margin Models. They are in the price range where people won't worry about paying a lot more than they intended for a unique feature. They will allow Tesla to experiment on new innovative features as the people in this price point like cutting edge technology and are tolerant with its growing pains.
But the most important aspect of Model S and X is there role in the brand image. It's basic human nature that people follow what influential people are doing. I can take the analogy of Pop stars and actors. People like to buy what famous people are buying. So, Model 3 will be more desirable to people if it's costlier siblings are selling like hot cakes. Now, in no way I am saying that buyers of one price point are better than others.
@OP
Tesla will ensure that Model S and X remains attractive offerings. If a person has enough money to buy a Model S, Tesla will work in a way that it would be able to pull the customer towards Model S instead of Model 3. Assuming size of car isn't an issue. IMHO.

flight505 | March 21, 2016

Before they buy Model S, Tesla shoppers are waiting to see what Model 3 will be.

A superior Model 3 would cabbage Model S sales.

That's why I believe Model S will remain superior in 0-60 MPH, quarter mile ET, and range. Higher technology is a more complicated skew.

But, two years is a long ways out and Tesla could make improvements to the product after introduction.

Tstolz | March 22, 2016

@flight 505 ... you mean just like how Mercedes, BMW, and Audi large car offerings outperform their "3" series cars? ;)

Hi_Tech | March 22, 2016

Model S will have the following going for it (vs. Model 3): vehicle size, full AL body, battery size, motor performance (0-60 speeds), as well as some of the higher end luxury items, etc.

Though Model 3 may offer some of these are added options, I think that will end up raising the price of the end product as well (getting closer to the MS price). Therefore, I assume that most that are on the fence will probably jump to MS right now, instead of waiting for 2 years. I don't think this will impact the M3 sales at all, as for the first several years they will be production limited, not demand limited.

jordanrichard | March 22, 2016

HiteshBhatt, a full aluminum body is not an advantage that people seek out. Apart from it not rusting, to a consumer, it makes no difference what a car is made of, as long as the paint looks good.

Hi_Tech | March 22, 2016

@Jordan - Fair enough. It was one of those things that I looked at about 3.5yrs ago, when getting my MS. Told myself that the body is built to last 20 years, which would help pay off the initial investment I'm making (which was far higher than my next most expensive car at $40k). But, I get your point.

jordanrichard | March 22, 2016

I completely agree with you because for me and obviously you, having a car, in New England as I am, that won't rust!!!!! Sign me up, oh wait, I did... :-)

claudealaval | March 22, 2016

I agree 100% with H.Bhatt...aluminium body is a big plus maybe not to the point of buying it because of it but face it if the Corvette would have been made of of steel you would have seen many of them over the years getting rusted and the whole image of the car would suffer. I will for sure be at the Montreal store to put my deposit for the M3 but like HB said I'm one of them who are on the fence between the 3 and the S the money be the major factor that I don't already own an S.Here in Canada the basic model is already over 100K so...

flight505 | March 22, 2016

Tesla used aluminum for Model S to cut down on weight compared to steel.

Benz | March 24, 2016

The Tesla Model 3 will take away marketshare from ICE models from other car manufacturers, but also from other EV's like the Nissan Leaf.

georgehawley.fl.us | March 24, 2016

Worrying about effect of Model≡ sales on Model S sales is beyond speculation. The Model ≡ won't be rolling out of Fremont until 2018. No one know what tricks Tesla has up its sleeve for the Model S by then.

jose.t.weeks | March 24, 2016

As a prospective buyer of either a 3 or S I must add that the aluminum construction is important, not because of its rusting capabilities but because of the lower weight of the vehicle thus increasing range. The 3 will be smaller but since it will be built out of steel the overall weight might be the same. Some here think that the S will not have a lower battery option, that is a ridiculous notion since many purchase the smaller battery but desire a larger vehicle. It is more likely that the higher versions of the model 3 will have the same size battery capacity as the lower version S. The target for the S is 300+ miles and the target for the 3 is 200+ miles, that alone indicates they can do it with a smaller battery if the weight remains the same.

Chunky Jr. | March 24, 2016

I'm sure Model 3 will "cabbage" Model S sales (is cabbage a typo or some slang I'm not aware of?), but the important thing is whether the sum of profits from Model 3 + sum of profits from Model S post model 3 > sum of profits from Model S before Model 3. The answer must be a resounding yes or Tesla wouldn't bother. They have done the research, and the math, and concluded that a Model 3 would be a win for the company.

georgehawley.fl.us | March 24, 2016

Every car has to be profitable. No ifs, ands, buts, or cabbage.

Haggy | March 24, 2016

verb (used with or without object), cabbaged, cabbaging.
2.
to steal; pilfer:
He cabbaged whole yards of cloth.

carlk | March 24, 2016

One thing people need to be reminded is when we are talking about a low cost car it's not only low cost to buy but it has to be low cost to produce too. People mentioned that S always uses most expensive components in addition to the aluminium body through out. A lot the suspension parts, for example, are sourced from Mercedes or Mercedes' suppliers. A $35K car can not use parts as expensive as parts in a $80K car. There got to be some cost cutting somewhere. That's just the reality.

Haggy | March 24, 2016

Tesla could offer a premium suspension, just as they do with the MS. They could offer a sports suspension and an air suspension if people want to pay for a premium spring suspension or have a choice of premium suspensions. The low cost car is going to be the base version, and Tesla could make just about anything optional that isn't standard on all cars. They will likely have enough features to make it nicer than other cars in its price range. I don't expect them to go back to window cranks and manual door locks but I can see them making something where options could literally double the cost of the car if somebody wants something fully loaded.

They wouldn't be the first car company to have something with a low end model that's little like the high end version when it comes to power, handling and performance. That doesn't mean that the low end will be a bad car.

carlk | March 24, 2016

Some car companies do offer upgraded suspension with higher performance variations but then we are not talking low cost model 3 anymore. It could cost as much as or even more than the base S. BMW's M3/M3, for example, do cost more than base 5/7 series so is Mecedes AMG versions. I'm all for Tesla to do it though. It definitely does not mean the base model will be a bad car just not as good that's all. Those who want base 3 to be as good as base S is nothing but wishful thinking.

Red Sage ca us | March 24, 2016

Please help. Flag this post into oblivion. Thanks.

Chunky Jr. | March 25, 2016

I assume it will be more profitable for Tesla to sell a top of the line Model 3 than a bare bones Model S, so Tesla may not mind if fully loaded Model 3s steal market share from low end Model S.

flight505 | March 25, 2016

@Chunky Jr.
Maybe so, but what about the nearly 2 year wait period for Model S? Will buyers put off a Model S sale to wait for Model 3? We should know more next Thursday night.

Chunky Jr. | March 25, 2016

@flight505 - that's a good question. I think if someone could afford a Model S, they would get one now rather than wait 2 years for a Model 3. But once the Model 3 is readily available, I could see people opting for a fully loaded Model 3 over a bare bones Model S.

Ross1 | March 26, 2016

There will be so many Models S traded in on the 3, that a second hand S could be ridiculously low cost/ big depreciator.

Gen3Joe | March 26, 2016

Model 3 doesn't even have to be superior to Model S to cannibalize or cabbage or whatever the Model S. For the simple fact that the Model S is the only option for those that really want a long range BEV with access to the SC network there will be Model S owners converting to Model 3 owners for various reasons. Size is one and I'm sure there are others.

Sounds like many current Model S owners are worried about this. If the Model 3 in performance trim ends up outperforming the Model S then sell your Model S and buy a Model 3.

I really don't think Elon's mission is to create exclusivity for every factor including performance on the top end of the Tesla lineup. This would be a minor sacrifice for his real mission... to revolutionize transportation.

Gen3Joe | March 26, 2016

Something else to consider. It would be in Tesla's financial best interest for fully spec'd Model 3s to cannibalize base Model S. Better margin on the fully spec'd Model 3.