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TheStreet Open House

Texas Supersized: Update on Tesla's SUV-Minivan

Stocks in this article: TSLA F GM HMC TM NSANY

The Tesla Model X doesn't have a center tunnel at all, of course, but it's taller, so it needs to be a little easier to get in and out. As with the Volt, this has implications for how the sides of the car (windows and up) have to be more upright, and for crash testing.

You will now be sitting with your head closer to the B-pillar. Again, this will remind you more of the full-size military-grade Hummer, where the people in the front sit very close to the edges of the car.

These issues are eminently solvable. Volt's crash rating is outstanding and the Tesla Model X will be, too. But it requires significant re-engineering from the original Model X prototype.

This is what has been keeping Tesla busy here in the first half of 2013, and will finish in the second half of 2013 before full testing can commence with beta prototypes in early 2014.

The Model X will retain the radical double-hinged falcon doors and otherwise share most of what would be a 2.0 version of the Model S, entering production probably around the same time in 2015. This includes the optional front-drive electric motor, making both cars four-wheel drive. The same goes for the dashboard, center stack and other electronics upgrades.

Tesla's decision to upsize the Model X to something closer to a Chevrolet Suburban -- or for that matter Honda Odyssey minivan in terms of interior size -- shows how intelligent Tesla is in reading the market for electrified cars. Success in the market is often about going to where the competition isn't.

Many people who would otherwise contemplating buying a Chevy Volt or a Tesla Model S don't buy because they need a large SUV or minivan. Likewise, many people who have already purchased an electric car want to swap out the second car in their household but are waiting for a proper large SUV or minivan.

How do I know this? Because I ask people in the market for plug-in vehicles. Yes, there are some people interested in smaller cars such as the Nissan (NSANY) Leaf, Fiat 500 or Chevy Spark, but there are just as many people who want the biggest car on the market -- a large SUV or minivan.

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