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Examining Tesla's Competition, Part 2: Model X Competitors

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Based on the awards won, customer reviews, and sales success, Tesla Motors (NASDAQ: TSLA  ) Model S has been a remarkable success. In the next few years, Tesla is going to try to build on that success with the release of the Model X SUV. And with SUVs remaining popular, especially among families, it's time to size up the competition for the Model X.

SUV luxury
When I was looking for the most similar offerings to the Model S in the first part of this series, I found that some of the closest comparisons came from BMW (NASDAQOTH: BAMXF  ) and Porsche (NASDAQOTH: POAHF  ) . Likewise, these two luxury-auto makers produce some of the best comparisons for the Tesla Model X.

Hybrid model
The Porsche Cayenne Hybrid is a way for luxury SUV buyers to save a bit on gas while thinking about the environment. However, the Cayenne Hybrid still gets only 24 miles per gallon on the highway. For a 380-horsepower SUV, that's pretty good, but the Model X naturally wins the fuel-consumption comparison hands down.

With the Cayenne Hybrid starting at $70,900 and the Model X expected to sell for a similar price, the two SUVs carry good price comparisons. However, I still see a market for both vehicles. The Model X has a strong appeal among those who use their vehicles for short or moderate trips or have another vehicle for long trips. But many people use their SUVs for long trips, and until enough people have confidence in the Supercharger network, gas or hybrid SUVs still have the advantage among this segment of the population.

Future offerings
Although BMW doesn't yet offer a hybrid SUV, we must consider future competition, since the Model X itself is still more than a year away from delivery. And looking down the road, we can see a potentially interesting offer from BMW.

Some reports show that the automaker is looking to develop a plug-in hybrid electric vehicle, or PHEV, version of its X5 SUV. Such a vehicle would probably have less range than a Model X, but it would have a gas-engine backup for longer trips. Although this sounds like a good mix with BMW's line of other hybrid vehicles, the PHEV X5 has no defined timetable, and reports say that BMW is still working on the batteries.

Since the automaker hasn't given a date for the PHEV X5, it's probably at least a few years off, since BMW would first need to solve the battery issues, and then actually build the vehicle and ramp up production. It could be competition for the Model X down the road, but it's unlikely to be a competitor when the Model X first hits the streets.

SUV profits
In many ways, the Model X and Model S are very similar vehicles. Even though one is an SUV and the other a sports sedan, they share the same platform to save on development and production costs. Similarly, price points between the two are closely correlated, and even the competition comes from similar companies. With the success of the Model S, the bar is set very high for the Model X, but if Tesla can execute well, the Model X could become the must-have vehicle of the luxury SUV segment.

Up next in this series: a look at what Tesla's planned Gen III sedan may find itself up against.

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Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 29, 2013, at 2:46 PM, weaponz wrote:

    I think the Model X is aimed at the soccer mom demographic or people who need to carry a lot of things.

  • Report this Comment On September 29, 2013, at 4:32 PM, SteveTG3 wrote:

    At such a similar price point, I can see why you've compared the X and Cayenne.

    I just see long distance travel as far more probably a selling point for Tesla over the Cayenne rather than a limitation... when these cars go on sale in 2015, Tesla will be going from 80% to 98% Supercharger coverage per their website.

    Of course, it's possible Tesla might take somewhat longer to hit those targets, but short of a complete meltdown of the plan, I think free will have a nice connection with consumers rather than 24 mpg.

  • Report this Comment On September 30, 2013, at 9:28 AM, AjitC wrote:

    Tesla has to offer a larger battery pack for the Model X. I would say 125-130 KW-hr option that would cost may be $10k more. I estimated the extra weight at around 350 lbs. Should be no problem with AWD.

    Model X has higher drag, weight than Model S, plus it will carry a larger load. Make it practical for long trips without too much use of SCs.

    Still will be cheaper than a Cayenne Turbo and have more space. Plus cost less to fuel, maintain and repair.

  • Report this Comment On September 30, 2013, at 4:23 PM, damilkman wrote:

    The problem is Tesla seems to define coverage as is there another charger within driving range. This works great if you are commuting on the interstate. However, that is not how most of us travel. What if we are going somewhere else?

    Are these stalls easily upgraded? With ten stalls and assuming a normal distribution at peak, a ten unit stall can handle and process one customer every 2 minutes. This presumes everyone takes exactly 20 minutes. What happens if people leave their car for lunch and are gone for an hour? All it takes is a few lagards and there will be congestion. Perhaps a new form of road rage waiting for a charge. I would say that if charging stations are popular they will need to be beefed up or at least staffed so that an attendant can manually move the outlet if someone is waiting.

  • Report this Comment On October 01, 2013, at 11:07 AM, ffbj wrote:

    Model X is scheduled to come out in the first quarter of 2014. Originally it was supposed to be the fourth quarter of 2013. "Within the next few years" seems to be a bit of a research fail.

    Regarding the super-charger network: It seems that Tesla has considered many of the possible complaints, problems, etc... that might come up. Tesla owners are very helpful and compliant in regards to their special club, so I don't see too much charger rage going on. Maybe Tesla will send you a nasty note if you overstay at a charger, but it's a valid point. Regarding politeness: as said, Tesla owners are quite polite but in general Americans are infamously rude, though not as bad as the French, at least according to widely accepted views. No offense to the French afterall I am just another ignorant, rude American.

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