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Comment by sandstrom | Hacker News Reader

I agree with most of this analysis.

I think the reason they did the X was that when Model S was brand new they expected the market to 'max out' at ~20k vehicles a year (which wasn't unreasonable looking at other, similarly priced, niche premium brands).

So, they wanted a SUV to sell more cars. Now, as everyone (especially Tesla) knows, Model S has been selling very well. So in hindsight it was a big waste of time/resources. But I can see why the mistake was made.

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In general, large/luxury SUV sales has been outpacing large/luxury sedan sales for a while. Perhaps this was an artefact of a distorted market rather than true preferences. Either way, platform engineering the model s in to the model x will pay off with increased sales once it gets underway.

It's the same strategy as 5 series/x5 that bmw has, and has been exceedingly successful at.

Except that there's apparently a lot of bespoke engineering in the X that isn't in the S. And the X5 was built on the 7 chassis, at least initially. I don't think it shares much with the 5.

> So, they wanted a SUV to sell more cars. Now, as everyone (especially Tesla) knows, Model S has been selling very well. So in hindsight it was a big waste of time/resources. But I can see why the mistake was made.

The funny thing is that the Model S has more cargo space than many small/medium SUVs. The Model X doesn't really allow a decent rooftop cargo carrier.

Why was it a waste of time/resources? From all we know, the X might even sell better than the S, the preorders are crazy. Which would make Tesla a much larger company than selling the S only.

But they would have sold even more if they ignored the X and prioritized 3 which is the ultimate goal because they need the money

Can't prioritize the 3 until the gigafactory comes online. Not point to making lots of cheap chassis if you don't have the batteries to put in them.

I do think the X is making them way more money than the 3 could for quite some time, as the margins for the 3 are probably much less than those of the X. Only when they hit the 500k/year it might be the main moneymaker for Tesla.

Assuming a limited number of design and engineering resources I think the article makes a sensible argument (though, really poorly written) that it would have made more business sense to prioritize those resources on getting a more mass market offering out to consumers, capturing that revenue stream and cash before prioritizing the X.

Without knowing many of the details of Tesla this argument makes sense on it face. That being said there's a hefty amount of hindsight going into this analysis and I'd respect it more if the author made this call about 2-3 years ago.

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