Tesla Model S global sales has grown every year since deliveries started in 2012.
Model S was truly on top of the world, until Tesla set its eyes on Model 3. Now we don’t even talk about Model S and Model X, at least not in the way we used to. It’s all about the 3 now.
Both Model S and Model X are Tesla’s flagship vehicles. Production capacity is already in place. Supply network has been streamlined with years of production behind them. Bottlenecks were found and ironed out over the years and cars were getting out of the factory as fast as the parts were coming in.
Why not continue with the cars that have proven themselves inside and outside the factory? Why make life difficult with a high volume – low priced sedan?
Money, Markets and Charging infrastructure.
Tesla has always been focused on three major markets.
- North America
- Europe
- China
The electric car maker has carefully invested its money to expand its supercharger network in these regions. Having 10,000 superchargers in 29 countries is much better than having 30,000 superchargers in 100 countries.
With infrastructure already in place in these regions, Tesla has higher odds of success in increasing its penetration in current markets than taking its flagship vehicles to new markets, where infrastructure needs to be built from scratch.
Tesla needs to be wise about where it wants to invest its dollars.
Faced with the choice of picking existing markets for growth vs existing models for growth, Tesla chose the former. It’s the correct decision -because Model S is already the number one player in Tesla’s major markets.
With Model S already holding a strong position in Tesla’s key markets, growth will slow down to a crawl in the next five years. Expanding into new markets will be the only way for Tesla to grow and the company will be forced to spend a ton of its money and time in just building the infrastructure.
Not a great choice for Tesla at this point.
The alternative is to move down another segment and continue the ascendancy in its current markets.
Model S and Model X are now travelling in Tesla’s backseat and they will have to stay there for the next few years.
