It suffice to say that 2018 was not the most stellar year for Tesla. 2019 alone has Tesla all roughed up, starting with the SEC filing Elon Musk for contempt, announcing and retracting announcements, and foreseeing a not so profitable first quarter.
CEO Elon Musk isn’t new with clashes with the SEC, but it’s starting to take its toll. In his motion against the SEC filing, he said that the proposal to have him held in contempt, caused Tesla’s stock price to go down 3.4 percent.
Moreover, the public and investors are in shambles with Tesla’s on-again and off-again announcements. Earlier in February, the company announced to shut down most of its physical stores to support the $35,000 Model 3 but later on said that it would keep stores open although will raise prices on its other vehicles, instead.
The electric car company hopes to reignite interest and trust in the company’s line of electric vehicles to get it up and running again. Especially now that pre-orders of the Model 3 is, finally, well on its way in terms of production, but significantly the demand for it is fading.
On the other hand, the Sports Utility Vehicle or the SUV market is booming. People seem to want bigger and buffer cars compared to conventional 4-seater passenger cars. As of January, SUVs and crossovers made up 45% of sales in the United States; on average more than two out of three vehicles sold were SUVs.
Car companies are taking note and designing their big rig vehicles to meet customer demands. Last year alone, the Toyota RAV4, Nissan Rogue, and Honda CR-V lead last year’s 4th quarter sales.
Moreover, Jeep sold 20 percent more vehicles in the US than it did three years ago. The company claims that it can even double their profits by 2022.
With the success and attention SUVs are attracting, Tesla can’t help but to want a slice.
Tesla introduced to the public their long-awaited Model Y last Thursday night and reactions aren’t what the company was hoping for. Analysts are saying that the brand new Model Y was “underwhelming,” and that they’re “not surprised.”
Although, Tesla already has an SUV in its line, the Model X, but priced at the more high-end luxury side at a whopping $100,000. Even with prices that high, it only accounted for 15% of Tesla’s sales in the fourth quarter.
Tesla’s stock is down 10% since February and hoped that the unveiling of the Model Y would turn things around. However, it did precisely the opposite. The electric car maker’s stock fell by about 4 percent in intraday trading, further straining shares that are down by more than 16 percent and have lost roughly $7.4 billion in market value so far this year. The company is currently valued at about $48.1 billion.
As of the moment, the Model Y will cost between $39,000 to $60,000 depending on the extras and is about 10 percent bigger than Tesla’s Model 3. It, in fact, has seven seats which we did not see coming as it’s only 10% bigger than the Model 3. The seven-seater feature is seen on the Model X. Moreover, the Model Y has a panoramic glass roof and 66 cubic feet of cargo space.
But, as critics say, Tesla needed to innovate more if they wanted the Model Y to improve their stocks. However, unlike 11 years ago, when Tesla started mass producing electric cars, a lot of car companies have joined the bandwagon and are creating their versions of electric vehicles–Sedans, SUVs, and crossovers.
China, one of Musk’s most desired markets, have at least 48 electric SUVs available in their market according to Autohome. Even though Tesla has stationed a Gigafactory in China, it’s still vague how the company’s future will pan out.
Moreover, the current pricing of Tesla vehicles in China are significantly more expensive than when you purchase it in the US. As of the moment, it’s faith still dangles on it’s Shanghai Gigafactory, hoping to cut prices enough and make Tesla more accessible to the Chinese market.
With all that’s said, with how the public and analysts describe the Model Y, it won’t be Tesla’s saving grace. But, hopes are still high, as the company aims to resolve past issues regarding production and delivery issues that stifled the company’s growth and the public’s favor.
Then again, it would have been wiser if Tesla followed initial advice not to have pursued the mass population and worked with niche markets that allowed it to grow.