The Tesla bears are huffing and growling. Now they have a vehicle to ride as they rip into the iconic electric car maker’s high profile and astronomical market value. Jaguar last week unveiled its challenge to Tesla’s Model X sport utility vehicle, going on sale in the 2018 second quarter.
The Jag I-Pace SUV looks like a formidable competitor to the Tesla X. The car will have a range of 240 miles on a charge, with exceptional acceleration (zero-to-60 in 4.5 seconds according to the carmaker), a very low center of gravity from the battery placement, and an adjustable air suspension.
The I-Pace will be priced in Europe at about £64,000 according to CNN, or $88,000 U.S., although the company has not yet announced a U.S. price. Unlike Tesla, which has developed its owned sales strategy, Jaguar will sell the cars through its existing dealer network.
Seeking Alpha analyst Paulo Santos says the Jaguar SUV is “quicker, higher quality, arguably prettier (at least inside) and significantly cheaper.” He says the price compares favorably to the Tesla X: £71,350 for the base Tesla Model X 75D, £88,050 for the base Tesla Model X 100D. Santos concludes, “The I-Pace is a credible competitor to Tesla’s Model X. It’s superior in many ways, except for ease of charging during travel – where competing charging networks will be expanding a lot in the next few years.” Santos is shorting Tesla’s stock.
The I-Pace arrives as Tesla continues to face production problems with its mid-level Model C, including an inability to build battery arrays fast enough to support mass production, and quality concerns. At the same time, it appears that demand for its flagship Model S and Model X SUV is soft, according to analyst John Engle, also writing for Seeking Alpha (which appears to house a Tesla bear den). He writes, “Demand for the Model S and Model X looks soft so far this year. This aligns with Tesla’s own decision not to expand production capacity for these models.”
Engle noted that “several sources reported on the lengthening wait times for its Model S and Model X vehicles. Commentators took this to mean that demand has increased substantially. A closer look reveals that the delays are the product of slowed production, not increased demand.”
According to Engle, the production slowdown for S and X cars results from the Model C mess. “Tesla has reduced the number of work shifts for the Model S and Model X from three shifts to two,” he writes, “in order to transfer manpower to the Model 3 production lines. Specifically, we know that in Q4 2017, a number of Model S and Model X line workers were transferred to the Model 3 lines. Unsurprisingly, that has put a considerable supply constraint on Model S and Model X production capacity.”
Tesla’s future, the company has acknowledged, depends on the Model C finding a mass market. The company loses money on every Model S and Model X, both priced beyond what an average car buyer is seeking.
Earlier this year, Tesla released its 2017 4th quarter financial report, showing a loss of $675 million for the quarter. Losses could mount when the company reveals its first quarter financials next month.
— Kennedy Maize