The price of the Tesla Model X Signature Series has been reported to be $132,000. Given the likely performance of the Model X, the price is competitive with high end performance SUVs. Signature pricing may indicate a newfound realism in Tesla's pricing strategy. Tesla's (NASDAQ:TSLA) pricing for the soon to be released Model X Signature Series has been revealed and it's pretty breathtaking: $132,000 before tax credits. Should Tesla investors worry that the price of the Signature Edition is too high? No. If anything, it's a sign that Tesla may have finally realized the importance of making a profit on the cars it sells. While the price of the Signature is high, it's really not that high compared with comparable high performance SUVs such as the Porsche Cayenne Turbo. How dare I compare a battery EV toy to an automotive icon such as Porsche (OTCPK:POAHY)? It's easy, given my iconoclastic nature. We don't have much in the way of hard specs on the Model X as of yet, but we know it's based on the same platform as the Model S, which means it's approximately the same size, uses a similar suspension and drive train, and shares motors and battery packs with the Model S. So for comparison purposes between the Model X and Cayenne Turbo, I've substituted Model S specs. This is really for purposes of showing that the cars are comparable in terms of size and weight. Specification Porsche Cayenne Turbo Tesla Model X Signature (Model S P85 D Specs used for comparison) List Price $157,300.00 $132,000.00 Curb Weight 4927 lbs. 4647 lbs. Length 192 in. 196 in. Width 85 in. 86 in. Horsepower 570 hp 762 hp Torque 590 lb.-ft. 713 lb.-ft. 0-60 mph time 3.8 sec. 3.1 sec. Top speed 176 mph 155 mph Except for top speed, the Model X is probably the quicker car, and it also has the advantage of the silky smooth quiet of electric drive. For its higher price, Model X Signature buyers will also probably get a slightly higher battery capacity of 90 KWh. The Model X is an even better value when you consider that Autopilot is included, whereas autopilot features such as lane departure warning and adaptive cruise control are extra cost options for the Porsche. Based on past history with the Model S, consumers can expect mainstream Model X cars (as in those that come off the assembly line once it reaches full speed) to be less expensive than the Signature. How much less is unknown. The Signature price tag is in interesting agreement with my estimation of what Tesla would have needed to charge on average for each vehicle sold in the June quarter in order to have no operating loss: $133,000. Obviously, Tesla isn't going to charge that for each Tesla car, or even for the non-Signature Model X, and it may not need to going forward. The June quarter operating expenses of $383 million rose 58% y/y as Tesla prepared for the production start of the Model X. Nevertheless, this shows how disconnected Tesla's pricing has become from its financial needs. Tesla has needed to charge more than $100,000 per vehicle for some time. In the June quarter GAAP revenue per car was only $77K. The need to charge more per vehicle and turn a profit has been my principal complaint about Tesla for some time. The high price tag of the Signature is therefore a good sign. It indicates that Tesla is willing to price its vehicles at something much closer to its costs, and forgo its more altruistic objectives for the sake of, to be brutally frank, survival. Tesla's recent stock offering also constitutes a new but belated realism. On the face of it, not acknowledging that this was necessary at the June quarter conference call was a silly and obvious mistake. Everyone, everyone knew it was coming, therefore I saw no point in congratulating myself on the prediction. I can only infer that Musk simply hadn't made up his mind as of the conference call, but that questions about a capital raise catalyzed the decision. There are deeper and darker interpretations, of course, but those interpretations have to assume a level of stupidity on Musk's part that simply isn't there. Although I didn't like the way the matter was handled, I'm not persuaded that raising additional capital somehow increases the level of risk of Tesla failing outright before the Gigafactory and the Model 3 enter production. I still see that risk as relatively low. The main risk for Tesla shareholders is that bad news about Model X production, or the Gigafactory, or the Model 3 will precipitate a sharp sell off. I regard such a prospect as relatively likely. The bear thesis that demand is tepid and that Tesla will never reach its lofty production goals for Model S and X in the near term (2016) is more than a little plausible. There is also risk that new entrants such as Apple (NASDAQ:AAPL) will disrupt Tesla even as it rushes to begin Model 3 production. Apple could come out of left field with a new battery or energy storage technology that would make the Gigafactory obsolete, as I discussed recently. However, the likelihood of any such technology being lower cost than the Tesla approach is remote, once the Gigafactory is in full production. Apple might be able to field a more convenient energy storage approach for its cars, but probably not a lower cost one. One risk that is constantly asserted by Tesla bears I still consider to be non-applicable. This is the supposed threat posed by low cost plug-in hybrids such as GM's (NYSE:GM) 2016 Chevrolet Volt. The Model S and X completely outclass cars like the Volt and always will. While the Volts of this world constitute no threat to Tesla's luxury EVs, the Model 3 certainly constitutes a threat to the plug in hybrid.
This report in Seeking Alpha discusses the reported $132,000 price of Tesla's forthcoming Model X and defends the price as fair, given it is competitive with other high end performance SUVs. The report also states that Signature pricing "may indicate a newfound realism in Tesla's pricing strategy...Should Tesla investors worry that the price of the Signature Edition is too high? No. If anything, it's a sign that Tesla may have finally realised the importance of making a profit on the cars it sells..."