Tesla Motors (NASDAQ:TSLA) on Wednesday announced a new lower-cost version of its Model X SUV. The new Model X 60D will start at $74,000, $9,000 less than the next-higher version, the Model X 75D. The move comes about a month after Tesla introduced a new lower-cost ($66,000) version of its Model S sedan -- and 10 days after the Silicon Valley automaker announced that it had missed its second-quarter sales target.
Has demand for Tesla's innovative "premium electric vehicles" peaked? Or is something else going on?
Tesla blamed the sales miss on supply and logistics issues
The answer is that it's hard to say.
Tesla said on July 3 that it had delivered 14,370 vehicles in the second quarter. That was short of its previously announced target of 17,000, raising the obvious question: Did demand fall short of expectations?
Tesla blamed the shortfall on supply and logistics issues, not a lack of demand. It said that it had an unusually large number of vehicles in transit to customers, which weren't counted as "deliveries." It also hinted that manufacturing disruptions were a factor, saying that, because of an "extreme production ramp," "almost half of the quarter's production occurred in the final four weeks."
There's no doubt that Tesla is working hard to improve its manufacturing and boost output. CEO Elon Musk has repeatedly said that improving Tesla's manufacturing is a high priority, and he has set extremely aggressive volume targets for the upcoming Model 3 sedan that will require significant changes to the company's factory in Fremont, California.
Factory changes can certainly disrupt production in the short term. But if its just a matter of logistics and factory issues, then why did Tesla launch new lower-priced versions of its cars?
Demand for Teslas is strong, but demand for these Teslas might not be
Given the 400,000-plus deposits that Tesla has taken for the Model 3, it seems clear that demand for Teslas remains extremely strong. But it's possible that, after four years of Model S production, Tesla is running short of customers who can afford the current Teslas. After all, while the starting prices are significantly lower, the average transaction prices for the Model S and Model X are still around $100,000.
With these price cuts -- or properly speaking, new affordable versions -- Tesla may be looking to bring forward some of that Model 3 demand. Instead of waiting until 2018 (or maybe later) for a Model 3, the company seems to be saying, why not pay a little more, and have a Model S or Model X now?
What does Tesla's website say?
Analysts have long watched the ordering pages on Tesla's website, where the company provides estimated delivery times for each version of its two vehicles, for clues about demand. Right now, Tesla is saying "September delivery" for all versions of the Model S, and "late September delivery" for all versions of the Model X.
Given Tesla's ongoing efforts to increase production, and the possibility of scheduled disruptions in the months to come, it's unclear what that means.
The upshot: Tesla may be running short of new well-heeled customers
I won't be the least bit surprised if it turns out that demand for higher-priced Teslas is fading a bit. As I've been saying for a few years now, the supply of affluent, tech-savvy early adopters isn't infinite.
To be fair, the number of people who are both willing and able to buy a $100,000-plus electric vehicle from a still-new automaker has turned out to be larger than I expected. But at some point, everyone who wants a Tesla and can afford one will have one -- or two, or even three, in some cases.
We're not there yet. But we may have hit the point where it will be hard for Tesla to hit its sales goals without lower-priced products.
Tesla knows that, of course. Musk's famous "secret master plan" from 2006 made it clear that the expensive Teslas would help finance the development and production of less-expensive Teslas. That's happening now.
Don't be surprised, however, if Tesla has to get even more creative to keep sales of the high-priced models growing, while it works to get the Model 3 into production.
John Rosevear has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.