Following a series of mysterious tweets by Tesla CEO Elon Musk earlier in the week, rampant speculation swirled around a potential new model release to be unveiled at Tesla’s Thursday reveal event. The result was the introduction of the Model D, which appears to be the company’s latest attempt to level with the average consumer while still maintaining a high degree of technological innovation. Some of the more notable features of the new model included a dual engine for all-wheel drive, an increase in drivable range, and an “autopilot” feature that may serve as an introduction to the future of self-driving cars.
However, analysts and investors were not clearly impressed with Musk’s announcement, as illustrated by negative price action and skeptical press releases. Investors sent Tesla plummeting down 7.82% on Friday, erasing the weekly gains made from enthusiasm preceding the event. Equity analysts accused the Model D as nothing more than an enhanced Model S, noting that the additional features lack the degree of innovation present at previous Tesla events. Analyst Ivan Drury noted that “a dual motor, all-wheel drive vehicle is the logical next step to build sales and offer a vehicle with daily drivability,” which suggests that Tesla is becoming more traditional and bland in its product offerings.
To that end, Tesla has been struggling to define itself as a brand over the past year. Although the company’s stated goal has been to provide an affordable, attainable electric car to the mass market, their actions have supported the establishment of a niche, high-end portfolio of product offerings. Tesla’s current best-seller, the Model S, prices in at $75,000, allowing Tesla’s competitors room to undercut and outsell the electric car manufacturer. Both the Nissan Leaf ($30,000) and Chevy Volt ($35,000) have at one time outsold the Model S, and Musk’s plans to bring down the sticker price of Tesla’s offerings are murky at best (the Model D price tag will likely be upwards of $100,000). Furthermore, the future of Tesla’s planned “gigafactory” remains relatively uncertain, while the anticipated release of a cheaper Model 3 vehicle is still 2-3 years in the future. Unless Musk is able to follow through on these two plans, Tesla’s product offerings will continue to be inaccessible to the general public.
Personally, I believe Tesla has been in the midst of an identity crisis over the past year. Despite Musk’s publically stated desire to eventually reach the mass market, he is certainly cognizant of Tesla’s appeal amongst the upper-class, novel buyer. By cheapening the brand and moving into an already crowded low-end electric vehicle space, Tesla risks alienating the core business that has brought the company to where it is today. In any strategy that involves Tesla entering the mass market, I believe it is critical to maintain and appease this novel buyer base that will continue to support Tesla as a high-end brand.