Wanting to "Delight Customers", Tesla Delays Model X Production Again

In it’s third quarter letter to investors, Tesla Motors announced that they are pushing back the start of production of their falcon-winged Model X crossover again, this time until the third quarter of 2015. This is the third time that production has been delayed for the Model X, which Elon Musk originally promised for 2013. That was subsequently pushed back to this year, then to late this year and now delayed again. Tesla put a good face on the delay, characterizing it as “a few months”, and attributing the later production start to more extensive validation testing, wanting to “delight customers” when the Model X does start deliveries.

In anticipation of this effort, we now expect Model X deliveries to start in Q3 of 2015, a few months later than previously expected. This also is a legitimate criticism of Tesla – we prefer to forgo revenue, rather than bring a product to market that does not delight customers. Doing so negatively affects the short term, but positively affects the long term. There are many other companies that do not follow this philosophy that may be a more attractive home for investor capital. Tesla is not going to change.

Some folks have questioned whether Elio Motors will ever start production of it’s low-cost high mpg reverse trike because of its repeated delays in reaching production, now coincidentally also schedule to begin in the second half of 2015. One wonders if those same people will be as skeptical about the Model X. Of course, it isn’t a completely fair comparison as with over 33,000 deliveries of the Model S to date, and the Tesla Roadster before that, Tesla has already proven that they can put at least one vehicle into production. Still, Tesla’s announcement of the delayed Model X shows that contrary to what the Elio skeptics would have you believe, production delays are a part of the car biz.

Tesla Motors Q3 2014 Stockholder Letter