3 Possible Selling Points for Tesla Motors Inc.'s All-Electric SUV

At Tesla Motors' (NASDAQ: TSLA  ) annual shareholder meeting on Tuesday, CEO Elon Musk said the company's Model X is on schedule for production to ramp up in the second quarter of 2015. But investors who have been following Tesla closely for the last few years are well aware that the latest roadmap for Model X production was originally scheduled as early as late 2013. After waiting so long, investors certainly have high expectations for the SUV. Can Musk & Co. deliver?

Model X. Image source: Tesla Motors.

Analyzing the Model X value proposition
The Model S isn't outselling all other comparably priced luxury cars in North America simply because it's electric. Tesla went far beyond that, making the large sedan compelling. There is little doubt Tesla executed expertly on building an attractive value proposition into the Model S. Consider the vehicle's exhaustive list of 2013 accolades, including a 99 rating on a 100-point scale from Consumer Reports.

The Model X, too, will need to offer an all-around compelling value proposition to get customers to pay an estimated starting price around $75,000. So, beyond the obvious selling points that come along with any Tesla-branded vehicle (like ditching gasoline forever, free long-distance travel, and lower maintenance costs), what other features could help drive sales?

Style
First and foremost, Tesla clearly wants to make the vehicle "pop." Design is incredibly important to the U.S.-based young auto company, and Tesla wants to hit a home run on that front with the Model X.

Radical styling undoubtedly begins with its "falcon wing" doors.

Model S (left) and Model X (right). Image source: Tesla Motors.

Bit Tesla asserts the doors are about more than style. "[T]hey're functional first," Tesla says. "Falcon Wings open up and out of the way, in even the narrowest of parking spots. You easily step, not climb, into Model X."

Musk says Tesla is taking a no-compromise approach to the design, insisting that the production version of the SUV will "blow people away." In fact, the production version of the Model X looks better than the pictures of the vehicle available now, Musk told investors on Tuesday.

And like the Model S, the space in the Model X is startling. When Tesla first debuted the SUV, seven grown men stepped comfortably out of the vehicle. Then, of course, there is Tesla's signature "frunk," or a trunk where an internal combustion vehicle's engine usually is. The frunk adds convenient storage space.

Performance
With either a 60 or 85 kWh battery and Tesla's dual motor electric powertrain, which delivers instant and powerful torque, the SUV will outperform the fastest SUVs and many sports cars, according to Tesla. The Model X Performance version gets to 60 mph in less than five seconds.

Model X base. Image source: Tesla Motors.

Further, with its dual motor setup enabling all-wheel drive, combined with the low inertia in the all-electric drivetrain allowing for nearly instantaneous response in the vehicle's traction control system, the Model X will likely be among the best performing SUVs in the snow.

Safety
Then there's the many safety features that will likely carry over from the Model S -- the safest car ever tested by the National Highway Traffic Safety Administration. Features like the vehicle's low center of gravity (thanks to a battery built into the floor of the vehicle) or its unparalleled front crumple zone (thanks to the nifty frunk).

Tesla could also debut partially autonomous driving with the Model X. Musk told investors last week that Tesla owners will be able to go "from highway on-ramp to highway exit without touching any controls" in "less than a year." The timing suggests Tesla may be planning to debut the feature alongside the Model X launch.

Sure, there may be other key selling points beyond these three. But these factors alone help build a convincing value proposition for the SUV. Given Tesla's excellent execution on the Model S, investors shouldn't doubt Musk & Co.'s ability to pull off another blockbuster vehicle in the Model X.

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Read/Post Comments (11) | Recommend This Article (4)

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 June 07, 2014, at 4:30 PM, Ustauber wrote:

    ThxTSLA

  • Report this Comment On June 07, 2014, at 5:10 PM, faraway wrote:

    I hope Tesla makes a go of it. They still face obstacles. Currently, no EV can match the range of most gas powered vehicles with a full tank. Even when nearing empty, it is likely a service station is close. A 15 minute stop and they're back underway. Here is a likely scenario for an SUV. A Denver family may decide to take a week-end ski trip to Vail (a common trip). I-70 will present many challenges. Steep grades, cold temps, traffic jams, high altitudes and continued operations with heat, lights and music. The last time I was at Vail, I did not see any charging facilities. Currently, no EV can make that round trip. Most gas powered SUV's can easily make the round trip. If the family left with less than full fuel there are service stations along the route. A person driving a Subaru Outback for example, will find the overall cost to operate, including the cost of gas, to be less than most EV's. There are other scenario's in other places that make EV's unlikely to succeed. Week-end trips in Wisconsin, etc. Like many, I believe gas has to go. I recognize the Tesla received very high ratings and goes very fast. However, if the ratings included range compared to all gas cars it would fare poorly. It's a great car ... but not for everyone.

  • Report this Comment On June 07, 2014, at 6:08 PM, dannystrong wrote:

    Oh look, it's the Motley Fool! Oh look, another slavish article praising the Fool's messiah, Elon Musk! Oh look, more misleading 'statistics'. Based on cherry picking sales figures (that is, declaring that the only competitors for the Tesla come from Mercedes, BMW, Lexus, Audi and Porsche), yes, the Tesla did sell 27% of all luxury sedans in 2013 -- if you only count the ones they want you to count, and more than any single one its carefully chosen competitors. However, if one were to look with less blinkered eyes, one might see that this hothouse buy-the-stock-right-now-you-fool attitude is not without its bias.

    If we pick 'competitors' other manufacturers -- from, oh, say, Ford (the Taurus, for instance), Tesla sold very nearly one quarter the number of those vehicles (that is, a lot fewer Teslas than Tauruses.) The Lincoln MKZ outsold the Tesla very nearly two-to-one. The Toyota Avalon outsold the Tesla more than four-to-one. (All numbers just in the USA.)

    It is small wonder that a shareholder in Tesla wrote this gushing piece. The larger wonder is that it is, alas, typical of 'information' from the Fool about Tesla in general.

  • Report this Comment On June 07, 2014, at 7:33 PM, TMFDanielSparks wrote:

    @dannystrong,

    Not sure what stat you are referring to. The Model S is outselling comparably priced cars in North America, meaning an average selling price of $100,000 or so.

    No recommendation to buy the stock in this article. In fact, in the only tesla article I wrote this week in which I referred to a decision on the stock I said:

    "Should investors bet on surprises big enough to improve the outlook for Tesla even further? Probably not, with so much already priced in, doing so is speculation -- not investing. This highlights why investors should think twice before they invest at these levels."

    It's important to keep in mind the difference between acknowledging an excellent company and pointing out an excellent investment opportunity: they are entirely different.

  • Report this Comment On June 08, 2014, at 2:32 AM, stainlesssteel77 wrote:

    @faraway June 07, 2014, at 5:10 PM:

    "I hope Tesla makes a go of it. They still face obstacles."

    Your hopes are more on track than your post suggests:

    "A Denver family may decide to take a week-end ski trip to Vail...challenges: steep grades, cold temps, traffic jams, high altitudes and continued operations with heat, lights and music...Wisconsin, etc."

    Your Colorado and Wisconsin cold-weather weekend trip scenarios as of June 2014:

    1) are a tiny fraction of Tesla buyers' usage,

    2) are steadily improving as more Superchargers appear

    " The last time I was at Vail, I did not see any charging facilities."

    Electric Car (EV) Charging Station at Vail Village Parking Structure - Address: 241 E Meadow Dr, Vail, CO

    http://www.plugshare.com/?location=13432

    "Currently, no EV can make that [between Denver and Vail] round trip."

    The Tesla Model S definitely can: along the 120 mile route between Vail and Denver, the Silverthorne Supercharger is 31 miles east of Vail.

    http://www.teslamotors.com/supercharger/silverthorne

    "I recognize the Tesla received very high ratings and goes very fast. However, if the ratings included range compared to all gas cars it would fare poorly..."

    Consumer Reports' dual best ever 99/100 Tesla Model S ratings of road test and owner satisfaction both take range into account:

    "It stands out for its innovative design, outstanding performance, surprising practicality, long 200-mile-plus driving range for an electric car, and low driving costs."

    http://www.consumerreports.org/cro/2012/12/owner-satisfactio...

  • Report this Comment On June 08, 2014, at 3:10 AM, stainlesssteel77 wrote:

    @dannystrong June 07, 2014, at 6:08 PM:

    "...cherry picking sales figures (that is, declaring that the only competitors for the Tesla come from Mercedes, BMW, Lexus, Audi and Porsche…"

    This is not cherry picking. These **are** the vast majority of similarly priced, similar capability competition to the Tesla Model S.

    "If we pick 'competitors' other manufacturers...Ford (the Taurus, for instance)...Lincoln MKZ...Toyota Avalon…"

    Now that's cherry picking--these cars are not direct competition: far lower priced $28k-45k vs $65k-120k, and far less capable than the Model S.

  • Report this Comment On June 08, 2014, at 10:10 AM, josephfbuck wrote:

    Dear Tesla I do wish you made a off road 4X4 that can run throw deep water and had a fold up windmill

    changer for weekends in the woods. please make a very high lift don't want to bottom out

  • Report this Comment On June 08, 2014, at 12:32 PM, dannystrong wrote:

    @TMFDanielSparks - ah, so we shall allow Tesla to declare that comparisons are based on price, but not value. OK, just wanted to be sure exactly how stacked the deck was...

  • Report this Comment On June 08, 2014, at 1:27 PM, corrado wrote:

    the suv look like a x5. the only thing different is you can`t go anywhere not long trip with your family!

    the charge it`s only for 150 miles if you drive slow! For 100k I have so many options!

    tesla is a cool car but for now just a toy that you can buy if you have a extra garage and drive on weekend but do go to fare>I hope you have AAA card!

    sorry but $200 stock with no profit and one car and Total Debt (mrq): 2.20B .

    I am short!

  • Report this Comment On June 08, 2014, at 1:28 PM, peteroo wrote:

    Mr. Sparks. One interesting point I would like to point out. I always thought of Porsche as a sport car NOT an SUV manufacturer. 53% of Porsche’s sold are Cayennes (13% Panamera, 16% Boxster-Caymen twins, and 18% 911). BTW, Porsche is coming out with a smaller SUV so I see the SUV % increasing.

    The classic remark from every SUV owner is, “I love my SUV (fill in the name) but I hate its’ lousy gas mileage.” The Model X’s eMPG will be less than a Model S but still a giant leap ahead of the ICE and hybrid SUVs. X will be a welcome competitor and offer the consumer a choice they didn’t have. What will really be tipping points is the annual savings between gasoline fill ups and charging (+ free supercharging) and the costs of maintenance. Most SUVs have enormous appetite for brakes! The Model X will have regen brakes which yield very long brake life. SUVs generally have higher ground clearance, making a higher center of gravity and may be more prone to rollovers in sudden and violent accident avoidance. I see the Model X to be far safer from rollover than traditional SUVs.

    If the Model X does for Tesla what the Cayenne did for Porsche, it will keep Fremont very busy.

  • Report this Comment On June 16, 2014, at 12:57 PM, faraway wrote:

    A thank you to stainlesssteel77 for pointing out supercharger locations on I-70 west of Denver. The ski trip scenario might be a tiny fraction of Tesla buyer's usage. However, over 1/4 of all US households are single family. Another large block are single person households. This represents millions of people who depend on cars. A single mom can buy an eight year old Honda that is reliable. A Civic's cost of ownership including gas will be far less than most EV's. Further, she can fill the tank and commute from the Chicago suburbs to her job in Chicago (of course hypothetical) for days in the worst winter conditions. Likely, she never considers range anxiety. If she works in an office I doubt that she would fancy plugging in her car in brutal winter conditions. If she chooses to take her family to Wisconsin Dells for a week-end outing, she can simply start the car and go. She does not have to plan around an EV's limitations, measure her speed and use of air or heat. Even with the Tesla there seem to be horror stories of people being stranded http://www.nytimes.com/2013/02/10/automobiles/stalled-on-the.... I agree that people with any car can be stranded. However, most persons with gas cars have one simple reason ... they ran out of gas while passing convenient service stations. EV's have more variables to contend with. Steep grades, high altitudes, temps either too hot or too cold, high speeds ... are all battery killers. Some persons on trips have been advised by Tesla to lower their speed to 55mph and turn off the air. In some cases, computers have been inaccurate. On the other hand I have friends in Chicago with a Tesla S. They love the car. It is fun and everything Consumer Reports said it is. But they are wealthy. The Tesla is used for Chicago commutes and fun rides along Lakeshore Drive. Still, when they drive to their cottage in Michigan they take the Range Rover. The block of people that cannot afford an EV or cope with their limitations is not a tiny fraction. My only real point is that at present, EV's are not for everyone and I resent the marketing that implies they should be.

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