Why Tesla Motors Model X Could Become Its Best-Selling Car

Tesla Motors Model X will hit the road in early 2015. Investors better buckle up, as early indicators hint that it could be the company's fastest-selling car to date.

Jun 29, 2014 at 6:03PM

There are a lot of catalysts for Tesla Motors (NASDAQ:TSLA) heading into 2015. But perhaps most exciting is the wildly anticipated arrival of its Model X crossover SUV. The all-electric-car maker has delayed production of the vehicle more than a few times since debuting the model back in 2012. However, these delays could quickly be a forgotten dream if Tesla delivers a product that exceeds consumers' expectations. CEO Elon Musk said he now expects to reach volume production of the Model X in the second quarter of next year.

Here are two reasons why it could be Tesla's fastest-selling EV to date.

Model X Musk Garage Pic

Source: Tesla Motors, Model X.

Robust recent SUV demand 
Stronger than expected demand for pickup trucks and SUVs boosted auto sales in May. Sales of General Motors' (NYSE:GM) Yukon sport utility vehicle surged 137% in April, while sales of GM's Chevrolet Suburban climbed 32%. Other manufacturers have also experienced higher SUV sales recently. Toyota's 4-Runner model, for example, captured sales growth of 64% in April.

On top of this, sales of small SUVs could climb as much as 12% annually through 2015, compared with just 5.6% growth for the broader auto industry, according to The Wall Street Journal. Consumers want spacious vehicles, but they don't want gas guzzlers. Moreover, "volume and pricing data suggest luxury car buyers are trading up to higher-priced SUV segments," according to Bloomberg.

Ultimately, car buyers may be willing to pay more for Tesla's Model X if it means saving thousands of dollars each year at the pump. With Tesla's Model X, drivers get the best of both worlds: a roomy SUV without the burden of increased fuel costs.

Taking the luxury SUV experience to the next level
At Tesla's recent annual shareholder event, Musk said the production-ready version of Tesla's Model X would "completely blow people away." He went on to say that delays were necessary to deliver the best possible product. Musk added: "At Tesla whenever we show off a car as a demonstration item, the actual production car will always be better than what people saw."

If this is more than hyperbole, Model X sales could zoom past those of its predecessor, the Model S. Musk gave us more evidence of this during the company's fourth-quarter conference call.

"The Model X demand is very high. ... Even though there is zero marketing for the Model X. In relative terms, it appears that the X will see at least as much demand as the S. And if I were to guess -- and this is just a guess -- I think the X demand will exceed S demand," Musk explained.

Model X Next To Model S Pic

Source: Tesla Motors.

Musk's word is certainly good for something. Since taking Tesla Motors public in 2010, he has achieved many seemingly insurmountable milestones, including ramping up production of its Model S and winning the Academy Award of autos when the Model S took home Motor Trend's 2013 "Car of the Year" award.

Going for gold
Given the early indicators described above, it won't be surprising if Tesla's Model X receives accolades of its own when it officially hits the road in early 2015. Until then, investors should keep an eye on Tesla's stock. If the Model X is as mind-blowing as Musk believes, not only could demand exceed that of the Model S, but this vehicle could also fuel Tesla's status as a top momentum stock in the year ahead.

Warren Buffett's worst auto-nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

 
 
 
 
 
 
 
 

Tamara Rutter owns shares of Tesla Motors. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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