Tesla, which recently claimed the throne as the most valuable carmaker in the United States, could be in trouble due to two separate issues concerning the Model X electric SUV and the upcoming mass-market Model 3 electric sedan.
Despite the demand for SUVs in the United States, sales for the Model X are struggling. Meanwhile, the name of the Model 3 is causing confusion among customers.
Tesla Model X Sales Struggling
Sales of the Model X have not met the expectations of Tesla CEO and founder Elon Musk, with registrations of the electric SUV declining over the past two quarters.
"Luxury SUVs are really hot right now, and the Model X should have been a big hit and broadened Tesla's audience," said Autotrader.com analyst Michelle Krebs. However, the Model X has so far not soared, and its double-hinged falcon-wing doors are partly to blame.
In an earnings call earlier this month, Musk said that the Model X became a "technology bandwagon" that included everything that Tesla could think of, which the CEO described as a "terrible strategy."
Tesla is now paying the price for cramming too many features into the Model X, as quality concerns and a high starting price of $82,5000 have plagued the electric SUV. Despite a market that is friendly to luxury SUV's, the Model X was only able to sell an estimated 2,000 units last month.
Tesla Model 3 Confusion
Meanwhile, the confusion surrounding the upcoming mass-market Model 3 has pushed Tesla to create a webpage explaining its difference with the Model S.
There has reportedly been misconceptions among customers that the Model 3, designed as an electric vehicle that is more affordable, is a next-generation Model S. Customers seemingly think that the Model 3 is something like a Model S version 3, which may be holding back orders for the Model S as buyers believe that the Model 3 will be a better car.
The Model 3, which will have a starting price of $35,000, is set to start production in July. This has placed pressure on Tesla to hasten efforts to clear the confusion between the mass-market electric vehicle and its flagship Model S.
The comparison webpage for the two electric vehicle models describes the Model S as a premium electric sedan that is more powerful and offers more customization options compared to the affordable Model 3.
While the Model S is capable of going from zero to 60 miles per hour in as fast as 2.3 seconds with range of up to 335 miles and more than 1,500 customized configurations, the Model 3 can go from zero to 60 miles per hour in 5.6 seconds with range of more than 215 miles and less than 100 customized configurations. The Model S also comes with free unlimited usage at Superchargers, while owners of the Model 3 will need to pay each time they hook up to Tesla's charging stations.
Tesla initially wanted to name the affordable electric vehicle as the Model E, which combined with the Model S, the Model X, and the unannounced Model Y, will spell out the word "sexy." However, Ford blocked the name as it already owned the trademark for it, forcing Tesla to instead go with the name Model 3.
Can Tesla Bounce Back?
It is currently unclear what Tesla plans to do to solve these two issues beyond its current initiatives.
If Tesla would like to widen the gap between itself and other carmakers, it will need to find a solution to the struggling sales of the Model X and the confusing name of the Model 3 quickly.