Mar 1, 2019 7:38:54 AM
Leawood911:Drive it for a week and return it if you don’t like. 1000 miles.
An act of despear, I would say... How many producers of consumer articles do practice a similar distribution model? How high will be the percentage of test users be that will be keeping their test car? 50%? That would be very high percentage already, right?. I.e. this distribution model will probably kill Tesla on the cost side. If not, Apple, watch dealers, Porsche etc. could all close their retail outlets and offer a similar distribution model as Tesla
Last point: if Tesla cannot justify their sales outlets this hints to a problem with their products. If the products were emotionally attractive enough and if the sales staff was good enough and if the service in the sales outlets was good enough these "shops" should all generate more than they cost... Their distribution approach was wrong in the first place. Now they are risking even more...
MKSGR:Leawood911:Drive it for a week and return it if you don’t like. 1000 miles.
An act of despear, I would say... How many producers of consumer articles do practice a similar distribution model? How high will be the percentage of test users be that will be keeping their test car? 50%? That would be very high percentage already, right?. I.e. this distribution model will probably kill Tesla on the cost side. If not, Apple, watch dealers, Porsche etc. could all close their retail outlets and offer a similar distribution model as Tesla
Last point: if Tesla cannot justify their sales outlets this hints to a problem with their products. If the products were emotionally attractive enough and if the sales staff was good enough and if the service in the sales outlets was good enough these "shops" should all generate more than they cost... Their distribution approach was wrong in the first place. Now they are risking even more...
Biggest problem: they say you will get a refund if you don't like the car but we all know how difficult it was to get back downpayments in the past. Who would now pay them 50k US$ (or twice that much) and seriously expect a refund if he does not like the car? I mean, the company is nearly bankrupt...
Mar 1, 2019 8:16:39 AM
"Tesla drives down price for Model 3" (BBC News)
(1 March 2019)
Tesla has announced it will start selling a version of its Model 3 in the US at a price of $35,000 (£26,400), finally delivering on a promise it made more than two years ago.
To make the lower price "financially sustainable", the firm said it was shifting to an online-only sales model.
The electric car company announced the Model 3 car in 2016 as an alternative to its luxury offerings.
However, as recently as September, the average selling price exceeded $50,000.
Closing physical stores will allow the firm to cut costs by about 5%, savings it is using to reduce prices across its line-up of vehicles, chief executive Elon Musk said.
He declined to say how many people will lose their jobs as a result of the move but said making the change was necessary as Tesla works toward its bigger goal of making electric cars mainstream.
Mr Musk said making a car for the mass market was Tesla's long-term goal
'Insanely difficult'
Tesla has already announced thousands of job cuts since June, as it tries to balance its books after years of losses.
Strong sales of the Model 3 are critical to that effort.
More than 400,000 customers signed up for the car when it was first announced, but production issues, higher prices and other delays caused troubles following its launch.
Over the last year, the firm has shrunk the Model 3 battery, tweaked its manufacturing process, and reduced costs in other ways to hit the lower price, while still protecting profit margins.
The firm managed to scrape a profit in the final two quarters of 2018, but expects to post a loss for the first three months of this year, Mr Musk said.
"It has been insanely difficult," Mr Musk said referring to delivering on the $35,000 price promise.
Analysis: Dave Lee, BBC North America technology reporter, San Francisco
If you've ever wondered how those enormous Tesla stores in fancy shopping centres make money, well, they don't. At least, they don't make enough money for Tesla to keep them all open if it also wants to be able to afford to produce the $35,000 car its investors (and many customers) have been desperately waiting for since it was announced way back in March 2016.
The hope is that this is the car that brings a Tesla into the affordability zone for a whole new type of customer. It's still an incredibly expensive car for almost all of us, but for a luxury electric vehicle this is new ground. The Tesla brand, and its ramped up production capabilities, make it likely the cheap(er) Model 3 will turn out to be a popular proposition.
But Tesla's admission it would not, as it had previously said, turn a profit this quarter, has spooked investors. As has admitting it needs to lay off workers and scale back its bricks-and-mortar presence in order to make good on a long-held promise is of concern.
Coupled with his SEC woes lingering overhead, Mr Musk hasn't exactly lost his investors' confidence, but he hasn't exactly filled them with it, either.
Delivering a car for $35,000 - about the average cost of a new vehicle in the US - is a "potential game changer" for Tesla's growth, said Daniel Ives, a managing director at Wedbush Securities.
"While there are still questions that need to be answered around logistics and delivery ... we believe this strategic shift was the right move at the right time for Tesla," he wrote in a note.
The Model 3 electric car has a range of 220 miles, a top speed of 130 mph and 0-60mph acceleration of 5.6 seconds.
Tesla's website said cars ordered now would be ready for delivery in two to four weeks. However, customers with orders already in queue will get priority, which could delay some deliveries until June, Mr Musk said.
Mr Musk said he was not worried that a shift to online-only sales would put off customers.
The firm already has a much smaller physical presence in the US than most car companies, which work with dealerships. The firm said it would also provide full refunds for cars returned within seven days.
The lower-priced model is expected to be available for order in Europe and China in three to six months, he said.
Link: https://www.bbc.co.uk/news/business-47410636
__________
NB: Rennteam members with deposits on the Roadster are encouraged to request a refund while the company has adequate liquidity. Tesla is reducing prices, taking exceptional costs to close stores and layoff workers, repaying a $920m convertible with cash, starting a $2bn factory investment in China and expecting to report a net loss in Q1. There is also a risk that potential buyers in Europe and China will delay buying until the lower-priced model is available. The decision to bring forward the $35k option is a signal that demand for higher priced variants of the Model 3 has been filled already and the competition is ramping up...
...this could go one of two ways!
Mar 1, 2019 9:05:14 AM
CGX car nut:The regulatory issues of OTA patching in the auto industry: http://thedrive.com/tech/26679/why-havent-over-the-air-updates-taken-over-the-auto-industry. Anticipating a cacophony of retorts from the usual choir members.
My E63 S just had an automatic OTA update for the SOS emergency feature of the car, which didn't function properly. I got a letter Mercedes that this is going to happen, it was a mandated software update, initiated by the federal authority in Germany responsible for car safety and stuff like that.
RC (Germany) - Rennteam Editor Audi R8 V10 Plus (2016), Mercedes E63 S AMG Edition 1 (2018), Mercedes C63 S AMG Cab (2019), Range Rover Evoque Si4 Black Edition (2019)
Prices for Model S/X also dropped significantly; see [1]. In Germany a P100D with (almost) all options is now 110k€ compared to 150k€ a couple of month ago. I'm obviously missing something ..
[1] https://electrek.co/2019/03/01/tesla-model-s-model-x-prices-options/
schmoell:Prices for Model S/X also dropped significantly; see [1]. In Germany a P100D with (almost) all options is now 110k€ compared to 150k€ a couple of month ago. I'm obviously missing something ..
[1] https://electrek.co/2019/03/01/tesla-model-s-model-x-prices-options/
This will support resale values a lot
Mar 1, 2019 1:11:27 PM
RC:CGX car nut:The regulatory issues of OTA patching in the auto industry: http://thedrive.com/tech/26679/why-havent-over-the-air-updates-taken-over-the-auto-industry. Anticipating a cacophony of retorts from the usual choir members.
My E63 S just had an automatic OTA update for the SOS emergency feature of the car, which didn't function properly. I got a letter Mercedes that this is going to happen, it was a mandated software update, initiated by the federal authority in Germany responsible for car safety and stuff like that.
That is part of the telematics system and many similar systems have had OTA available for many, many years. What you have described is exactly what is discussed in that article.
MKSGR:schmoell:Prices for Model S/X also dropped significantly; see [1]. In Germany a P100D with (almost) all options is now 110k€ compared to 150k€ a couple of month ago. I'm obviously missing something ..
[1] https://electrek.co/2019/03/01/tesla-model-s-model-x-prices-options/
This will support resale values a lot
and - as a bonus - annoy exiting customers
To be honest Tesla don't really need a show room, people that wanted a Tesla hows exactly what they are in for, there is no need to have a salesman pitching the car.
What they need however is more service stations.
They hav already ran out of customers for the high spec Model 3, they have no choice but to start making the base model even at a loss, as to doing iso will mean an idle factory, and they do need the revenue for cashflow purposes.
Mar 1, 2019 4:24:03 PM
Whoopsy:To be honest Tesla don't really need a show room, people that wanted a Tesla hows exactly what they are in for, there is no need to have a salesman pitching the car.
What they need however is more service stations.
They hav already ran out of customers for the high spec Model 3, they have no choice but to start making the base model even at a loss, as to doing iso will mean an idle factory, and they do need the revenue for cashflow purposes.
Concur. Tesla originally started with a Build-to-Order or BTO business model but for some inexplicable reason moved away from it when it introduced the higher volume Model 3. Finished inventory carry costs consume working capital that should be deployed toward higher return activities of developing new products and processes.
About twenty years ago, Volkswagen held an enviable position in the U.S. Sales were so strong that virtually all units were sold before arriving on our shores. That’s ideal and follows a model that made Dell Computer highly successful. Dell used the BTO model and obtained negative working capital, meaning the business was self-funding as it grew. Dell was paid up front to deliver product in the future, and even later paid its vendors and suppliers.
Interestingly, Audi is using a hybrid sales model for its e-tron SUV in the States. Since the company is having problems determining demand and dealers don’t want to be saddled with expensive inventory that may not sell, customers order the EV either online or at the dealership and will pickup the vehicle, once built and shipped to the dealership.
Mar 1, 2019 6:39:20 PM
SciFrog:Delivery in March the Urus will have to wait.
Tesla just dropped most S and all X prices by $13k overnight. Porsche or Audi could NEVER do such a thing. Being able to adjust prices, options and offerings on the fly is a huge advantage.
A supplier forced to do this is close to bankruptcy, sorry. I would not buy a car that will be out of the market soon.
Me ..like spending Hours spec the car...goes to the dealer 10 Times...asking friends like me...spending nights togheter
young customers, dont like cars as we do....it is a thing and that is it...buy it on the net ..better....even better if it is a service....to pay for what you use.
Therefore i must admit tesla is doing right...for the younger ones...and i feel like a man from the 1800
993 c2
Mar 2, 2019 7:18:26 AM
It seems that, despite the price reductions, Tesla has quietly INCREASED the Model 3 deposit requirement to $2,500 presumably to help finance their net working capital (i.e. Inventory + Receivables - Payables) as this consumes liquidity during a period of slower revenues like Q1.
Also worth noting that a 2-4 week delivery timeframe for the $35k Model 3 suggests there is only 15,000-30,000 order book remaining in the US market.
Q1 is looking to be a very difficult quarter for Tesla...
Mar 2, 2019 11:43:22 AM
MKSGR:xander71:Guys tesla has nothing to do with car business as we know it...they are inventing all from scratch....the others are like old dinos.....
You could also say: they are a startup failing.
Compared to other auto makers? You have to be kidding. I’m a car guy and I hate dealerships. I would buy a Tesla now just to avoid a dealership. I really don’t get the haters. Head in the sand and all that. I get it but seriously. It is the best car company I see on the horizon. Just my humble O and I could be way wrong of course but some of the negative speculation is just hilarious. Is everyone short?
Mar 2, 2019 1:09:34 PM
Leawood911:MKSGR:xander71:Guys tesla has nothing to do with car business as we know it...they are inventing all from scratch....the others are like old dinos.....
You could also say: they are a startup failing.
Compared to other auto makers? You have to be kidding. I’m a car guy and I hate dealerships. I would buy a Tesla now just to avoid a dealership. I really don’t get the haters. Head in the sand and all that. I get it but seriously. It is the best car company I see on the horizon. Just my humble O and I could be way wrong of course but some of the negative speculation is just hilarious. Is everyone short?
My main reasons to visit the dealer: check out exterior colors, leather options, other details/options of the car. You can sit in the cars, walk around them. Then they offer after-sales service.
As (expensive) cars are always an emotional decision I doubt dealerships will vanish within the next 30 years. But I am not sure if Tesla is still in existence in 3 years. They are in the process of accelerated decay it seems. Closing all dealers, reducing prices by 10% overnight... Pure despair.
Mar 2, 2019 1:38:38 PM
Agree that the decision to close sales outlets, while bold, was a spontaneous decision as Tesla opened eleven new outlets last month. Closing physical locations reduces fixed costs however, every broken lease agreement will have certain breakup costs involved so cash will be expended over the next few quarters.
More disturbing is Musk’s behavior. He had changed his Twitter handle to Elon Musk days beforehand and filled it with silly meme postings. This is not acceptable when he is plotting the dismissal of hundreds if not thousands of employees. How would you feel if your boss basically mocked you as he was in the process of firing you?
The next issue is more pragmatic and it involves after-sales service. Relying on a virtual mobile service network is highly inefficient, both in terms of cost and time. Recall that Tesla owners can’t really use independent service locations as Tesla doesn’t sell parts to third-parties.
Musk is also being called out for violating Reg FD for fair disclosure since, on Thursday, the company held a closed-door conference call with select members of the press. Musk stated that the first quarter will probably not be profitable. Inside EVs, a website, estimates that February 2019 Model 3 sales were 5,750 units, less than the January total of 6,200 and definitely less than the 25,000 units sold in December 2018. This isn’t sustainable and off the production number Tweet by Musk a few weeks ago that caused the SEC to file a contempt of court charge. Musk continues to taunt regulators at the SEC, which is a dangerous strategy.
Finally, tragically, another Tesla driver died Thursday in Florida when his Model 3 collided with a semi-trailer. The car went under the trailer and then traveled for an additional half-mile before coming to rest in the median. This suggests the potential use of Autopilot, once again. Federal investigators had added this event to their files. https://www.cnbc.com/2019/03/02/us-safety-agencies-to-investigate-fatal-tesla-crash-in-florida.html
Mar 2, 2019 8:16:31 PM
MKSGR:Leawood911:MKSGR:xander71:Guys tesla has nothing to do with car business as we know it...they are inventing all from scratch....the others are like old dinos.....
You could also say: they are a startup failing.
Compared to other auto makers? You have to be kidding. I’m a car guy and I hate dealerships. I would buy a Tesla now just to avoid a dealership. I really don’t get the haters. Head in the sand and all that. I get it but seriously. It is the best car company I see on the horizon. Just my humble O and I could be way wrong of course but some of the negative speculation is just hilarious. Is everyone short?
My main reasons to visit the dealer: check out exterior colors, leather options, other details/options of the car. You can sit in the cars, walk around them. Then they offer after-sales service.
As (expensive) cars are always an emotional decision I doubt dealerships will vanish within the next 30 years. But I am not sure if Tesla is still in existence in 3 years. They are in the process of accelerated decay it seems. Closing all dealers, reducing prices by 10% overnight... Pure despair.
One minute order on the phone. They bring it to you for a one week 1000 mile test drive. What is it you want to do in the showroom again? Look at the color and leather for a few minutes? No leather. Sorry. It is just a new world. Less fixed costs. Some stores will remain open as mentioned. I don’t get the downside. They will have service locations but most service will come to you. Again - sounds all good to me. If I find a way to save money don’t assume I’m going broke and grasping at straws. Assume I am smart and will continue to do smart things. I have not see too many dumb Musk moves.
SciFrog:Price drop too good to pass on:
Delivery in March the Urus will have to wait.
Tesla just dropped most S and all X prices by $13k overnight. Porsche or Audi could NEVER do such a thing. Being able to adjust prices, options and offerings on the fly is a huge advantage.
Congrats
Awesome car and with the new prices it is hard to beat.
Mar 2, 2019 8:26:05 PM
Leawood911:MKSGR:Leawood911:MKSGR:xander71:Guys tesla has nothing to do with car business as we know it...they are inventing all from scratch....the others are like old dinos.....
You could also say: they are a startup failing.
Compared to other auto makers? You have to be kidding. I’m a car guy and I hate dealerships. I would buy a Tesla now just to avoid a dealership. I really don’t get the haters. Head in the sand and all that. I get it but seriously. It is the best car company I see on the horizon. Just my humble O and I could be way wrong of course but some of the negative speculation is just hilarious. Is everyone short?
My main reasons to visit the dealer: check out exterior colors, leather options, other details/options of the car. You can sit in the cars, walk around them. Then they offer after-sales service.
As (expensive) cars are always an emotional decision I doubt dealerships will vanish within the next 30 years. But I am not sure if Tesla is still in existence in 3 years. They are in the process of accelerated decay it seems. Closing all dealers, reducing prices by 10% overnight... Pure despair.
One minute order on the phone. They bring it to you for a one week 1000 mile test drive. What is it you want to do in the showroom again? Look at the color and leather for a few minutes? No leather. Sorry. It is just a new world..
It is not a new world but the end of Tesla. People who spend 100k or more on a car don't do it for logical reasons. They do it because of an emotional attachment to the object purchased. A high priced car will always be specced to customer demands...
Also, picking up your example, you pay, do a 1000 mile test drive and want to return the piece of junk. However, you find out they can no longer repay your 100k.... No thanks.
P.S.: Based on your logic, for example, Apple should have closed its stores many years ago. Same goes for Rolex, AP etc. The simple reason why Tesla does it now is that they are facing the risk of immediate bankruptcy. They have no choice.