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Is Tesla (TSLA) Going to Ditch the Model X Gull-Wing Doors?

November 18, 2014 10:10 AM EST
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With its recent earnings report, Tesla Motors (NASDAQ: TSLA) announced, among other things, that the highly anticipated Model X SUV will be delayed further - from the second quarter to the third quarter. In light of this, Morgan Stanley analyst Adam Jonas commented today on rumors the futuristic gull-wing doors could be to blame for the delay.

"If Tesla is indeed having trouble with the doors, it is likely to be driven by the mechanism and form factor of the doors," Jonas comments. "Gull-wing doors are rare but have been done in the auto industry before (notably in the gorgeous 1956 Mercedes Benz 300SL)."

He notes that Model X doors are not traditional gull-wings but “falcon doors” in that they are double-hinged (vs. single hinged for gull-wing door. "This allows the doors to be opened in small spaces like parking spots and garages. However, a big problem with gull wing doors is weight and this is likely a worse problem with the falcon doors that have an extra hinge mechanism."

Jonas said another issue to consider is that Tesla is attempting what might well be the largest door opening in the history of the auto industry, if they intend 3rd row occupants to "walk into" the car behind the 2nd row. "A door of that size and weight is going to be very hard to lift. Furthermore, having a hole of that size in the side of the car (that cuts deeply into the roof) could severely compromise structural rigidity impacting handling and safety," he said.

Further he said they are not even consider the practical challenges of gull wing doors, including how to protect occupants in rain/snow, rollover access, etc. "The engineering complexity and the practical challenges of wing-type doors would have probably driven other traditional OEMs to wonder if it was worth the effort. But Tesla is not a traditional auto company," he comments.

"In the 3Q conference call, the only reference to the falcon door was in the Q&A session in response to a question about Model X production volume in 2015. Elon Musk said: “With the falcon wing door and the second row of seats and sort of a few other things, we're adding some very new stuff to -- that's really not out there, that never really has existed in a way that was useful. So it's hard to say whether that -- what those numbers would be. Except I'm confident that the demand for the X will be very high once we're in production and again...we will be production-limited because it is really a phenomenal car.”

Jonas said they are prepared for a scenario where Tesla may face a choice on the doors: keep the current 'falcon' design or execute a redesign with a more traditional aperture format. He outlined his views on the choices below:

Choice A: Keep the falcon doors - In this scenario, Tesla may run the risk of needing to further delay the launch of the Model X beyond the 3Q horizon. Alternatively, Tesla may need to execute a slow ramp to ensure strong initial quality for defects that may occur in a frequency of 1 every 100 or so. In addition, Tesla may also need to integrate significant additional content (sensors, high-strength materials, seals, actuators) to ensure reliable and durable functionality of the doors. We caution, however, that it is possible that an inordinate delay in the launch of the Model X could have a knock-on effect in delaying the Model 3 which is expected as early as 2017.

Choice B: Ditch the doors. In this scenario, we have assumed that Tesla would have been working on a ‘plan B’ with conventional doors as a parallel development. If this is not the case, then Tesla would have to undergo a substantial redesign/re-engineering of the aluminum body from the B pillar back (including the roof structure) to make the transition.

"We don’t believe the falcon doors will be ditched without Tesla undergoing a significant effort to save them," Jonas said. "If door execution were to prove very challenging, we would expect Tesla to make every effort to preserve them with as much of the primary functionality as originally conceived, even at a potentially higher expense to the company or a higher end-price to the consumer. This may seem superficial, but we see the doors as an extremely important selling point for the Model X – one that we believe ranked very highly in the minds of Tesla engineers and consumers."

The firm maintained an Overweight rating price target of $320 on TSLA.

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $253.98 yesterday.



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