Reuters Insider - Tesla to Upgrade Base Version of Model S
09/04/2015 01:44
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Source: Thomson Reuters
Description: Tesla is upgrading its Model S vehicle with 15%
more battery power and all-wheel drive. WSJ’s John
Stoll reports on MoneyBeat. Photo: AP.
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Transcript (May be auto-generated)
Tesla is scrapping its base model- the lowest cost model it sells in favor of a
more powerful version of the same car in an effort to boost sales and give
itself a better shot at meeting its aggressive 2015 sales targets. John Stoll is
WSJ's Detroit Bureau Chief. He joins us from the Motor City with the details.
John, how are you? Good, Paul, how are you? I'm pretty good. So Tesla- they had
a good first quarter. The first quarter sales little over 10,000 cars they sold.
That was a record. But that- even that pace would not get them near their 2015
goal of selling 55,000 cars. They have to bump that up for around 15,000 per
quarter. And this is really the first- is this the first move we've seen
towards- getting toward that goal, the new car? Yeah, I mean, we've seen a
succession of moves. I think the new- this upgrade has been in the making for a
while.
I mean, the battery technology doesn't fall out of the skies. So they've been
working on this for a while to get more range into the base model. This will
help raise revenues per vehicle. I mean, it's $4,000 or $5,000 more per shot.
They feel like it's a closer fit with what they have in the higher end. So
people aren't making as big of a compromise to come in on the lower level. They
may be losing some sales to more conventional models because the base model
isn't sufficient. So we'll see them first of all get more revenue on the lower
end vehicle. Yeah.
Secondly, this is a big salvo for them and I think the bigger one will come
later in the year when they launch this SUV, or they're at least planning to
launch an SUV in the second half. And that's what we're really be watching for
the volume acceleration. But this could help second quarter for sure. Yeah. Now,
the new base model- this is the model S, the base- besides the increased battery
life, what else is in this car that is going to make it worth the extra couple
of grand? Well, it's got all the bells and whistles that the Tesla upgrades with
some of the new advanced safety technologies we heard about earlier this year.
So that's important. When somebody shows up to the dealer- or in this case, they
do the direct buy from- or go to a showroom with Tesla, they're going to be able
to see that this model as sufficient as the other new models, in what is known
as the P85 range, with the 85 kilowatt. So that's the first thing, they'll have
the advance safety.
They also have all-wheel drive. And that is a big selling feature. It's done
very well, particularly with niche models where you need to differentiator.
Think of Subaru- a lot of people laugh. They think it's quirky but Subaru is on
a tear over the several years. And all-wheel drive has been their biggest
selling point, particularly in the Northeast where people have the weather, here
in the upper Midwest where you figure it's better to have all-wheel drive than
not. So those are two feature that you'll see in this new Tesla, and in addition
to the 15% gain in range. Right. Alright, John, good stuff, thanks a lot