I don't understand the discussion about cross-shopping S-class with Model S. There are probably very very few of those customers. At least in Europe I don't think anyone who was interested in an S-class ended up with a Tesla instead. Model S appeal to a completely different group of people coming from all sorts of type of cars and having different reasons for buying one. The "size class" where the Model S is positioned is of second priority for most buyers and it doesn't matter if it is sized as a S-class or an E-class. It happened to be quite good space for luggage and passengers as a great bonus of the skateboard designed drivetrain.

The Model S is not a luxury car in the sense that we used to define luxury with an S-class (fridge in the back seat, massage seats, possible to configure every little detail, dedicated nice feeling metallic buttons for everything, etc). The Model S in comparison is minimalistic and simple and very limited in terms of customization. A different type of experience and a different type of luxury. Different strokes for different folks just like some prefer minimalistic and hi-tech interiors while others prefer the opposite. There is no right or wrong, just different.

Simplicity should also not be underestimated. Many people probably appreciate the simple way of ordering a Tesla. Select color for interior and exterior, premium pack and autopilot and you're done. Compare that with ordering an Audi and all the combinations and packages. It's good being able to configure some stuff, but for the average car buyer I can imagine that it get's a bit too much. They just want a car and make sure they don't miss the necessary features.