Tesla Motors is an electric car company based in California.  Tesla is most known for its electric sports cars, which are high performance and industry leaders in miles per charge.  While Tesla’s sports cars have been successful, the company wants to expand to the SUV/sports crossover market.  The Model X is Tesla’s attempt to enter said markets.  The Model X is fully electric crossover (between and sedan and a SUV) with a four-wheel drive system.  The Model X would allow drivers to use their electric cars in the winter unlike Tesla’s sports cars.  (Berman)

Whether or not this is a good idea for Tesla is somewhat irrelevant at this point.  Tesla initially revealed its plans for production of the Model X in February 2012, claiming production would take place close to a year later.  However, it is now 2013, and production of the Model X is still yet to begin.   It is now said that the Model X will officially begin production in 2014.  Naturally, many consumers are skeptical as to why production of the Model X is delayed. (Berman)  Shanna Hendricks, a spokeswoman for Tesla said:

“I almost have trouble calling this a delay in Model X, because that makes it sound like we’ve run into problems with Model X, and it’s taking longer than we thought, and it’s out of our control,” She then wrote wrote. “When, really, we’re consciously pushing back timing to allow ourselves to focus on its production and product enhancements in Model S (one of Tesla’s sports cars).”   (Berman)

While Hendricks claims that production has purposefully taken longer than expected, many are skeptical because Telsa had delays when releasing both of its sports cars as well.  Normally this wouldn’t be a huge deal, but Tesla requires a $5,000 initial deposit for the very basic Model X and a $40,000 deposit for the signature Model x (not including down payment).  (Berman)

With this kind of money at stake, is it a good idea for Tesla to delay production on purpose?

 

 

Works Cited

Berman, Bradely. Tesla Model X Production Won’t Start Until Late 2014. 12 March 2013. 20 May 2013 <http://wheels.blogs.nytimes.com/2013/03/12/tesla-model-x-production-wont-start-until-late-2014/>.

 

 

In mid to late April Mercedes-Benz’s new midsized sedan, the CLA, hit markets in Europe and will be in the U.S. in September.  While Mercedes currently has a wide array of possible sedans to choose from, the CLA is different.  Normally when one hears Mercedes, he or she automatically thinks of an expensive luxury car.  It is no secret that a car made by Mercedes- Benz can be expensive.  However, Mercedes hopes to break this schema with the CLA.  (Padgett)

The CLA, as mentioned, is a sedan that features an inline 4-cylinder, 208 horsepower engine, a plush leather interior, and a wide array of technology options.  At this point in the description, most probably think, “This sounds like every other Mercedes”.   Truthfully, it does; but the CLA is unlike most Mercedes in one category- price.  Mercedes claims that the average price of the CLA will be right around $30,000 USD.  Providing that this is true, this price would make the CLA the most affordable Mercedes on the market, followed by the C-Class.  (Padgett)

Mercedes plans to use this relatively low price point to target younger drivers between the ages of 25 and 45.  The theory is: if younger people are able to afford a Mercedes now, then they will continue to be loyal to the brand as they progress on the salary scale.  While this may be a good idea in theory, it may not work in the long run. (Padgett)

There is a reason that Mercedes charges a lot for their cars.  The reason is because they are quality automobiles.  I make that claim based solely on fact, not opinion.  Having said that, if the CLA is a quality product like other Mercedes, how can it be so much cheaper?  I know as well as everyone else that there are generally large markups on cars.  However, I am not sure that a mark up would make the next cheapest Mercedes about $15,000 more expensive, even after haggling has taken place.

There are a few possible reasons for the CLA’s price.  The first possibility is that Mercedes strongly believes that the CLA will help them retain younger customers.  This would ultimately ensure profit in the future, which could offset the price of the CLA.  Another reason, dare I go there, Mercedes may have taken shortcuts.  There is a large possibility that the CLA will not be as reliable or perform as well as a higher end model.  But, with the way the company defends the quality and desirability of the CLA one cannot know for sure.

If this were the case, why would someone buy the CLA?  As much as I want to believe that consumers make buying decisions based solely on product quality, I know this is not always true.  Truthfully, Mercedes will get many young drivers to purchase the CLA just because it is an affordable Mercedes.  However, will they remain loyal to a product that might be lacking the quality that is expected?

Padgett, Marty. Mercedes-Benz CLA. 4 April 2013. 21 April 2013 <http://www.thecarconnection.com/cars/mercedes-benz_cla>.