Tesla today told customers who placed deposits on its forthcoming Model X SUV that the vehicle will indeed be produced “starting in early 2015″ as expected. That’s good news for buyers, many of whom put down $5,000 or $40,000 with the company more than 2 years ago. But it’s also important for the company, which could use the more versatile vehicle to reach new market segments and see a significant uptick in sales as a result.
Model X was originally slated to begin production late in 2013, with deliveries in full swing by now. But Tesla has found ramping up the Model S sedan, while simultaneously expanding into Europe and Asia, to have its own set of challenges. The result of a full plate and the fact that CEO Elon Musk is a self-proclaimed “perfectionist” with respect to the details led to delays. Still, Musk has promised a vehicle that is both functional and attractive, with a base price that’s just a bit above the Model S sedan.
The premium is due in part to the fact that all Model X crossovers will come with two motors to support all-wheel drive and they will also sport rear “falcon-wing” doors that are hinged in two locations. Musk has been insisting these will allow easier access to the rear of the vehicle as well as tighter parking in lots and garages. The doors will make it challenging if not impossible to mount skis or a surfboard on the vehicle’s roof, however. It’s possible that Tesla wishes to discourage that behavior because any meaningful change to the aerodynamic profile could have a significant impact on range.
While Tesla isn’t saying much about the batteries in the Model X, it’s expected they’ll be generally comparable to the Model S, which gets 208 or 265 miles depending on which pack a a buyer chooses. There was, however, one reveal today that didn’t sit entirely well with some reservation holders. The third row of seats is optional, not a standard feature. (On Model S, the rear-facing jump seats add $2,500 to the price; what a third-row will cost in the X is unknown.) On the official Tesla forums, kejun1 put it this way: “making 3rd row optional is definitely a disappointment. it is just another way of increasing the price.”
In March, Musk told Bloomberg, “I really am quite insistent that the production version be superior to anything we’ve demonstrated before.” Whether Tesla can live up to that claim should be apparent later this year when the first prototypes are shown. Features like side-mounted camera in lieu of mirrors, which Tesla has shown on several Model X mockups to date, are unlikely to make it to production, however. While more aerodynamic, they’re currently not legal in the U.S.
Perhaps the most important implication is that Tesla gets a new vehicle to sell, literally doubling the size of its product lineup. Musk has suggested he thinks the market for the Model X could ultimately be larger than that of the Model S. In most product lineups, that’s not the case. BMW’s 5-series sedans outsold the X5 by 56,863 to 39,818 last year in the U.S. There are exceptions, like Porsche’s Cayenne outselling the Panamera sedan by a 3:1 ratio. It’s certainly possible Tesla will fall somewhere in between.
Either way, Tesla has been slow to ramp sales due to limits on availability of batteries. Musk has said those constraints could ease somewhat ahead of Tesla’s planned battery Gigafactory as partner Panasonic increases production significantly ahead of the new plant. The two firms inked a deal last October that implied Tesla was planning on reaching the 100,000-vehicle-per-year level without the Gigafactory.
Last year’s 22,477 vehicles sold is likely to rise roughly 50% in 2014 as Tesla has targeted 35,000 sales and a production run rate of 800 per week by year end. If Panasonic can get the batteries to Tesla, it’s possible that next year will see the company’s growth accelerate from those levels. There are already more than 10,000 reservations for the Model X. While not all of the will be converted into sales, it’s all-but certain excitement around a second Tesla vehicle will bring in new customers.
Musk said there might be global demand for 50,000 of each eventually. With the Model X finally set to arrive early next year, Tesla should be able to get much closer to finding out how true that is.