Strange how you say it's a strategic reversal when it's almost all documented in the 12 year old published "master plan"...
How many companies even have the same corporate mission statement from 12 years ago? Let alone still implementing it.
Dang, the ones I've seen were more aspirational fantasyland to begin with.
Also you confuse the stock with the company... as if wall street is rational...
2
What a hatchet job of a "news" article. The author, editors, and management should be embarrassed. You are a tool of the established car industry, their financiers, and investors.
Electric cars will replace gas cars, and sooner than you think. I just saw a pair of photos of Broadway in NYC, one packed with horse drawn carriages & wagons (no cars), and the other, 10 years later all cars (no horses). Ten years from now gas guzzlers will be obsolete. Take you head out of the sand. I've lived through the adoption of TV, computers, and cell phones, and it all happened far faster than most folks imagined. I'll be selling my Toyota hybrid in a couple of years (hopefully before it's worthless) and buying a Tesla or equivalent.
5
I am one of those people who bought Tesla Model 3 with no test drive and never even sat in one before purchasing it online. It is a great car. The CEO is a bit nutty but has risked a lot of his own time and money creating a private company to help address one important aspect of the huge global warming problem.
I had purchased a Nissan LEAF 3 years before and knew what a good electric car should be like. I also knew by reviews that the Tesla was overall very well made and that a test drive would not tell me much; the interface being so much like a smartphone would be initially alien. And as opposed to some snarky comments from people who don't seem to have driven a Tesla car or ridden in one, no one I know who has driven one (or ridden in one) doesn't think it is a great car. I spent a fair amount more for the Tesla than I spent for any previous car but is worth it.
My sister just bought one, she loves it, and a friend who I shared an extended test drive with, loved it and will soon buy one. Tesla owners love sharing the experience and are effectively supplying "test drives".
Did Elon Musk insult the columnist or something? The whole thing reads like a rant. Love the Times otherwise.
7
By reading a lot of the posts by Tesla owners, it's obviously a great car. However, I would not consider one yet if it didn't have a small 2 cylinder gas powered "limp home" engine -- it would eliminate the "range anxiety" my friends who own Teslas suffer from. One of my friends frequently drives her Tesla from NYC to Boston, including during cold temperatures; she's never sure if she can make it in the cold as the batteries don't keep their charge as well. She ends up turning off the heater (not sure if the Tesla brain does it for her). At one point she jokingly said she read the entire Sunday times while plugged in at the Milford CT Plaza fuel station on I-95.
Other manufacturers are coming out soon with this hybrid concept which would work for me. Another issue is that if you only have on-street parking, you've got a real problem.
Tesla is not quite there yet but I hope they succeed as they were the ones that made the car companies scramble to follow suit. And they are coming, late to the game, but they have the infrastructure to service and sell their wares.
Other than the clean drivetrain and batteries (very poisonous so hard to dispose of other than shooting them off into space in a SpaceX rocket), all cars are the same beast. The few problems I've had with my very reliable various Audis and BMWs have been with software glitches, pothole damage, a power window failure. As to service, it's only every 10,000 miles, and I just get a loaner. Not a big deal.
4
Until charging times and many thousands more high speed charging stations are built, electric cars will remain a small blip on auto sales charts.
There are way too many drivers that need their vehicle to be versatile enough for longer trips, not to mention the millions of apartment and condo dwellers who cannot charge at home.
All the headlines and news conferences announcing the latest electric model are simply click bait designed to attract readers, or strategies to make car companies appear to be "green" or forward-thinking.
3
The Tesla-bots are out in force
Here is what a Tesla CAN NOT DO
(1) It loses 33-50% of battery capacity in cold weather. That 280 miles range Tesla X is now 140-185 miles. On top of that it, loses the equivalent of 25 miles of range for every hour of running the heat. (Info from Tesla owner's forum)
We are in the north - it was 9 degrees after dark yesterday
(2) Every 3 months I MUST do a 580ish mile round trip for medical care. Driving time (including fuel stops) in my little wagon is around 4 1/2 - 4 3/4 hours each way or 9 to 9 1/2 hours total. Add in 2 - 2 1/2 hours for the appointment and it is a 12++ hour day.
According to TESLA'S trip planner, I would spend 2 1/2 -3 hours MORE time because of 5+ stops to charge the blasted thing.
That average 12 hour day just turned into 14 1/2 -15 1/2 hours
No way can we do that. (And I am not staying overnight with cats at home and the dogs with me who go for the ride so I don't have to hire a sitter at $175 a day (7 critters x $25)
(3) Its range is too short in the winter. If it drops to 140 miles - 25 miles per hour for heat, then when I have to go to 3rd village down the shore, I many not get back. It is 45 miles each way but takes 1 hour+ each way. 90 miles + 50 for the heat (2 hours) = 140 miles & now I am risking ending up sitting in the road in the winter
Get back to me when it has the cargo space of my little wagon (68 cu ft with the seat down) & can go 600 miles with only 20-30 minutes of recharging time.
2
And what happens when States REALLY wake up to the lack of Road Fuel Taxes being "avoided" by a fleet of electric vehicles?
Sure, some States have enacted some measures to collect road revenue, but nothing NEAR the true cost...
Why are you interviewing a guy who drives a $9K car and wouldn’t even consider the lowest cost Tesla on price alone? Completely irrelevant.
4
Tesla won’t go anywhere. Elon Musk might, though.
I credit Musk for making electric cars cool and creating demand for them. He is partly responsible for other manufacturers rushing to make them. He has also driven prices lower for cars and batteries ( Tesla’s Powerwall).
However, he treats his employees badly ( not just the multiple layoffs ). Who in his right mind would want to work for his company. Given Tesla’s many problems, it’s not clear that he makes a good CEO. Maybe he should stick to being a visionary.
55
@A. Raymond Wrong. Tesla is consistently rated as one of the best employers. And they are now the largest manufacturing employer in California. So if it's so bad, why do 35,000 people work for them across the world?
6
Buy a car without a test drive? No, thank you.
15
19 hours in I feel lucky to be able to comment but also unable to study article prior to for fear it shall be shut in seconds. I have however been fighting Mr. Musk since he created a fake space in the cloud to destroy our planet by marketing car scale human mobility with insignificant changes in powertrain at best.
accordingly what I should of been heard then interjecting now depends on the nyt to approve but here goes:
Human presence is expensive. Increasingly less essential the way we get around cities should reflect technology but has yet to for most of us so remains to routine and obsoletely homicidally performed. To drive any car is to kill other people, there children, by blunt force trauma not just however also obliviously toxic dust smoke and of course 'geoengineering.'
Nano solutions do it better. What failed or not elsewhere in car era if any need not be feared. If Musk can be put out of business a viral saleable ACTUAL FEASABLE solution disruptor should be able to modernise human mobility by incorporating customer forums not "silently moderated" from getgo.
All this worry over the Fed tax credit being reduced..........
The Tax Credit was a Freebie-For-The-Top-12% in the US
It is worth zero or very little to those in the middle income or wages
That $7500 tax credit is NOT refundable.
It is only worth $7500 to the buyer IF the buyers ( a couple) have at least $66,000 in TAXABLE income and roughly about $93,000 in minimum gross income (2019 tax tables)
Gross household income - $93,000 = TOP 12% of all US households
Median household income = $61000+/-
For an individual single taxpayer, to get the entire credit would take a taxable income of $53000 and roughly about a $65,500 gross income.
Gross income for an individual - $65,500 = TOP 15% of all workers
Median worker in the US only makes $31,561.
https://www.ssa.gov/oact/cola/central.html
Median - 50% make more, 50% make less is FAR more accurate than "average".
So the rest of us are subsidizing toys for the top 12%
If a company's products have to be subsidized like that, it will never reach buyers in the middle.
For the rest of us, $35000 is pushing into luxury car range particularly for a DINKY little SEDAN.
$100000 for Tesla's X model (crossover-SUV) which would actually hold the dogs, the kids and 'stuff' is pure complete FANTASY LAND
It has to get the Tesla X down to the price range of the Rav 4, Honda CRV before it is a mass market vehicle------------ and that means dropping from $100,000 down to $26-28,000ish or less.
Yeah......right......
4
Musk is showing all the signs of extreme over-stress. It is obviously having an adverse impact on his judgment. Lerch here, lerch there. First Solar City ran into major problems, so he merges it with Tesla. Now Tesla has quality problems (see recent review by Consumers Report). Who knows what is happening with Space X. Smart guy who is beginning to show overt signs of being in over his intelligent head, and is suffering mightily for it. Really too bad.
As I have maintained all along, Elon Musk is either delusional or an outright charlatan. Clearly, either way he cannot run a company. An automobile company does not announce a car model and then try to figure out how to make it.
Whoever buys his cars or hype has been drinking the kool aid. Stop and get a grip. Oh, and read Consumer Reports. Now, answer this: If you have one of his faulty cars and there are no dealerships, where do you go for redress, online? I can already see the massive telephone answering tree you will have to go through to get a human on the line-one who can help you.
1
This article belongs in the Op-Ed section, since its content is so remarkably out of touch with the actual reality surrounding Tesla. Tesla is presenting selling cars at such a high rate that if it continues will overtake many major car manufacturers in a matter of years. The author's bias is not worthy of such a well respected outlet like the NY Times. Do I own a Tesla? No I don't. But I probably will.
6
Tesla could lead the industry and sharply increase sales by opening the door to Cars as Power Plants!
Future electric vehicles, as well as those with combustion engines, can be modified to become mobile power plants.
Cars, trucks & buses, when parked over a plate can transfer energy without physical contact. The system was developed by an MIT spin out venture.
Micro-Turbines have been prototyped and a Chinese firm is planning the largest micro-turbine factory in the world. They are designed to end range anxiety in electric vehicles.
They could be converted to run on water using hard-to-believe breakthrough technology. The water can be extracted from the air ending the need to refuel.
Existing vehicles with combustion engines can be cheaply converted using the same surprising technology. Learn more at MOVING BEYOND OIL at aesopinstitute.org
Vehicles so equipped will be able to sell power to utilities, or power buildings, when parked over transfer plates. No need for plugs or cables. This points the way to replacing fossil fuels much more rapidly.
A 24/7 program to implement such important new science and technology is a way for Tesla to open a new market that can grow exponentially.
Perhaps leading to cars that pay for themselves as investments.
The Black Swan is a book by Nassim Taleb. These are positive Black Swan inventions: Highly improbable - with huge implications. Black Swan innovations will emerge in spite of Trolls and a legion of skeptics.
You do realize that there is this thing called amazon, and that more and more people are buying stuff online?
And that auto dealers that skim money off every deal for no added value will be going the way of SEARS.
My experience with Tesla buying and service as been a 1000x better than any car dealer.
I suggest the author actually research actual the cars and the actual car buyers instead of cherry picking facts and obviously just making stuff up to fit his click bait headline.
Because what I see, in reality, is Tesla not retreating but moving forward into the obvious future of online sales for cars. And getting there, as usual, before anyone else does, ready for the massive and optimized business it produces.
Please Times, this author does a disservice to your paper. Every article he writes is clueless to reality and one sided towards Tesla bashing.
Every time Tesla succeeds, your readers are in the dark and surprised.
5
@Jane
BLah blah blah.........and totally unaware of WHY anyone with more brains than a rock would want to see some very expensive thing that will cost more than their mortgage per month in person
THen add in trying it to see how the vehicle fits. Yes fits.
I'm 5'1 1/2" .
I can NOT reach the center panel controls (heat,,AC etc) on the newer Subaru Outbacks without leaning sideways.
I can NOT see well over the dashboard in the newer Prius wagon because of a weird bx shape thing on top of the dashboard
ANd how do I know this? Because I could go to the sales showroom and sit in the car and check.
Anyone who thinks I would ever spend even $30000 on a vehicle without first being able to sit in is NUTS!!
It is one thing to return a sweater that doesn't fit - relatively inexpensive as a share of income
It is another to return an item that cost 61% (SIXTY ONE!!!! percent) of the median household income.
YOu will have other sweaters to wear. Most won't have another car to drive when the online Tesla is returned
4
There is an inaccurate statement in this article. The article includes the statement that "so none of [the Model 3] cars will be available for a total of less than $30,000." That's not true. Depending upon the tax credits offered at the state level, some cars can be purchased for less than $30,000. In Colorado, for example, there is a $5,000 tax credit which would bring the cost of purchasing a base-level car below $30,000.
1
@Harry McIntosh
Those tax credits are NON-REFUNDABLE
That means you to owe that $5000 in state tax to get the $5000 credit
In my state, we would have to have $154,942 of TAXABLE income (and some income is not taxed in most states - Soc Sec benefits, state & muni bond income etc)
$154,942 of income subject to tax
$5000 divided by tax rate plus or standard $40000 deduction...
With a $154,942 taxable income. that $5000 credit is a GIVE AWAY to the very very well-to-do
2
~ 63million people voted for Donald trump in 2016 election and his thus his policies. Try selling them an EV and see the response you’ll get
This report is Truly Saddening for me.
Tesla was for a good period the CULMINATION OF MANY DREAMS with seemingly unending prospects for making those dreams become reality, in my lifetime.
What really went wrong? Is Tesla just staggered or sinking down for the count?
I have no idea.
#1. I do know that the actions of Mr. Musk soured my dream of purchasing only a Tesla and I know that his actions have shown a great lack of personal restraint when subjected to questions of his judgmental statements or retaliatory actions.
#2. If there are readers here old enough to remember Marlon Brando in the Movie, The Formula, they know the power of bargaining of big oil. Big oil had some pretending to be Tesla friends but are known to be snakes.
#3. Open fights in public with the SEC is a no-win possible situation for any participants.
#4. Many rational people really shrug back hard at the mention of open drug consumption, we head hard for the door, having heard of all the illicit stuff now flooding, from super potent MJ to Flakker. I don't want to trust my safety to people who may be on a drug high.
I close with, I would LOVE to see maturity walk through the corporate doors of Tesla to give us products that would help save our planets for AT LEAST one more generation. More gas hogs/guzzlers truly are not the answer. Reporters tearing the products and company down doesn't help either as it was a great product. Is reporting biased by reasons other than those visible? Egos? I wonder?
1
Yet another NYT hit piece on Tesla. No mention of the fact that the Model 3 is the best selling luxury car in the US. No mention of the fact that the Chinese Gigafactory is ahead of schedule. No mention of delays in Tesla's competitors' plans to "destroy Tesla". No mention of the prospects for sales outside the US. And no mention of the fact that 92 percent of Model 3 purchasers (almost all of whom bought their cars without a test drive) would buy another one
6
"Now Tesla is in retreat."
I'm curious as to why this article has decided to put such a negative spin on this news.
Is Tesla really in retreat? It's finally achieved what it set to achieve when it started. (Here's the "master plan" written 12 years ago now:
1. Create a low volume car, which would necessarily be expensive
2. Use that money to develop a medium volume car at a lower price
3. Use that money to create an affordable, high volume car
The definition of the "affordable, high-volume car" was set at $35,000 being produced at a rate of 5000 per week and that's what been finally announced.
Cause for celebration and congratulations all round, you would think?
No, apparently not, according to any of your industry experts that you quoted. For example, this one:
“They are not going to grow faster by being online only than by online plus stores,” he said. “It’s a logical impossibility.”
Really? If closing your brick and mortar stores means that it reduces the cost of the car, then more people can afford to buy it, which will increase sales. That's Economics 101 and the very opposite of "a logical impossibility."
Meantime, the Tesla Model 3 was the top selling luxury car in the US in 2018, which tends to show that sales and marketing is not anything that Tesla needs to be unduly worried by. (https://www.forbes.com/sites/niallmccarthy/2019/02/08/the-tesla-model-3-was-the-best-selling-luxury-car-in-america-last-year-infographic/#7232f1d77b07)
5
Maybe the board should spend its last few dollars on therapy for Mr. Musk. This public train - er, car- wreck taking place in slow motion must be agonizing for those who believed the hype. It could just be a marketing ploy (Americans love an underdog, esp a scrappy one). Appearing to be on the brink of ruin will make the "comeback" that much more glorious. If that's not the explanation, then I am at a loss to understand how this lunatic has been allowed to burn through billions of dollars with only this situation to show for it.
1
This almost feels like another hit piece. I wish NYT can be more equitable in reporting, Tesla has problems, but Car manufacturing is never easy. Every car companies go through problems. We don't hear the hit piece on Subaru when they recall 0.4 million vehicles due to potentially dangerous Valve issues (my BRZ is affected and Subaru won't be able to fix for a month and they have given me a rental in lieu.)
Other readers have pointed out the positives of Tesla. Tesla directly or indirectly created 50,000 jobs. They could have chosen to manufacture in China, but they chose USA. Elon Musk is a troubled genius, but he has an outsized impact and let's support and foster it instead of letting other countries become the leader in Auto, Space, and Solar.
2
Musk neither invented the electric car nor founded Tesla. However great of a salesman he may be he is slowly going to bring this company down by doing crazy things
1
Musk should have taken a page from Amazon’s playbook and asked each shopping mall to give him free rent and to pay his store employees in return for the huge draw as well as prestige a Tesla store brings to the mall.
@NorthernVirginia
You are seriously overestimating the draw of a Tesla store. Yes, people like to go in them to see the cars, but no one actually goes to the mall for that sole purpose, other than people actually looking to buy. Which on a daily visitor basis would be inconsequential. The King of Prussia Mall has a Tesla store. They also have an Hermes store that sells handbags for more than the cost of a Model 3. You think that mall needs to give Tesla free rent?
I wish Tesla the best, but they are hitting the point where all their fanatics now have a Tesla and the rest of the population is not jumping in the way they thought they would. Things like charging for paint color and interior color do not go over well at this price point. It comes off as price gouging, which is exactly what it is.
It literally boggles the mind that there a are so many Americans who are routing for Tesla to fail. This is a world leading company that is homegrown is Silicon Valley!!! America finally has produced the best car on the planet and people want to throw that away?? Every single person in this country should be clamoring for this car.
4
Elon Musk lost me when he spent how many tens of millions of dollars and sent how many tons of CO2 into the atmosphere to launch a sports car with a maniquin at the sun. There are real problems on this earth that need resources. So long and good riddance.
I am a YUGE time admirer of Elon.
As a frustrated aerospace engineer - i admire that he achieved what talented engineers could only dream of achieving with SpaceX.
The Dragon is about to come home after putting on a spectacular Stanley Kubrick style videos of its approach to Space Station.
With Ripleys believe it or not - all it missed was HAL.
So, Elon knows how to defy gravity.
With Tesla, unfortunately, market forces gravity have doubled down and are pulling him down fast.
I think he is on hisway to be another DeLorean - whatever he thinks insanely about his car.
He has a prayer of a chance only if the latest Democrat horror show called Green New Deal passes.
Elon's Tesla surviving beyond 2020 has the same probability as this new deal becoming a law.
Elon, stick to Space X
America needs you.
I heard Amazon is doing only online sales!
It will never work!
2
The desirability for Tesla is extreme, as is the satisfaction of driving one. Nothing else comes close, including several much more expensive cars I have owned in the past. Test drives are easy, whether through the company or friends. Buying a car online without a plethora of stupid "options" for a fixed price and without ever seeing a salesman was one of the best parts of the entire acquisition process. CT's dealer cronies blocked direct sales but they are already in the rearview mirror of history.
2
What if you made a car affordable and nobody came?
In 2018, >30% of new car sales were via leases. Tesla does not, will not, nor cannot offer lease programs that are affordable for the Model 3. The unknown, and slipping, resale value of an M3 makes determining a residual value impossibly risky to an outside lender, and Tesla does not have the financial resources to do the leasing themself.
The rush to make the M3 APPEAR affordable without the financing means to actually MAKE it affordable to the targeted market seems likely to doom this effort and may go down as Elon’s most spectacular disconnect from reality.
2
Good article, which raises many questions. Should Tesla partner or merge with a big auto company? Ford could certainly benefit from having a good line of electric cars, and has dealerships across the country with nothing but SUV's and trucks for sale. I hope Tesla makes it, but I would never buy a car I couldn't test drive and have serviced. As a happy new Nissan Leaf owner, I am learning that electric cars don't need much service. Tesla has to be more careful, because it is getting a reputation now here for cavalier and careless management. Do they have the resources to go it alone, while shooting cash up into outer space, or is space X about to become profitalbe?
2
"Mr. Musk announced last week that Tesla was accepting orders for a Model 3 priced at $35,000 — $8,000 less than the current basic model. But the federal tax credit on Tesla cars has been scaled back, so none of the cars will be available for a total of less than $30,000, as he once heralded."
This is not correct. Federal plus state tax incentives can still get the price below $30,000.
1
“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.” The demand for anything is insanely high....if the price is low enough. A lot of Elon's ideas run on snake oil. The idea of solving urban traffic congestion with tunnels leads that parade.
1
More doomsday reporting about Tesla just plays into the hands of greedy stock traders and Big Oil, which has pretty much destroyed the environment; and traditional carmakers, who have dragged their feet on producing EVs. I bought my Tesla online in April 2015 easy peasy. No car on the market today can match the effortless driving and the serenity of a Model S in our noisy, contentious world. Tesla showrooms with service centers and SuperChargers like the one I use in Paramus, N.J., won’t be closed. So, what’s the big deal?
2
I had to exchange my Tesla lease for new one.
Never once thought of going to a store.
Did it all online and was done.
3
Interestingly, the market for Tesla seems to be comprised of the same economic stratum of people who are frequent flyers (i.e., using up massive amounts of jet fuel to fly off to meetings, conferences and vacations).
1
Their policy does clearly state that, if you buy without a test drive, you can return the car within one month or 1000 miles, whichever comes first.
1
I can't recall a company other than Tesla that's had so many stories written about its impending demise amidst an exponential increase in production while still cutting manpower by 7%. These two things happening in tandem are considered "good" news...usually lauding the CEO in veneration and praise.
4
@ed e
Remember that little company that was never going to be profitable according to the business analysts? It is called Amazon.
3
I have tried in vane to buy a Tesla since October. Often there were empty showrooms and sales staff turned over as fast as every two weeks. At year end they desperately tried to sell off cars that had been rejected by the original buyers.
Also, remember that the FBI announced on October 25th that it was investigating fraudulent sales reporting practices.
1
Demand for electric cars without government rebates just isn't there. They are expensive, those batteries.
2
Asked about sales trends, a Tesla spokesman pointed to a statement by Mr. Musk in his conference call about first-quarter earnings: “The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.”
Which means the demand isn't there. Macro Econ 101.
9
I wonder if Musk has not become a real liability to the brand, and that it could show up in sales. He’s an extraordinarily visible figure and quite frightening actually. I would no doubt buy a Tesla because they’re so cool to drive. But I would also be super worried about the future of the company , and might delay my decision till I’m sure they’re gonna maintain the car in the long run. Today, if Musk stays at the helm, I think he’s gonna ruin the company (at some point you reach the limits of your talent: he’s a visionary and a great R&D guy; I doubt he can be the CEO of a big company)
4
Really don’t understand the NYT. You frequently and properly warn of the dangers of climate inaction yet continually (and I mean continually) bash Tesla. Of course there are problems, they are accomplishing what every major media and auto publication said was impossible while creating tens of thousands of American jobs. Name another large corporation that has done more to combat climate pollution than Tesla.
I have been happily driving off of solar panels for more than 6 years. The 3 Teslas we have owned during that time have been the most trouble free, not to mention delightful, cars I have owned. Our Model 3 is 13 months old and has not been back to the service center once.
You can be lucky with a car once, but three times in a row?
Despite fierce petroleum fueled opposition and an overworked and overextended Musk, the battle has been won in a remarkably short time. Although the legacy car makers are still dragging their feet to protect their investment in dirty cars, they know electric is the future. Unfortunately it will be five years before they create the charging infrastructure that Tesla has in place today.
10
@b.noing
Do you charge batteries of your Teslas with your solar panels? How much acres of panels do you have and how much money you spent?
Or your grid power is already completely free from fossil fuel?
America is out of my imgination...
1
My immediate reaction is but-of-course. Retail centers aren't where they are selling cars, and the division expense must be huge. That goes for the charging network as well.. a division that is necessary. This move is no doubt about getting lean, not a sign of changing strategy nor of troubled times, simply business evolution beyond the wild demands of visionary founders to prudent tactics of bean counters.
This article's portrayal of Tesla deliveries and service is not at all what I have experienced in almost two years of owning a model S. It is also not indicative of the experience of anyone else I know who owns a Tesla. My S is the best car I have ever had. It makes every other car I have ever owned or driven feel like a dinosaur. Unlike my top of the line Honda Pilot, which I purchased two months before the S, my Tesla keeps getting better. If I were going to buy another vehicle today, it would be a Tesla... and I would be happy to do it online. Keep in mind that if you order online, without a test drive, you have 7 days to return the car. Most of what I have purchased in the last 5 years, was purchased online without a test drive. Why should cars be any different?
9
According to a Detroit based auto consulting company, Tesla technology is way way WAY ahead of the big three.
It's not even close. I applaud Tesla for their green tech and want to see them succeed.
I also love the elimination of dealerships. This is nothing more than another layer of parasitic revenue generation draining consumer wallets. Anything that helps break that monopolistic and inefficient buying reality is good news to me, and so many more.
But here's the downside. Tesla is heavily hands on in it's actual assembly process. It is inefficient and therefore expensive on that front.
In addition, it fights tooth and nail the fairness doctrine as it applies to car repair (making tools and info, and parts available to third parties).
Lastly, while it's model cuts out dealers, it's long term plan remains to leverage that model to reduce it's own costs and headaches. And that means there will be no pressure long term on state legislatures to revise the protectionism that prevents getting rid of the weasel system of car dealerships.
I think that at some point Tesla will go into receivership, which is a shame. The good news is that the tech advances will be picked up by someone - perhaps by a reorg'd Tesla.
Electric cars are here to stay. Green energy is here to stay. Coal production continues to decline, and as battery tech makes the bounds it has in the last decade, so will fossil fuels.
Net net, Tesla will have been a good ride, despite all the warts.
34
@Jack Tesla's electric motor technology is the best. They can't build a car - except by hand. The inner front fender of the Model 3 comprises 3 pieces, tack-welded together. A mature auto manufacturer would stamp it from a single piece. It's been a shell game since the introduction of the model 3. It's probably too late, but some adult supervision is needed in the C Suite.
13
The downside is - Tesla can’t hang on to any VPs in any of its functional areas. Musk thinks he can run every functional area at Tesla and define the company strategy by himself? Impossible. Musk thinks potential buyers of expensive high performance cars don’t want to first test drive it? They do.
11
@Jack
You are forgetting, Larry Ellison is heavily invested and on the Board of Tesla. He can and will bail them out in a heartbeat.
6
Asked about sales trends, a Tesla spokesman pointed to a statement by Mr. Musk in his conference call about first-quarter earnings: “The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.”
This makes no sense and should be a huge red flag for anyone buying Tesla shares. Lots of things - Ferraris, mansions, yachts - are 'extremely popular' but unaffordable for most buyers. The difference is Ferrari doesn't claim that it's building cars for everyone, just the consumers who can and will pay for them. I'm also highly skeptical of this claim generally. Lots of Americans buy cars that cost 35k (whether they should is a different question) - it just sounds like Tesla hasn't built a car that enough of them want to buy.
50
@Andrew
One of the problems, and the reasons why purchasers do not have the money, is that Tesla does not offer a lease program for the Model 3. Even and affordable car becomes unaffordable when >50% of the buyer market (leases and loans) has no access to the same credit available on mainstream brands.
4
@Andrew
Amazingly, a share of TSLA ($276) costs a little more than twice what a share of Ferrari (ticker symbol RACE, price $130), costs.
Tesla is cripplingly overpriced, inviting a short attack.
2
Whether they sell cars online or at stores, they will still need service centers to do maintenance on the vehicles. Have they tried franchises; the franchisee may come up with ways to sell the car on their own. And even if the preferred way is to sell online, one demonstrator may increase sales. Assuming they recouped a lot of their capital investment last year, one would expect the price to come down.
What makes hybrids and electric vehicles so expensive compared to electric golf carts and pallet jacks? A hybrid is a combination of a riding lawnmower and golf cart, with a computer. All of those together is about $5,000. Where does the added expense come from?
A carbon tax recycled to hybrids/electrics as buyer incentives, with the highest subsidy based on a combination of highest mpg and lowest price, would let the market--competition--bring the price down. Government programs don't have to be boondoggles to support high prices.
5
@loveman0
Still expanding service capacity especially their Tesla Ranger program.
More like concierge auto repair.
I don’t know a single Tesla owner who is completely happy with their vehicle, and not one who has purchased a second one. Good concept, bad delivery. Needs to be acquired by an auto manufacturer that knows what it is doing.
22
@Muelling Things Over
I am completely happy with both of my Teslas. I've got a Model S and a Model 3. Both are fantastic. And I was licensed in the early 1970s and have owned many, many cars. The Teslas are the best by far. So much so, that I actually get pleasure from driving them day after day. That's something I never experienced with any other car. Why? Because they are so smooth, quiet, and powerful.
11
@Muelling Things Over
I am completely happy with my Model 3. It is the best vehicle I've ever owned - by far. Previous survey found 91% of Tesla owners report they would buy another Tesla.
8
@Muelling Things Over I’m completely happy with my 2015 Model S, especially when you compare it to the other cars we’ve owned, and will be buying a Model 3 in 2020 to replace our 201O Toyota Prius, which is a good car plagued by numerous service campaigns and a couple of recalls.
4
I've owned a Tesla Model 3 for 6 months now, and I LOVE it. Tesla has obsoleted gas-powered cars, and obsoleted the inherently corrupt car-dealer model. That's a fantastic achievement! No other car manufacturer can do this.
So, I'll be buying a Telsa Model Y later this year for the wife.
Tesla closing stores means that the result of its store experiment is this: people don't need stores. There are other ways of experiencing a Tesla before buying, including driving it.
Did the author notice how successful Amazon has been? For the same reason, people don't need brick-and-mortar stores anymore.
19
@Astrochimp
"So, I'll be buying a Telsa Model Y later this year for the wife."
It's sort of like me buying premium Ahi tuna to feed "the" cats.
5
@Astrochimp
An auto purchase is the second most expensive investment next to purchasing a home. Tesla autos are also quite different than combustion autos in terms of operating. Tesla doesn’t advertise, no TV, no broadcast, no print, no auto shows, etc. The stores were thought necessary for awareness and customer education.
Who is going to purchase an auto that is unseen - yes there are online apps that allow to comparison shop and purchase, but all the choices can be previously seen at dealer showrooms.
Not incouraged by this Musk descision without discussing within the larger organization. Marketing is not an option, it’s a requirement. The strategy of “built it and they will come” only worked for a movie about a baseball field.
6
@Astrochimp. “obsoleted the inherently corrupt car-dealer model.”. I hope that’s true. Absolutely the worst part of buying a newer car is dealing with the cheats and liars at the dealerships.
6
About 5 years ago, Sears was trucking along pretty happily. Then a bearish photo expose made the press circuit. Next thing, the stores were re-inventing themselves to appease investors. Wall street is just a gambling house. Traders are not exactly business gurus, and even the business gurus in the big consulting houses have to peddle advice their customer will pay for. Nobody at Tesla is going to pay McKinsey to tell them to keep going the way they are. Closing the dealerships is a smart move. What Tesla needs to worry about is whether demand will fall off when Tesla's are no longer novel. Not long ago used to see one about every month driving around (the same one). Now I see a different one at least once a day.
As an economist, think about all the layers of inefficiency that happen because of dealerships. First, there is the cost of wharehousing on prime "auto-mile" turf, where the villiage selectmen make a point to grease their palms with everything from the electricity and water bill, to the rent and insurance, to the payroll of the workers. Do you really want to directly employ hundreds of salemen -- and pay their workers comp, FICA, etc. etc., or would you rather have a couple of "fix it" guys who provide post sale support to a multi-state territory? The only reason Tesla wanted dealerships was to break into states where the law prevented direct sales of cars (and to stay in states that were threatening to enact such laws).
10
@Gene Buying a car is the first investment, followed by regular maintenance. Our Toyota hybrid can be booked for service 7 days/week at the local Toyota dealer/service center (frequently the same day service). Most people rely on their cars for commuting and need local service. Teslas look great but most can't afford a car they need to transport a distance for service.
4
@M Perez
Interesting comment which has little reference to reality when I just waved goodbye to my service tech as he pulled out of my driveway after adjusting a switch and the front hood (which I thought worked perfectly.) oh,and my appointment was 5 days after I asked for service.
Tesla comments have become like political comments on fox: little basis in facts.
4
Dealers should be illegal.
They monopolize an area and then skim money off each deal for no added value.
The amount of money we all have given to dealers for absolutely nothing is staggering.
And then the services, ug, total inflated prices for suspect “service”
It’s been so nice not having to deal with that rip off.
I loved just buying online and then picking up the car with no waiting while the sales guy talks to the finance guy about the “deal” they can get you.
Tesla’s model is the future. Surprised the times reporter see that obvious future.
4
A true cynic might say Tesla was designed to take maximum advantage of the giant EV subsidy. Now that that is halved and winding down as rivals emerge, the company is merely hoping to reach break even with little hope of doing much better.
An optimist might say it contributed to the big car companies getting in the game sooner, and thus did some good for the planet in addition to its shareholders.
Either way, Tesla now seems like a Whole Foods on wheels - a brand that sold a socially-conscious ideal through a pricey product that, outside of a niche market, cannot compete with larger rivals that make a dedicated effort to imitate it with part of their product line. Too bad that, unlike with Whole Foods, Jeff Bezos isn't looking for a way to do a test run for getting into Tesla's industry.
3
We purchased a Model 3 in October of last year. So far it is UNQUESTIONABLY the best vehicle we have ever owned. We bought the mid-range version (264 miles) and haven't yet come even close to making a dent in that capacity in our daily driving, and the performance is incredible. We've used the supercharger stations several times on longer road trips and they are an absolute breeze.
People always talk about range anxiety, but the vast majority of the population will only need full range utilization an extremely small percentage of driving days (and when they do they can supercharge).
What I've learned in my ownership is that the value of leaving my garage every morning with a full battery (the equivalent of a full tank of gas) is way more beneficial to me than the cost of the rare times I need to figure a supercharge stop into a long distance road trip. No more leaving the house in the morning on my way to a meeting, running late, realizing that my gas tank is on E and that I need to scramble to find a gas station....
I honestly think the online only approach is going to work. I've never been more satisfied with a vehicle purchase and I'm not the only one who feels this way (earlier reports that 91% of Tesla owners would buy another Tesla - by far the highest in the auto industry). Tesla has hit it out of the park with the Model 3 product. The product will continue to speak for itself.
2
I think the government should extend EV subsidies indefinitely, even if they are reduced somewhat in value. Purchasers of such cars need to be assured that spare parts and batteries will be available in the future.
2
No. Not unless the gov is taking a share of the profits.
1
@Mons
Yes, I see your point... electric vehicle sales should be incentivized with a carbon tax.
1
The question Tesla faces is not whether they have a great product -I think they do. The question is can the company be profitable selling the Model 3 for $35K. This will depend on how well Telsa call pull off their new sales strategy, manage their manufacturing costs and provide good post-purchase service. Competition from other manufacturers is emerging as an issue as well. Jaguar, Audi, Kia, Hyundai and even Chevrolet have good electric vehicles on the market, and Porsche's is coming. Can Tesla compete? They have some challenges, but I would bet they can pull it off.
What does a used Tesla go for? Is there even a market for used Teslas yet?
1
@marek pyka The used market is pretty sketchy. The Tesla is basically 99% computer and 1% car. So all the support is contractual "tech support" type stuff. There are plenty of used computers for sale. Why don't they sell for what should be a competitive price relative to new computers? Because if you happen to encounter a problem, you can expect very poor support, and to be charged for it at a very hight rate relative to the competence of the people on the support line (i.e., expect to escalate 3 times before someone can actually add value by anything other than a scripted set of debugging procedures.
Poorly evolved right to repair laws which are absent or anemic in most states is what is holding back the secondary market.
1
I don’t understand the Tesla craze
We looked into getting one but the range is around 300 miles before needing to recharge
And that process can take almost 2 hours.
I have to wonder if it wouldn’t have better if Musk had gone all in on trying to develop better batteries than him being all over the place
4
@Blue
The majority of charging happens at night in your garage while you are sleeping takes 5 seconds to plug in your car, avoiding those frequent trips to the gas stations.
On a road trip, it takes 30 minutes for every 2 hours of driving.
For those taking many road trips, you might lose time. But the rest will gain time by avoiding the gas stations.
1
@Blue 300 miles is about what you get on a "sane" 16 gallon gas tank in a modern minivan, which has a 10 speed transmission and an engine that can go 0-60 in about 12 seconds (slow).
The trouble with the Tesla is not the 300 miles. It's the charging paradigm, where you then take 8+ hours to fill it back up with electricity. To pump 16 gallons of gas takes under 5 minutes! So the Tesla is relegated to puddle jumping from charging base to charging base. The range will need to be ratcheted up to 500 miles in order for it to be regarded as a full "gas car" replacement.
3
Tesla’s are so common in North Palm Beach county that they do not even turn your head as they flash by while driving about town. They have out sold Mercedes and BMW in the luxury car market here.
What does turn my head is sitting at a red light and watching 2 or 3 Tesla’s move through the intersection. Movers, shakers and forward thinkers are buying them and driving them. There are at least 5 in my family oriented community today. Young, old or middle aged Everyone wants one. The next vehicle we purchase will be an EV. Probably a Tesla. It might be used but it will be ours. And last I checked the Tesla store in the Gardens Mall was still open.
If you believe in Technology, Science and making the world a better place for your children.. You believe in Tesla and the genius of Elon Musk.
7
Hmmm...movers and shakers use public transportation and cut down on congestion. Or drive trucks
Can you get your used Tesla serviced? Heck, will you be able to get a new Tesla serviced next year?
Not throwing 35K out the window, thanks.
One can only hope that “growing doubts” include potential Tesla buyers realizing that 83% of their miles are, on average, powered by dreaded fossil fuels and nuclear. So reduce the the back-patting by 17%.
5
@JFB wrote “...powered by dreaded fossil fuels and nuclear.”
Read up on nuclear. There is nothing to dread. We can’t run everything on sunlight, and I would dread taking a drink from a creek downstream of a solar panel factory.
2
@JFB - It's still an efficiency win even if the electricity for a Tesla is generated with fossil fuels. Power plant generators can capture more useful energy from fossil fuels than internal combustion engines, which are on average about 20% efficient, meaning about 80% of the energy content of the fuel is lost as waste heat. Toyota's got a gas engine that can hit 38% efficient but it's not widely deployed. Meanwhile, a coal plant is 30-40% efficient and a modern natgas turbine plant is around 60% so even with transmission and conversion losses, you're still ahead.
That said, we really need to stop burning things to get energy and figure out how to harness more sunlight. All the fossil fuels that we've been pulling out of the ground for the last 150 years or so represent millions of years worth of sunlight that hit the surface of the planet and was captured by plants which then died and eventually turned into oil or coal. We've released millions of years worth of energy (mostly as waste heat) and sequestered carbon into the environment in under 200 years. We can't keep doing that.
5
@JFB
I own a Nissan Leaf. I also pay extra on my electric bill each month to get electricity from a wind-power-only company. I may also get solar panels when I cam afford them.
I would assume that people who bother to buy EVs also bother to look into where their electricity comes from.
2
It's a nice car but still more expensive than a comparable gas car. Most people don't really care about climate change. They care about the current state of their pocket books. I still think electric cars are the future but I will wait until their prices are more in line with gas powered cars. Hopefully, the wait won't take a lifetime.
6
@hmlty. But but but... you don't understand! They're *awesome*. What else matters?
Capitalism wins again. The CEO has a vision and Wall Street doesn’t seem to ever do the right thing when it needs to. The waste of money in this country is overwhelming we waste money on charter schools ,clinical tests or cancer research that go nowhere
Would be nice in a world not full of greed if visionary people could develop a product that wasn’t a phone or stole our privacy
We need to move on from Facebook, and develop products that are meaningful.
5
@Tony
The CEO had a vision, opening a bunch of new stores in December, then abruptly changing his mind and shuttering them almost days later. Somehow, it’s never the mercurial Musk’s fault. It’s all a conspiracy to take him down.
Fortunately, he does that quite well when left to his own devices.
8
@Tony You could say this episode proves that Wall Street is just a bunch of gamblers. They were ready to elevate the stock through the roof when there was all the hub bub about self driving cars. Now that is cooling off, and the idea that Tesla would be dominant by virtue of provided a Morgan Freeman -less car to the aging Miss Daisy's of the 20th century has petered out. And other computer safety "self correcting" technology is now prominent in every Japanese brand, and gaining traction in US brands. Wall Street bet on the horse in front after the gate but the horses in the middle of the pack have been reeling in his technological advantage.
3
@Paul That vision was probably foisted on Tesla by some consultant's vision. The fact is that dealerships are nothing but a headache. You have salesmen who can dilute your brand with their stupidity (or you have to try something like Ferrari ... and Testla could do that with 6-figure models but not 35K models. Or there is the Saturn sales model... which was "buy without a salesman" before the days of the Internet. That's what they are moving toward, probalby because the higher priced models are being eclipsed by the model 3 so rapidly.
The short sellers are rubbing their hands together gleefully....
Now is when the company needs the goodwill and indulgence of creditors, stock holders, potential buyers and the general public. Unfortunately the company, and specifically the CEO, squandered that many times over. A sad story.
7
@zipsprite: Tesla has never been profitable on an operating basis and the ramp up in Model 3 production only exposes the additional costs that are required in terms of distribution, post-sales service and repair infrastructure that were ignored in the pro forma financial estimates. The much lauded Q3 '18 "profit" was merely the combined impact of ZEV credits and savings realized by winding down SolarCity: the latter an unvarnished buyout of a Musk family-owned enterprise for billions of dollars but with no commercial conveyance. The "massive" initial Model 3 sales were merely the result of cherry picking reservation holders' high content orders. We are not even 1 year into Model 3 sales and the much heralded "500K reservations" are proving to have virtually no conversion to sales now that the cultists have their cars. Tesla has gotten away with improper disclosures and loose public management statements that make Enron's management look responsible. At some equity valuation Tesla is M&A bait because the brand has demonstrated tremendous goodwill. What other "luxury" product producer could ever get away with delivering severely flawed "luxury" products yet seemingly keep its fan base loyal?
8
@Gene Fattore:
This is particularly hilarious:
“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.”
I am insanely wanting a McLaren P3 (in orange, please) but I don't have the money for it.
That they would put such a statement in an earnings report is astonishing and irresponsible. Musk isn't disruptive, he's reckless.
17
We've heard this all before. My take is that, for legal reasons, Tesla needs to fulfill its promise to sell a $35000 car, even though it isn't currently profitable, and so it needs to cut costs for a while. After a decent period it will raise minimum prices to a profitable level.
3
Yes, just like Amazon did.
The automobile business requires scale. Otherwise, you simply can’t make enough cars to generate the revenues required for growth. Tesla is a great idea but not viable as an independent business. I think it is time for the company’s assets to be acquired by another car maker.
5
@Mark Siegel That's absurd. 250k cars is a pretty decent scale compared to supercar makers and even botique makers. For a budget mass produced car, around 1 million units per annum should be a comfortable target. They will get there faster without the dealerships giving away toasters and peddling undercoating than they would having high school drop outs try to explain (and demonstrate) the 21st century tech in these cars.
Case in point - I went recently to testdrive a Honda and a Toyota recently. In both cases, the sales people were a little "loose" with facts (for example, about Honda's redesigned van transmissions). On a test drive, some of the Honda's safety features (e.g., lane drift sensors) did not function -- probably because they were turned off -- but the salesman was unable to get them working, and so I decided it was a piece of junk and moved on to Toyota. On the test drive with Toyota I was put into a car that I didn't particular want -- and AWD model -- in order to sell me the car the dealer wanted to move off the lot. The MGP readout on teh computer was abysmal, so again, the dealership did not do anything to get me excited about the car. The one car that could have got me to empty my wallet after driving -- a Civic R -- was on display behind velvet ropes, and the salesman proudly declared if I wanted to test drive it (a measly $50k car I think... not exactly an Aston Martin) I would need to buy it first. LOL.
1
The trouble with Musk was that he believed in the hype that other people bestowed on him. He should have asked himself: "Am I actually a genius?"
14
@wlieu. Whatever happens toTesla, Musk has done more to revolutionize the auto industry than anyone since Henry Ford.
@wlieu
And he may even be a genius, but that ain't enough to birth and raise a car company; necessary, but not sufficient.
@wlieu
He has actually delivered on many products that provide value. Be it amazing electric cars or rockets that land back at the launch pad.
Trouble with Musk haters like you is they should ask themselves this question : why do I hate Musk?
2
Tesla showrooms are gone and the buyers say they "can only know [what they're buying] by getting into the car.” I think it could be possible to recover from Tesla's loss of exposure with something like this:
Search the customer database for all Tesla owners that have a favorable combination of the right Tesla model, in the right location that has favorable demographics. Offer to pay those Tesla owners generously to show their personal cars to prospective buyers within a certain locale. Qualified driver/owners could be booked for test drives in advance. while prospective buyers/test drivers would be responding to internet test drive offers. The whole program could be dispatched from one location.
It would be like an Uber that brings the Tesla to you so you can test drive the model you requested. In the event the test drive results in a sale the driver/owner should get a nice commission..... A Nice Commission.....
An retired guy like me? Why I'd buy me a Tesla and give test drives on spec., between fishing trips and bowling night that is.
14
Good luck getting an insurance policy that will cover that! But that is the kind of problem solving creativity Tesla honchos need right now.
4
@Jim Aronson
Alternatively, I could go to ANY other car company on the planet with dealerships located in thousands of cities and within a short period of time have both a test drive and a trade-in evaluation of my current car. I honestly do not understand the concept of paying $35K for a car you have neither driven nor even seen. I know that Toyota, Honda, Hyundai, General Motors and other car companies will be around in ten years. Can anyone demonstrate that Tesla will still be around in ten or even five years?
6
@Jim Aronson I happily show my tesla model 3 to people locally for free. You pose a good idea - but not sure tesla needs to pay people to do what many owners are already doing.
2
The Michigan professor in the article claims it is simply logic that stores + online will do better than simply online. You see: X + Y > X. Except the actual argument here is that the store closures are turned into lower prices so in fact the two X's are not the same.
7
@ShoNuff
The "logic" argument also ignores the fact that brick& mortar sales cost more than online sales. Thus, while operating a brick & mortar chain in addition to an online store may result in more units sold, it does not necessarily result in greater profits.
4
@ShoNuff
Agreed -- the basis for the "logic" is the null set, as presented in the professor's statement. But, based on Tesla's 10-K filing (it's honest, right???) stores are important. And now most will be shuttered.
2
@GMooG
Which begs the question why did Tesla open all of these bricks and mortar stores a mere three months ago? Surely that was an expensive - and now wasted - undertaking.
6
Years ago, my wife and I were regulars at a local restaurant where the entree was great and it came along with a very tasty salad. After a few years, the salad became optional at a cost of $2.50 and the entree was still the same price. I wrote a letter to the owner of the restaurant, advising them that they would go out of business because the way they did business left a bad taste in my mouth. Had they raised the price of the entree which included the salad, I would continue to be a patron. About six months later, they did go out of business which I attributed to their change of what was included with the entree.
By closing stores, Tesla is waving the white flag and telling customers that they are not in it for the long haul and people may not be there to fix their cars when there is a problem. They are sending a strong message to present and future buyers to beware, they move goal posts and there is no more salad.
15
@Mfreed
For the nth time : they are not closing the service centers. Only stores which lost money. Service is is available either by mobile Tesla service or their service centers.
Tesla owners report the highest customer satisfaction with their cars. Drive one, may be you might even like the experience.
BTW, the restaurant story is poignant, but they could have closed down for any number of reasons.
10
@Nitin
“Drive one, maybe you might even like the experience.”
Can that test drive be scheduled online? Oh, that’s very different. Never mind.
1
@Mfreed
There are so many logical flaws with this comment that it is hard to pick just one to discuss.
1
I think it's great that Tesla is getting more people driving electric vehicles. Let's build a statue of Elon and move on though. It's an object to get me to the store and buy milk, not a lifestyle. We need LOTS of them. Who can build LOTS of them efficiently? Also, maybe mass transportation would be a better solution overall for the environment.
3
Mass transportation can work well in high-density areas, for others, BEVs can offer a solution where there isn't enough density to be served by larger busses.
At the moment, at least in North America, Tesla is the only outfit (thanks to the Gigafactory) that has the potential to mass produce BEVs.
Wow - astoundingly incomplete, misleading and biased.
Tesla has ample cash on hand to pay the upcoming bond payment of $960 million. Well reported is the fact that sum is only about 25% of its cash on hand - leaving it with a "mere" $2.8 billion dollars! More than enough to fund expansion plans, in addition to funds generated by rapidly expanding sales in China, Europe and, yes, strong sales in the US continue. Ominous "signs" of doom are simply false.
As for closing stores, keep in mind that most were in exceptionally high-rent shopping malls or districts. That was probably vital as its own form of advertising, to get the cars in front of enough people with the $ to buy one. Is an online sales model viable for cars? Hard to say - but the cost savings are real and utterly justifiable from a business standpoint. (Others have pointed out that Amazon seems to be doing just fine.)
But the article gets it wrong - not every store is closing. Some will remain open in larger cities - which is probably fine, as that is where most are sold. And all the delivery and service centers will remain open, with more promised.
Sales figures show that the Model 3, at least, is one of the best selling cars in the US. And the preorders in China and Europe are huge. They must be doing something right. You'd never know that from this article.
20
@Spalding
I agree with you re closing the stores, but not on the cash issue. In normal world, $2.8 billion is a lot of cash. But Tesla is not normal; last year Tesla burned about $750 million per quarter. With numbers like that, $2.8 billion goes pretty fast.
7
@Spalding Tesla's Pro Forma CapEx estimates weree materially reduced reflecting inadequate cash. A material amount of "cash on hand" represents reservation holders' deposits and much of that will likely be returned. The Model 3's initial sales represented years of un-filled reservations. Now that the "price agnostic" reservation holders have their cars, demand is plummeting. Normal car buyers have ample evidence of the numerous flaws in many delivered cars, inability to receive timely service and repairs, and "as delivered" vs "as promised" price. This is not bolstering demand. But, if an acquirer determines that there are enough fans like you who are willing to ignore all these flaws yet remain faithful to the "mission", there will likely be an acquisition of Tesla by a capable manufacturer at some price.
2
@Gene Fattore 400,000 reservations times $1000 per reservation is what? $400 million dollars. Let's assume the refund the entire $400 million (not going to happen, but let's assume it) They'd still have something like 2+ billion dollars of cash on hand. Sorry, not seeing your math.
1
No easy task walking around the mall with a Tesla in a shopping bag, I’m sure. Almost as pointless as an Apple Store.
2
This author is a known Tesla hater, just so you all know.
Tesla is not closing its delivery and services centers but expanding them.
I bought my Model 3 last year online, without a test drive. It is the most amazing car I have ever bought and I have had a Lexus, Audi Q7 and Mercedes. It has zero problems. I will never buy a gas car again. 2 people I gave test drives to also bought the Model 3.
I calculated and I save about $2000 per year on gas costs and there are no service costs of $600-$800 each time on my other cars.
Commuting to work, 40 miles each way, I use autopilot about 80% of the time on the highway, no braking or steering, no stress.
Next week, for free, Tesla will increase the range of my car from 310 to 325 miles and the performance by 5% just by an over the air software update.
It is over for other car makers. No one will be able to make profits on an electric car because they won't be able to sell in volume due to Tesla's advantages in battery efficiency, software, supercharger network etc.
38
The Chevy Bolt beat the Model 3 to that price point years ago, and is the same sort of car. By 2021 Ford and Chevy will be offering similar electric vehicles in all Tesla’s categories, and no doubt appreciate Tesla being the pioneer. This is not a unique product, and Tesla will trade at the same multiples as GM or F.
2
I wonder why the business press doesn't tell us more about how crazy and unstable Musk is. That was their story for almost a year, that Musk is obviously suffering from mental instability. The business press would know crazy, they have college degrees that required Psych 101. Of course my favorite was when Tesla finally had a profitable quarter the business press thought it would be the end for Tesla because of all the pressure and such, because the business press knows all about profit and pressure. They don't actually run businesses but they talk about them all the time.
Articles on Tesla are hatchet jobs by fossil fuel loyal hacks who have never run a business but show fealty to the wealthy every day.
8
@Chris so because Tesla cars don't run on fossil fuel, critical reporting and questioning of its strategy and business outlook is automatically a hack job? Come on, man, let's not get too emotional, shall we? For investors, lenders and employees who depend on the company's ability to survive, it is helpful to not just have sugar blown up their behinds about how great demand allegedly is. And by the way, I have seen plenty of critical reporting on the fossil fuel industry and its cronies in these pages as well. (And I do wish Tesla nothing but success.)
3
@Chris
"Articles on Tesla are hatchet jobs by fossil fuel loyal hacks who have never run a business but show fealty to the wealthy every day."
Yes, I'm sure that's it. The criticisms probably have nothing to do with Musk's mental instability, constant feuds with the SEC, removal as CEO, uneven product quality, supply chain mishaps, and losses of billions of dollars every year.
12
A lot of the nitpicking in these comments can be put down to the fact that Tesla is disruptive - to big oil and to “legacy” automobile manufacturers and auto dealerships; the fact that Tesla don’t buy advertising (which galls the mass media) It appears that most of the comments here point out the fact that Tesla is expensive and appeals to affluent consumers. It is well known that these affuluent consumers are demanding - to say the least. If the Tesla disappointed in a major way - we would all hear about this - a lot. That is not happening. Most Tesla customers are delighted with their car and are an extremely effective sales force.
10
Seems a television executive could splurge for a 35k ride, no?
1
@David Lachance. LOL. maybe public television
Don't be so negative. At least there is one American maker who cares enough about the environment to produce an electric car.
It was well known that for Tesla to sell an electric car that would appeal to a broader segment of society, the company had to tighten the belt which included closing most showrooms. The company is not on its death-bed even though those worshipping oil would hope it would at least go away.
When we need a new car, we'll buy the Tesla. It's our future...and the only way to go.
Shame on all of you who want this technology to go away so we can continue with business as usual.
15
I have owned a Model S for coming on three years. It was very expensive. I love it. I owned BMWs for 25 years, but will never buy another non-electric car for use in the U.S.
14
I’ve owned two Tesla cars. A 2013 Model S and a late 2018 Model 3. Both cars are amazing to drive. They are very quick, quiet, clean, and loaded with high tech features. I wouldn’t dream of buying a gasoline powered car now.
You have to understand that a vast majority of Tesla owners love their cars and would not switch to gasoline powered transportation.
This overly gloomy article ignores the customer satisfaction. Consumer Reports May have stopped recommending the Model 3 recently due to its survey indicating some issues with paint, glass and stuff like that. But that ignores the fact that the Model 3 had the highest customer satisfaction in their experience.
Tesla is a young company compared to the many stalwarts who have had over a century of development time. Tesla however listens and improves within their abilities.
This temporary setback is nothing. I’ve seen these come and go in the past 6 years of Tesla producing cars. Remember John Broder’s article when Tesla Model S came out? That mendacity of that article was staggering. He basically drove around in circles around a supercharger until the Model S ran out of charge, and then called a tow truck to splash the sensational lie ‘Stalled out on the electric highway’. It was big news, until Tesla exposed John Broder. He still works here at NYT though.
Tesla recovered from that setback, and will recover from this one.
I stopped subscription of NYT after reading Broder’s article.
9
We are currently driving the smart for around town but the next car will not be an electric smart but the Tesla. Thank you, Elon Musk, for having the foresight to do something rather than just wringing hands.
Oil is dead, except those peddling oil are fighting like hell to hang on to their domination!
4
One example of the bias of this article: “It laid off 7 percent of its work force in January, the second job cut in the last eight months.” No mention of the mass hiring and that Tesla actually has MORE employees now than a year ago. This article is intentionally written in a negative distortion.
32
@Trevor C. Yes. And we know who is behind it.
2
Most people planning to buy a Tesla would do what I did and rent one for a week to see how driving and charging worked out in the real world. You can do this easily from Turo.com.
Auto industry has 100% converted to building and pricing your car online and then using results to search dealer inventory and then opening a online chat with the internet sales department.
"He would love to own a Tesla, he said, “but for 35 grand, it’s not in the cards.”
That is the average new car sales price. Comparing a used Nissan Leaf price to a new Tesla price is meaningless. Leaf's don't hold their value, Tesla's do, again per kbb.com. And most states offer rebates for EVs that are not expiring CO - $5,000, OR $2,500. No gasoline or oil or filter changes.
As for the "trade in", Kelly Blue Book, kbb.com, makes a cash offer for your car when you use their website to look up your car's value.
As for profit margin, all car mfgs. have slim margins on their cheapest cars. Why GM and Ford are getting out of the car business and concentrating on pick up trucks and SUV's.
"The online publication InsideEVs, which follows Tesla closely, estimated that the company sold fewer than 8,000 cars in January, down from nearly 30,000 a month at the end of 2018."
Hello...end of year and getting $7,500 tax credit with giant push by Tesla (and all car mfgs) to boost end of year sales?
This was a dog bits man story and not well research.
11
The situation has changed since there were few Teslas to check out among ones neighbors and no one had any idea how desireable they would be. And don’t forget Tesla has been prohibited from selling direct in many states, and so forced to explore online sales. I bought two online, but did get a test drive at a showroom, so there is that. Genius is hitting a target no one else can even see...
6
An unbelievably one-sided piece. What's missing from it is:
- pretty much everyone who's driven a Tesla concludes it's the future and is desperate to own one.
- the company has a track-record of growing 50%-100% annually.
- it has, after an admittedly stressful development process began churning out upwards of 5000 model 3s every week and looks capable of going much higher than that.
- there is no sign yet of any competitor coming close to match Tesla on a delivered product in terms of overall range, power, design appeal, supercharger network, autopilot tech.
There are countless people out there with multi-billion $ incentives to talk Tesla down. It seems like this reporter spent a lot of time talking to them and very little time talking to customers who know the future when they've experienced it. I love the New York Times, but honestly a little embarrassed by this piece. It's just nasty.
27
If "people don't have the money to buy the car ", then how can demand be "insanely high"? Is this guy ALREADY in another planet?
3
I'm so tired of your negative, "glass is half empty" reporting on Tesla. Which is a shame, because I generally trust the reporting in the Times and it's my "go-to" news source.Not so for news about Tesla.
Despite all the negative press and doubts over the last several years, Tesla finally makes good on it's $ 35,000 Model 3 price target. It's ramped EV production and sales to a massive level. It's delivering Model 3's to customers in Europe and China in large volumes. It's built out a fast charging network that enables worry-free, long-distance driving in much of the world. It's reported two quarters of profitability.
And, you say "Tesla is in retreat."???? Uh? Sure, closing some retail outlets is a change in tactics. But, why don't you report that ordering a Tesla has ALWAYS been done online -- whether you did it from your home, office or in a Tesla store? This move just clarifies that message to the mass market. And removes the time and expense of fighting neanderthal, fossil-fuel vehicle dealer associations who don't want to compete in an emission-free world.
Tesla is an agile, data-driven, learning organization. If this new tactic doesn't work, they will make the necessary changes. If it does work, it will help their business become more economically viable as they pioneer bringing sustainable transportation to the world.
I've got over 10,000 miles on my Model 3 and it's been a great car!
6
How do you get these expensive, complicated cars serviced with no brick-and-mortar service locations? Outsource service to someone who will repair at your home? Is that even credible?
@Alex Monty
The service and delivery centers aren't closing. Just a lot of the shopping mall locations.
And complicated? No, pure EVs are simpler than any ICE (Internal Combustion Engine), hybrid, or FCV (Fuel Cell Vehicle). I own two Teslas and have almost 70,000 miles on them combined. Smooth as silk, and effortless to charge (at home) every night.
4
@Alex Monty These are actually quite simple cars with very few moving parts. The complexity is in the software and that is continually improved by over the air updates. I've had my Model 3 for 7 months and have not had any issues with it. The software updates have made this car far better than when I bought it. Finally, Tesla is closing showrooms, not service center.
3
@Alex Monty, you haven’t heard? They’re flawless. Service and maintenance is for losers.
1
Tesla is a revolutionary car, but needs to replace it's revolutionary leader in order to transition to a successful mass-produced car.
3
end game is too be acquired by an existing manufacturer with a wide service net and fundamental accounting (sure seems like sales dropped off as the fed tax break went away).
DeLorean will have company (along with Tucker (btw, Tucker is a great movie about early car company shenanigans)).
@ray
There is no existing manufacturer that could afford Tesla. The endgame is for Chrysler and GM to go bankrupt again.
1
Hyundai/Kia have at least 3 EVs headed to US shores - all with 250 mile-ish range and in the $35K price range. (The full tax credit should still be available with these cars as well.) Initially available in EV states, such as California, Georgia, etc, the Kia Niro EV, next-gen Kia Soul EV and Hyundai Kona EV could be offered nationwide at some point. Hyundai has also, apparently, updated its Ioniq EV for longer 250 mile (or so) range and Kia has its Stonic EV (similar to Hyundai's Kona EV) waiting in the wings.
All that said I agree with @PaulN of Columbus OH, swapable batteries are the way to go to with EVs in the future. With swapables "refuelling" will take only a few minutes and most importantly, separating the cost of the battery from the car will dramatically lower the price of EVs, perhaps to under $20K for some models. Already at least 2 Chinese EV companies are offering battery swaping with the goals of lower vehicle costs and making electron refueling as quick as a gasoline fill-up.
1
I wonder what Tesla will do with all the cars returned after six days because the person discovered only after delivery what they would have discovered in the showroom or on a test drive.
Given their low (nonexistent?) margins on the Model 3, having to sell these as "previously owned Teslas" at a substantial loss is going to hurt the bottom line.
2
@Bob Richards Returns will be extremely rare. The M3 is an incredible car in every respect. Obviously, Tesla knows this and has does not share your worries. You should take one out for the afternoon. It's so much fun to drive!
2
No showrooms? Almost no maintenance facilities? No third-party parts support? I don’t think these are fatal problems, mostly because cars are really large appliances, all of them offering comfort, fit, finish and similar durability. Cars also are so complex that many buyers already never look under the hood, and couldn’t interpret what’s there either. Parts supply for even recent models is, like everything else, dependent on fast, effective supply chains more than warehouses. Service is replacement, not repair.
Actually, the industry squeezing states to deny Tesla conventional dealerships may have been a shooting in the foot exercise. All this without saying that I’m particularly impressed by the company, its technology, and only very slightly by the boss. We have a current extreme problem with thin-skinned tantrum throwers in other spheres, and we definitely don’t need toddlers as role models for new entrepreneurs and nascent pols.
1
This piece is intentionally misleading. Tesla offering the base Model 3 and the new pricing is a very clear strategic move to establish long-term dominance of the electric car market, and a response to the tapering of the tax incentive. The pricing of the base Model 3 is lower than the Nissan Leaf's and the Chevy Bolt's, the other two EVs offered nationwide. Other competitors are irrelevant. And Tesla is years ahead of the legacy carmakers planning EVs such as VW, Volvo etc. When they enter the field in numbers in 2 years or so, Tesla will be technologically so advanced and producing at scale to easily undercut any competitor. The US should be happy to lead here, one of the few industries where it still does.
14
Sorry. The cars look dated. The quality is deplorable. And the whole thing is led by someone who seems to have lost his mind. One week so, the next week the opposite. Closing the showrooms overnight? Stiffing the employees and landlords of their money? Landlords will sue for breach of contract. But by the time this reaches the courts the Tesla brand may well have been sold to some bidder in China.
The US hasn't made decent cars for decades. Let's leave this to the Germans.
3
@Beyond Repair. Right, the German automakers that criminally manipulated diesel pollution sensor software, produce abysmal quality such as in the VW Atlas (lowest rating on JD Powers) and overly complex user interfaces. Audi / BMW designs haven't changed much since the 90s either, it is good Tesla is giving them a run for their money. EVs will only make an environmental impact when reaching the mass market, and that is what Tesla is aiming for in the end. The others only follow.
5
@Beyond Repair
"The quality is deplorable" -- I beg to differ, being the owner of two model 3s.
"Leave this to the Germans" -- Ha! One look at BMW i3, I just ran away as fast as I can.
3
I have been giving Elon Musk's recent conduct a lot of thought and came up with the hypotheses that he is wanting to be removed from Tesla's board because he knows the company, including Sun City, will fail.
If he is removed from the board and the company fails, then he can say that it wasn't his fault!
The average US household, with they typical average income of less than 60 K (per Google search), just can't afford a Tesla. They can't afford to buy one despite the fact that they can't afford not to buy one!
When ordering, the average US household can't afford to wait months for delivery. They can't wait months for repairs or for parts!
3
@The Raven If your hypothesis is right, maybe Trump will do the same thing?
1
@The Raven
Similar to Apple ( yes I worked for them) their customers are not the average US household...anything but.
My dream is to own a Tesla. But if the price does not come down or I cannot test drive one, then my dream will not be realized. Our politicians do not support electric cars to the point where they can compete with gas driven cars. They are bought off by the fossil fuel industry. China, who's government aides their electric car companies, will dominated the electric car market sooner or later.
1
@Phil M Did ya see the price went down to to $35,000? No gas, I doubt I'll ever have to replace my brakes and there's no maintenance do stuff like oil changes ect. He also said if they can get to scale at some point they will have a car that even cheaper. I think by the time that happens you'll know lots of people who have them and Tesla Owners...we love our cars and love to show people how amazing they are. I let people drive mine all the time to show them how incredible it is. I hope you get one.
5
@Phil M I bought an old used Model S from Tesla and drove it for about 9 months and 10,000 miles. I had some issues, but the CPO Tesla come with a warranty. I then sold the car privately for about 2K less than I paid for it. With the savings in gas, I ended up driving an incredible car for 9 months for free! Stop dreaming and get up and do something!
1
No test drives?
Who is going to buy a car without at least driving it? Are the seats comfortable? How are the blind spots? Does it handle well?
These cars are a lot of money. I doubt very many people would be willing to buy one without having had a chance to drive it first.
5
@Steven I did. As a matter of fact the first time that I ever saw one in the wild was the day I picked mine up. There is a 7 day or 1,000 mile return policy. I've given probably 20 rides and have 9 of them order; 7 have taken delivery. With the $35,000 model out I expect a lot of people will now place orders. I know it's weird but I think as there are more around, people will get to experience them and realize this is a whole new ball game. This is a hit piece by the NYT. Way over blown, ridiculous actually. But I get where you are coming from. Also, there are no blind spots...the camera goes 360 degrees around the car, the seats are like heaven and this car invented handling and we won't even get into how fast this car is.
2
@Steven Lots of people and organizations have examined this car in great detail. They almost always conclude it's the best car ever. What is it that makes the average Joe think that they will have anything to say about the ownership experience of a Tesla after driving it around the block? You think you will know more than 100 experts because you drove it around the block? Sounds like hubris.
1
Tesla’s problem is Elon Musk. He’s not a great CEO for a manufacturing company. He hypes everything and draws followers in with imagery, but I have realized that almost all of his big ideas have serious flaws in either the engineering or the economics. But, his followers are reluctant to challenge him, because they believe in his social objectives and he impresses them with things like rockets landing backwards and sports cars flying around the sun. Take his Boring Company, for example. He quickly drills a 2 mile tunnel and has us thinking that we're going to be driving through tubes soon. But, what if there was an accident underground? There would need to be a huge infrastructure to make the system safe enough for public transport. The cost would be enormous. But, no one presses Elon about it. In an interview he talked about how airplane flaps and rudders aren’t necessary, because jet engines can be gimbaled. The problem is, if the plane lost engine power, the pilot wouldn’t be able to steer. But, no one questions Elon. He talks about a growing danger of A.I. without providing any details about the projects he’s working on. Why aren't other top researchers joining him? Is he smarter than everyone else? I was a Model 3 reservation holder, but cancelled my reservation. I just didn’t feel comfortable. I still think we’ll all be driving electric cars in the future, but I’m not so sure Tesla will be around when that happens.
14
@Mark I think people also forget that Elon Musk is NOT an engineer. He's a guy with a futurist vision and an economics and a physics degree. Great for thinking, not great for doing.
8
Even though his thinking seems to be mighty clouded recently...
@ck
As I wrote before, don’t think of Musk as Steve Jobs or even Edison but more like Howard Hughes. Forward thinker, visionary but with an extremely flawed personality.
Now where am I going to take photos in a Tesla for Instagram now?
2
"enigmatic founder" -- isn't it a little late in the day to be using such euphemisms?
1
I think Mr. Boudette has an axe to grind against Tesla. His twitter feed has been constantly bombarding with untruths and highely speculative declarations, all seemingly against Tesla, the EV maker. Why is Mr. Boudette so obsessed about Tesla and if he is obsessed, why so negative. No good reporting, Mr Boudette. Clean up your act.
4
This is nuts. I buy Subarus because my local Subaru dealer provides great service. There are plenty of fine cars out there. Anyone who buys one online with zero local support is a fool.
9
@Josh I felt the same way Josh. I actually have one now, and I did need a small piece on the side mirror replaced. They came to my house, took a look, took pics and in two weeks changed the side mirror out in 10 mins. They do have support but they come to you.
4
@Josh I had a Subaru and loved it. Now I have a Tesla and it does not need any service because electric cars are so simple there is nothing to break or wear down. Any software issues are corrected by over the air updates. I'm glad you found a great place to service your car, but you will be even happier once your car is electric.
2
@Josh
If I had a Subaru I would care a lot about dealer service too, since Subaru's quality has been pretty bad and declining for the past few years. Over the last 20 years, I have owned Audi, BMW, Lexus, Acura, Mercedes, Porsche, Mercedes, Subaru, Toyota and Hyundai. By far the most reliable were the Mercedes (late 1990s) and Hyundai (current).
3
Another Tesla bashing article. Gets boring after a while. I bought my model 3 over the website and without a test drive. I did sit in one for a few minutes at a Tesla store to make sure that I would fit comfortably. When I purchased my snow tires a Tesla service van came to my house and changed them while in my garage. The car is pure pleasure to drive. When my CRV lease expires I will purchase a Model Y. Didnt all you folks write the same end of the world stories in early 2018?
25
Well, going forward there will no longer be stores to even test-sit those things. Glad you could get your tires changed. I hear when other spare parts need changing the ride is out of commission for weeks.
1
Tesla will survive, Musk will not, at least as CEO.
Apple , Google , maybe Amazon will vie to be a white Knight .
3
@Carsafrica Tata (Jaguar-Land Rover), FiatChrysler, PSA, Renault or one of the Chinese car companies like Geely will want it because of the tech. Then again, you need a good dealer service and sales infrastructure to sell high volume...
2
@Win
Tesla’s market cap is $48 billion , the companies you mention do not have that kind of cashier even half of that. JLR is a likely company to be sold in any case.
No I think it will be a tech company that buys Tesla and team up with selected dealers for service and off lease Teslas , sell new Tesla’s on line.
Amazon can do this, Google is already working on self driving cars etc, Tesla will complement their work.
1
@Carsafrica
Apple certainly has the financials resources, as does Google and Amazon. Also Apple has been working on EVs (Project Titan) for several years and gone through several SVPs.
No thanks, to online car sales.
4
Remember GM Saturn's "innovative non negotiable" sales strategy?
Variation on a theme?
4
This is the umpteenth article predicting the demise of Tesla. They’ve been writing them ever since the company started. They continue to write them even as sales grow and grow and prices come down and down, and markets open up.
Fourth quarter sales were way up. Anyone quoting first quarter sales is just guessing.
Maybe...just maybe, Tesla is closing stores precisely for the reason they state. They need their showrooms like they need commercials - they don’t. Unlike other cars, Tesla’s sell themselves on their merits. Commercials and showrooms are a waste of money that can better go towards making each car more affordable.
24
I could not buy a Tesla because of the touch screen interface. It is a hazardous distraction that forces you to take your eyes off the road even for something as basic as opening the glove box.
Mechanical switches involve muscle memory and do not force the driver to look away from the road at a screen.
13
@Jared it took me two days to change my glance pattern when I bought my Model 3. I have never opened the glove box while driving any car. After I set my mirrors I have never had to reset them. Occasionally I change the temperature of the car or use the windshield wipers. Eventually those will be fully controlled by voice. Most ICE cars have far more complicated control panels.
5
After 50k miles, I can assure you the touch screen is a non-issue. You rarely touch it when moving anyway
5
@Jeff P.
You may be right. But in my commute I often use the wipers (when raining - to spray washer fluid or to adjust the interval), the audio to change from source, volume, etc, the high beam switch, the telephone bluetooth, the seat heater, waze navigation, etc. I can do all of these with controls I can feel without looking away from the road except for the Waze - and that is a touch screen! I much pref having actual buttons.
3
I think Tesla's troubles are the result of treating the automobile industry as if it can be run like a high-tech online industry. There is a lot of history about how to sell and maintain automobiles that seems to have been treated by Mr. Musk as some sort of neanderthal thinking that can be ignored. Let's see if he can survive once he can no longer count on subsidies and must compete with high end competitors on a more even footing.
2
@Jon Orloff
"There is a lot of history about how to sell and maintain automobiles that seems to have been treated by Mr. Musk as some sort of neanderthal thinking that can be ignored."
I think that most of us who have had to buy and service a car at a dealership would agree with Musk that the traditional car sales/service model is Neanderthal and deserves to go the way of the dodo bird. I applaud Musk's efforts to ignore the traditional thinking on this.
1
Tesla should sell to Jeep/Dodge/Chrysler/Fiat or some other major auto company without an established EV pathway.
2
When considering what is affordable please factor in running costs.
When considering value please factor in that some put performance and others put safety top of the list (Tesla leads the pack in both categories)
When criticising the lack of test drive from the dealerships, consider the hassle free return policy is a 7 day test drive.
5
@Michael Brennan Hassle free return policy?? You must have purchased the vehicle first so it ends up being a major hassle to undo vehicle registration, cancel insurance, cancel financing etc. A fifteen minute hassle-free test drive will do the sales trick if the car feels right to you.
9
@geofnb
" I had one problem with the frunk release mechanism. They came to my house and fixed it in my driveway within two weeks."
Cripes! You realize how much that cost them to fly people around fixing a simple cargo release latch? This is not a sustainable business model in high volume.
9
@Rickske
How much do you think it costs to lease a high volume location for sales & service, build a custom facility & operate service bays?
1
@Rickske They don't have to "fly people around", they simply drive.
There are three (3) reasons I'm not buying a Tesla:
1) I don't have the money . . . and it doesn't matter what the other two (2) are.
29
@Big Text Yeah, your right. I hope you get more money soon.
I will buy an electric car as soon as the battery pack can be replaced by a freshly charged one at any "gas" station. Mark my words, we are not far away from this.
4
@PaulN It was called Better Place.. That company existed in Israel.
You don't need that. You leave the house with a "full tank" every day.
i am not a shareholder but i'm rooting for Tesla to succeed!
4
Amazon just closed EVERY ONE OF ITS STORES and they're being applauded for being "nimble". Both companies do just fine online; retail storefronts were tested and disproved, and Tesla will keep its gateway city showrooms open in case the 10% that didn't do everything online wanted an in-person look while shopping for Christmas presents. An immaterial number of buyers bought Tesla after specifically going to the mall to scout.
@Chris O. I don't think one is allowed to take test drives in a mall...
Instead you have to schedule one. If you go to an Audi dealer to buy an E-Tron EV, they'll have you driving one in 15 minutes with the salesman egging you on to press the accelerator and see how fast it accellerates. This is how sales are made, often on impulse.
4
Do you mean that a person goes to a dealership to be subject to the pressure of salespersons, before he actually decides on the make and model he wants? As a result, he makes a purchase decision on impulse. What kind of persons do you talk about. To be honest, I have met many such persons.
@Chris O.
They don’t sell any products at a price point as high as Tesla; an auto is the second most expensive purchase other than a home. Plus all their products can be seen, held and experienced at other companies retail stores.
You mentioned “going to the mall to scout”. That’s was the point for the stores.
When I went to a dealership to buy a car, I already know the make and model that I wanted. I may be influenced by the prices, the brands, the appearance of the vehicle, and types of vehicles. Not a time could I recall that a test drive affected my purchase decision. I also don't trust salespersons at a dealership. I consider them as less than average in terms of honesty. Dealing with them is just a necessary inconvenience because of franchise law preventing OEMs from selling vehicles. Stores display might have serviced a useful purpose for Tesla to introduce its brand to the public. But now, there are Tesla vehicles everywhere. The online only sales model is risky. But if this B2C model works, the legacy automakers will all be in trouble. The franchise law will prevent them from leaving their dealers and give Tesla a permanent cost advantage.
3
Tesla spokesman: “The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.”
Hmmm... If people 'literally don't have the money to buy the car', I'd say that demand cant be insanely high.
The desire on the other hand, might be insanely high though.
38
Tesla has done a great job making electric cars cool and bringing them to the attention of a larger market. But I wish people would also look elsewhere for electric cars. The Chevy Bolt is very well engineered (although in typical GM fashion is boring), currently sells for $35,000, and has a range of minimally 250 miles. Other manufacturers are also starting to churn out electric cars with high range and reliably costing around $35,000.
I hope Tesla is able to figure it out and becomes a sustainable company because they're a cultural phenomenon and they can be an American international success. But it seems they underestimated the difficulty in mass producing cars of high quality and relatively low price.
2
Having driven both the model 3 and the Bolt, they are no more comparable than a bmw 3 series and a Honda Fit- the Fit and the Bolt are great utilitarian transportation, but the model 3 is truly a pleasure to drive.
2
@Fulton Rockwell and the model 3 you drove likely cost $50,000. My Chevy Cruze is nothing like my parent's Mercedes Benz except mine cost significantly less and still gets me from point A to B.
As much as I would love to see Tesla succeed, I could never understand why investors were so foolishly excited about this venture. Yes, it was a good idea to leap-frog the existing electric car market -- minuscule that it was -- with a super luxury model. But any researcher could have told you that the electric car market was not capable of growing rapidly and that Toyota already dominated the sector. Chevy just announced it is abandoning the Volt, a very worthy model in a semi-affordable price range. Nissan's Leaf went nowhere. Over the past century, many commendable new auto brands have come and gone in this extremely capital-intensive business. If niche players had a future, we would still have Saab. The major brands are already working intensively on the future of automotive vehicles, as they have in the past.I wish people in the U.S. truly cared about fuel economy, but they don't. That's why Ford abandoned cars for trucks. It wasn't because they lacked vision. They have LOTS of vision. What they need is a market.
7
The actual price that the least expensive Model3 will sell for is more like $40K - $43K as there is no sense of owning Tesla without taking advantage of the many Autopilot features that makes Tesla stand out. Autopilot sells for an additional $5K to $8K and it is a net profit for Tesla as it is software that's developed anyhow no incremental cost. For some reason this slips out of analysts' attention, maybe because unlike me they don't drive Tesla.
1
Buy a new car online without a test drive. OK. What is Tesla's return policy? I buy clothes online without trying them on. I buy from Amazon without trying a product. But I get a no fault return guarantee, usually with pre-paid shipping. How long do I get to drive the Tesla and still return it for a 100% money back guarantee?
5
@Tom
I read somewhere that you can return within a week as long as it's still under 1000 miles.
@Tom
You have 7 days and 999 miles of test driving and still in otherwise new condition
https://www.tesla.com/support/tesla-return-policy
@Tom 7 days.
There's another storm brewing for Tesla:
Within the next 48 months, there will be a flood of late-to-the-game very sophisticated new EVs made by mainstream manufacturers that have finally caught up with (perhaps bettered?) Tesla's brilliant technology such as Porsche, Audi, Mercedes, BMW, Lexus, VW, Toyota, Nissan, Volvo (Polestar), GM, etc. All of these brands are well established and have vast nationwide showroom/test drive and service facilities, and all vehicles are warranteed by manufacturers that are very unlikely to go under any time soon. Ironically, thanks to Tesla's initial success, the entire auto industry has committed to an eventual and irreversible all-EV future.
GAs to Tesla going the "online sale only" route is like taking the wrong turn into oncoming traffic on a freeway.
When I go shopping for a car, I do some test drives, decide what I want, then go online to check the competing dealers' inventories and sales specials, identify the exact car with all the options I want and negotiate the deal in person. A day later I'm driving away from the dealer in my new car while the new Tesla owner-to-be is waiting at least a month for a car he's never even touched or sat in. I won't even elaborate on the trade in by jpeg strategy.
Kudos to Musk for trying and forcing the auto industry to eventually go all EV but the future does not look good for Tesla unless it partners with or is purchased outright by a car company that needs Tesla's technology.
6
@Win Having an idea, even a great idea, is not the same as being able to bring it to fruition. The long-established car companies know how to do that.
5
And the main strength of all the established manufacturers about to enter the EV market is also Tesla’s weakest. The production engineering skills to mass produce automobiles.
Tesla created the EV market, but I’m not sure they will still be there when the industry has gone fully electric.
Elon's screaming kindergartner tantrum management style and his inability to listen to the knowledgeable and experienced adults in the room will do more than any other factor to ensure that Tesla will never become a successful auto manufacturing company.
16
In the words of The Doors; “This is the end”. Having been a Tesla fan it’s sad to have the feeling that new Crossover will be a “meh!” moment. Can you even imagine thinking that 2 years ago.
Such a shame but the legacy will be of accelerating change in a huge industry. (A bit like Apple will be remembered if they don’t start innovating again)
2
Can't but think about the movie "who killed the electric car". Does big oil and their car companies have anything to do with this?
@ben No, because those automakers are trying to introduce EVs to the market. The problem is that the market for pure EVs is still quite small.
Can't wait for the future of self-driving electric cars. Hoping all the best for Tesla and that Elon works everthing out
Well, the popularity of the $80,000+ Type S always reflected disposable income of the very well off.
Whereas middle class wages (the ones that might pay for a Tesla Model 3) have gone down or stagnated since the beginning of the 2008 crash.
In short, the economy is bad for most in the USA--still.
Then, if you're interested in an electric car, the Chevy Bolt is well reviewed, and available today for the same price as the Tesla Model 3.
And of course, there's still no 15 minute recharge of any electric car, while the batteries lose a huge amount of capacity below about 20 degrees Fahrenheit.
3
@Yaj Correct. So for me in northern Wisconsin that’s a deal breaker. (My 10 year old Camry works just fine up here!)
1
@Northwoods Cynic, you're correct & for a vast majority, a $10k gas & go more than does the trick.
@Northwoods Cynic:
Look into polarized oil (Castrol Magnatec, Bitron, and Polytron) the metal parts of your engine stay covered in oil even after the engine has sat out over night in northern Minnesota, Wisconsin, Watertown NY, etc, because the oil itself, not an additive, sticks to the metal.
It's staggering.
My experience is with Bitron, but the others should be the same. Your engine oil changes will be black for at least 2 oil changes after you start with this polarized oil.
Yes, your 10 year old Camry engine will run a lot quieter--plus you should see about a 5% decrease in fuel consumption, or better acceleration, your pick.
I'll assume you're familiar with the infamous (and accurate no matter what Musk claimed) NY Times review of a Tesla Model S driven from Baltimore to about New Haven Connecticut on a 10 degree F day back in about 2014. It was a complete disaster and Tesla got caught using all sorts of big brother tracking, besides conflating using a Tesla on an ice track in Sweden with driving for hours in cold weather.
Even if you know you'll mostly drive your Tesla S, or Bolt (the only two decent mass market e-cars--the Leaf and i3 ranges are no good) at temperatures above say 30 degrees F, you'd still need access to something like a 300 volt, 50 amp, DC mini-substation to be able to mostly recharge your car in an hour. A 30 amp, 240 volt AC charger, sort of what you can have at home, takes something like 8 hours.
Musk has always been all hat and no cattle. Soon he will also shut down his Boring Co. which expensively solves no traffic problems whatsoever.
And if you still think he will get us to Mars with SpaceX, you're better off getting Greyhound tickets tot he same destination.
6
@Petersburgh F Eln could get himself to Mars I’d be happy.
1
I own a Model 3. It is the best car that I have ever driven and I have leased similarly priced cars like BMW, which are great cars in their own way but none compares to the Model 3 driving experience. It is so fun to drive. The supercharger network is there if you need it for long trips. Granted an electric car would be tough if you do not have the ability to charge at home. But, I would guess that the market for most cars is in the suburbs where people can plug in at night and wake with a car fully charged. I believe Tesla will be successful or some company (Apple?) will take it over. There is a lot of value there - supercharging network, battery knowledge, etc. This is not a Tucker. Once you drive the car you will know that it is here to stay. And in buying one you are supporting American workers, lessening the dependence on oil and helping to transition to a cleaner transportation future. Sure there will be some growing pains (and these seem to be microscopically examined) but there are so many positives.
54
@Mp One of the problems, as you sort of get at, is charging and distance and the market for these cars. I live in the San Francisco Bay Area. I can afford a Model 3, but I live in an apartment and have no way to charge it, which is a shame because my typical driving habits would be well-suited to an electric car. If I lived in an area where I could afford a house in which to charge my Tesla, my commute would be too long for the range of a Tesla. People who live in the burbs tend to have kids and have lifestyles that aren't yet compatible with owning a niche electric car.
@Mp
“And in buying one you are supporting American workers, lessening the dependence on oil and helping to transition to a cleaner transportation future.”
At last! A comment on supporting American workers, and less dependence on imported oil! Important stuff that is hardly mentioned.
3
@Maureen How do you think the electricity to charge the batteries is produced? Fracked oil and gas, neither of which can be sold at a break even price. When it so priced you won’t be able to charge the the batteries. Labor, would that be after three rounds of layoffs? Production Process is the intellectual capital that makes a shop floor run. Firing these guys/gals shows no longer term thinking. Takes a year or two to get these people up speed as a team.
2
Tesla should start advertising on the New York Time (I know they do not advertise).
Maybe this way this report would mention how "Tesla Model 3 Completely Crushing US Luxury Car Competition".
Google Small & Midsize Luxury Car Sales in USA. You see how BMW 3 series Mercedes C-Class Lexus ES, Audi A4 are just a fraction of the Tesla Model 3 market. tesla is a growth company is not the typical ford/Gm/VW of the world. Tesla may open more service center and have people trying the vehicles there in the future..
3
@GR Tesla is over.
One thing to keep in mind while reading these sorts of analyses, however: Model 3 is a fantastic car. Just ask anyone who has one.
I wish Tesla well. They are singlehandedly killing the gas car. If Tesla fails, expect to see even more gas-guzzling SUVs and pickups swarming the roads since none of the other car manufacturers care a bit about a livable planet.
17
@Peter Kalmus Sure, for one thing, the people able to afford a Tesla are already a certain specific demographic. (I know because I live near Tesla main HQ) and secondly -- a concept well known in social sciences research -- people are highly unlikely to put down their own decisions (even totally wrong ones). This is why occasionally you hear about people being scam for millions and not reporting it until much, much later. They're too embarrassed about admitting what happened to them. Same with plunking down $80K for a car or more. People don't want to admit to themselves or publicly they made an error so they focus on the good stuff instead or they say nothing.
I have nothing against Tesla personally but the price of their vehicles are still too exorbitantly priced and my family has a higher income than most.
1
@ms Currently in terms of vechiles sold,less then 20% buyers want sedans. The issue isn’t whether this is wrong headed or not, but reality. Tesla, cutting everything out including the kitchen sink is not going to provide what the market wants. It has no money. It may have the market cap of tech company but so what,where’d that money go? Doesn’t take $48 billion to develop a car platform.
@ms In that case you'll be happy to know that the base price is around $30K (after rebates, as of a few days ago), not $80K as you say.
1
My neighbor has a model S and I drove it. Fantastic. Musk has bitten off more than he can chew probably but the world needs people like Musk. If I were him I would move all the production to China.....all of it. That is because the coming electric competition is not going to come from US manufacturers or European ones. If the US wants to get rid of the tax credit just build it in China. And if the US does not want to promote nuclear for electricity to charge his Teslas.....build it in China where they are doing it carbon free. Leave the US to the lawyers, politicians, military industrial and medical parasites and hedge fund people and leave the manufacturing to the Chinese. Americans are just not competent in manufacturing any more. As a Chinese manager once told me "You Americans need your rest...."
1
@as China neither needs it or wants it, it already is the largest producer of EV cars in the world. Chin is trying to add more nuclear to its’ electrical mix. Currently, it’s the worlds largest user coal and oil and emitter of carbon.
Hang on to your Tesla shares, because the company is very likely a take-over candidate by the International Auto companies desperately trying to develop electric cars!
3
@Nilu that is not how it works. Tesla's share price is "insanely high" such that no rational, profit making auto company would want to take it over. Only if Tesla goes bankrupt, or the share price craters, then there would interest in the technology.
4
@Nilu Just how complicated do you think a battery powered car is? Not very. Electric motors have been around for 140 years, the basic design unchanged. The problem is the battery, go look at the periodic table of elements, there just isn’t any magical element capable of storing exceptional amounts of energy. One has to fool around with the molecular structure to pack in more power. But, there’s no free lunch at some point you functionally have a bomb. I don’t want to riding around in 1300 pounds of highly flammable batteries.
1
tsla's very high-end stores are not appropriate for sales of base Model3 - EM is no stranger to high-level risk taking - this is yet another instance - caveat: the sales staff has massive instatutional knowledge which could prove invaluable in delivery and service
3
On-line car buying: Vaporware.
No thanks.
2
The doe-eyed Tesla supporters will still support Tesla, at least in the comment sections of news stories, while they go buy other cars. Meanwhile, target after target is missed, promises are broken, and the bizarre Musk will continue shooting rockets into space while failing to meet production goals for a car he admits no one can afford, even if they could find someone to sell them one and actually receive it. All while Teslas keep hitting things like fire trucks and trees while in 'self driving' mode. It's all been a scam. All along.
6
@Jackie
Please drive an electric vehicle. not necessarily a Tesla. Something like a GM Bolt a Nissan Leaf and later we will talk about it. Electric cars are the future. cars are computer on wheels these days. Tesla does not have to defend its legacy combustion engine business ..
3
@GR if global temps are to keep under 3° then no cars are in the future.
The end was always near is now here.
Just a few more nails to drive to close the coffin.
But don’t you fret, you will still be able to buy a Tesla made in China.
1
Cut a deal with Apple. Sell the cars in their stores. Well... some of them.
$920MM payment for convertible debt? A sane person would have given the borrowers the stock. Reducing cash reserves at this point is a suicide move.
Tesla is doomed. It would be good to short TSLA, but the cost of borrowing the shares is relatively high since shorting that stock is rather popular.
1
@Michael Sierchio
The terms of the paper required the stock to be about $360/shr or higher to be converted to stock so Tesla had no choice but to pay back the debt in cash. Obviously they still can raise that cash if they need it -- either by selling more shares (with the attendant shareholder dilution a bit worse than conversion would have been unless TSLA stock recovers before they need the cash) or borrowing it (with Tesla's condition deteriorating and interest rates creeping up, that could be expensive).
1
The flaw in Elon's strategy is contained in his claim that 82% of Tesla buyers purchase without a test drive. That proves he has been dealing with a very small niche of car buyers up until now. All volume carmakers can tell you that over 90% of buyers insist on a test drive--specifically of the unit they intend to buy from the dealer's lot to ensure it doesn't seem like a lemon in operation. This same percentage selects from dealer's stock on hand versus putting in a 3-month wait "make to order" for a sample they never drove.
With the closure of his already small dealer network, he is ensuring that he only gets purchase consideration from a) the less than 10% who would buy without a test drive, AND b) those who can afford a $40k-100k car (they will surely constrain production of 0 margin $35k models) AND c) accept he has no service network for quick repairs while travelling.
Audi's coming E-Trons will deal the final blows.
12
There's always someone lined up to purchase Randian snake oil from some libertarian who won the lottery once.
11
Timing is off for Elon if he could have switched to on line sales on his own instead of being force to, he would have been a genius. Auto sales are going on line the next down turn in the auto industry dooms the show room, un- needed expense, the investment not worth the return.
Maybe he'll have to parter up, hope not builds great cars with the eye on going forward.
A company founded in 2003 should have stopped being called a startup around 2008. Maybe add a few years to be generous.
Welcome to 2019. Forever the infant company that never gets its act together.
9
I've driven a Tesla for three years. It's clean, quiet, simple, reliable, and fast. Very appealing.
Maybe, though, a <$40K electric car isn't economically feasible. Maybe, just maybe, the clean green future of personal transportation won't be built on battery power.
Musk banked on a decline in battery costs, volume, and weight, and an increase in power. That's happened, but very slightly. Not the steep cost curve descent he envisioned.
Battery manufacturing, and the extraction of required minerals, is an environmentally messy business. And it's not clear what will happen to these battery packs when they reach the end of their relatively short lives.
Electric vehicles have zero tailpipe emissions, but the electricity still has to be generated on an industrial scale, and that relies on coal and gas, currently, in the United States.
Take away government subsidies, and maybe it's not a business.
It's difficult to imagine anyone executing better than Musk has. If he can't do it, perhaps it can't be done, anytime soon.
8
@MR:
"Maybe, though, a <$40K electric car isn't economically feasible. "
Take of the blinders and see the very well done Chevy Bolt.
Yes, Chevy. It's been out for a couple of years. E-car geeks like it a great deal.
1
@MR After 16 it is difficult to imagine anyone, short of not making a car, doing worse.
There are major problems getting Tesla parts now, but after bankruptcy it will be close to impossible.
8
If Tesla fails, we all fail. The science is clear, if we don't rapidly transition away from fossil fuels, the jig will be up for humans before most even realize it. Tesla is driving the transition and has a huge lead. I love my Model 3.
116
@geofnb Greenies worried about the repercussions from fossil fuels should be on the front lines begging for more nuclear power, instead of predicting doom and gloom.
1
@geofnb We do not all fail. Most people in the world don’t have cars, we don’t need them either, if it’s a matter of life or death.
3
Every innovation opens the door for others to follow. There are many affordable models available, for a lot less money than Tesla.
2
The article seemed tilted unfairly to me.
A complaint about Tesla is their cars are expensive. Yet somehow its a bad thing that they are working (and succeeding) in lowering the prices of all models?
It's a bad thing that they made enough to pay off a large loan?
Remember how obstinate our Detroit has been on fuel economy? Their experts always saying it cant be done... It took someone outside to re-think the auto and leap ahead.
Now the Germans are pivoting as hard as possible to catch Tesla. Our local california company is litterally changing the auto world. VW/Audi just said they have to pause because their EV approach is proving too costly and is not as good as Tesla's.
Not to mention the three safest cars on the road are these 3 Tesla models. They caused Consumer Reports to re-scale their safety metrics.
I waited sooooooooo long for the 35k model. The day it was released I ordered mine. I bet there are tons of other people ,just like me, residing on the next lower (and wider) tier down. (engineer / not rich )
EVs are the future and Tesla has a big jump on everyone else.
73
Musk and his board just don’t have a clue about how to scale up from being a boutique car manufacturer. Very, very few companies make the transition from startup to major player under the same CEO. The skill sets are so different. In addition, Musk himself is increasingly erratic. The board can’t control him and he will drive Tesla to bankruptcy, which might not be the worst thing. If Tesla gets acquired it could bounce back rapidly. I’d be careful shorting the stock. It may dip but I doubt it will nosedive.
4
I knew the company was in trouble when Elon started to "lose it"..
The stock has fallen - but may rebound if a buyer appears.
I guess Elon will be remembered as another Preston Tucker.
https://en.wikipedia.org/wiki/Preston_Tucker
1
@d. stein
Musk is a bit of an eccentric Genius, Tesla cars are 3 years ahead of the competition. The key to Electric Cars IS its Battery and TESLA has the best current Battery and they are making them their selves.
Elon's biggest problem (like Trumps) is he needs to delete his twitter account and concentrate on the business at hand. Elon announced he new SUV for 1 reason only, he cannot stand when the shorter's are driving the stock price down, and he tweets to drive it back up. This has backfired on him more times than not.
He owns 1/5th of the Stock, so his net worth falls considerably as the Stock value drops.
But IF you examine the facts:
1. There is currently no electric car that is remotely in Tesla's class.
2. reducing production costs, means lowering labor costs. (which he is doing).
3. The $35k model 3 opens the door to the Millennials, and the High School and college students, whose parents are looking for cheap, safe Transportation for their kids.
4. China is HUGE, IF Musk can build the factory there in a year as predicted, the Chinese market dwarfs that of the USA.
5.Space X is America's future and Musk is Space X.
6. The underground tunnels, is a great idea, but way before its time and Musk needs to drop it and concentrate on Tesla and Space X.
7. Anyone who is willing to spend 24/7 on his production line, sleeping in the factory, IS the type of person who will succeed.
5
@Bob
No genius here - just a slick promoter with some very good engineers behind him using existing tech to make a 'new' product. Yes, many good things have been developed at huge costs to investors, the supply chain, the environment and future generations.
Tesla batteries are the knee joint of the whole enterprise. Take a look at the post-crash fires and multiple re-ignition events after the initial fires were smothered. The smoke and vapors are toxic - fire departments are instructed to stay upwind and 'let it burn.'
OK - gasoline and diesel aren't very nice when burned in the open, often contaminating local waterways and soil with unburned residue. And they are supported by an environmentally and financially ruinious system. This will be paid for by succeeding generations.
But ion-polymer technology is far worse. Our children and their grandchildren will curse us for spreading ion-polymer battery technology over the world. These devices rely on rare earth materials extracted at great environmental cost and their disposal in anything but a safe facility is problematic. We barely know the consequences of this technology yet promote it as 'saving the earth.'
Good Luck
2
@Bob
//The $35k model 3 opens the door to the Millennials, and the High School and college students, whose parents are looking for cheap, safe Transportation for their kids.//
Not for me it isn't. When I bought a new car just after finishing college (I borrowed one of my parents cars prior) all I could afford was a Civic, and that's with no student debt. I can't see College student being able to afford a new electric car even now unless their parents are loaded.
4
Yet another gloom and doom article from the corporate press.
Tesla has created the world's best electric vehicle. They've created the best-selling luxury vehicles in the United States. They are the only new car company in this country in a century. And they continue to earn kudos for the quality of their vehicle.
Will sales be cyclical? Yes. Will they endure some downturns? Yes. But Tesla is revolutionizing the car industry, and in the process, the company is creating a critically important means of reducing greenhouse gases and helping us survive global warming.
Perhaps corporate reporters could acknowledge those points.
146
@Sean
Your memory is short or you are young. Remember DeLorean Motor Company? They were founded less than 45 years ago and were based in the US.
And to say that Tesla receives kudos for their quality seems to counter what Consumer Reports survey of owners shows. There are also plenty of examples of Teslas with very poor fit and finish online - for example uneven body panel gaps that would never get to the end of an assembly line at Toyota but end up in customer hands from Tesla.
9
Most of what you say is true, however, the reason why Tesla may well fail is because their leader doesn't know how to lead. He spent $2B of cash on a fully automated production line. It didn't work, so he hand built cars in a tent. Instead of building the Model Y first - a high demand SUV - he built the Model 3, a sports sedan. He doesn't know how to build cars and had zero interest in getting a team's help to do this for him. Now, he reverses course on retail stores - from less than 2 months ago. Elon Musk is his shareholder's and customers savior and their worst enemy.
8
Tesla maybe revolutionary at the tipy-top, taking market away from luxury brands, but as their CEO himself says, average wage earners can’t afford Teslas. The collapse of buying power in the American middle class is starting to become very visible.
3
I am not against EVs, but Tesla has always been the wrong solution to a poorly defined problem. In urban areas, there are plenty of cheap and better EV and hybrid options, but better still, use mass transit, walk, or ride a bike or scooter.
I saw Tesla as trying to bridge the gap for longer-distance intercity travel for pure EVs. But then I as, why? ALL of that time and resources would be better spent on building out our deficient passenger rail network. Almost all private car travel, unless maybe you have a van packed full of people, is inherently wasteful. We do it because we don't have a choice.
Then starting with the luxury market and working backwards was also the wrong model. The model 3 is comparatively cheaper, but my gosh, it's not affordable by any stretch of the imagination. The best option for price and efficiency is to keep all those little cars in good working order as long as possible.
Last but not least, Tesla's innovations are drastically overstated. The fact is that you can retrofit just about any car with off the shelf parts to an EV that approaches the performance of the model 3 for less money. YouTube can show you how. It is indeed not rocket science.
7
125 mpg and made in America. What other non-EV vehicles get to that number?
1
@Joe Schmoe, the problem is that America is not Europe.
The collective will for train travel is non-existent. It is both stupid and wasteful to have this attitude, but there it is.
It doesn't help that there are monied and entrenched interests fighting public high speed rail at every turn, nor that attempts to reach some slender vision of this (such as California) have failed.
Would it be better? Yes, in spades. But America is the land of the car...definitely for worse. So our only hope is that all our self-centered brethren will at least be driving EV instead of gas vehicles...and helping the environment even though they couldn't care less and actively sneer about tree huggin'.
@Bascom Hill All of them.
From a purely thought exercise perspective, Tesla will be studied in business master classes in the future. Their business model started interestingly enough but when pushed by to be more than what it appears was intended, there was not a clear plan for going forward.
Reading this article was the first time I became aware that the vehicle, by design, has only a single pedal; an innovation to be sure but also a fundamental question of design practicability. When all other vehicles have a different design and the training of drivers is only on the established model, what is the expectation?
The fragmentation of the residential solar market is just such a miss. At a time when they have the market's attention and could drive change on so many levels -- leading the way into the future by reducing carbon emissions. Perhaps there is still time to recover and own this space though it is not apparent that a plan nor appetite exists within the company and/or its founder to do so.
@Lostin24
Their battery sub stations for electrical grids is going over like gang busters in other Countries. They are paying for themselves in less than 2 years.
The key to our future is finding the perfect battery. Tesla is 3 years in the forefront. Tesla cars @ 500,000 miles, still have 80% battery storage left.
What Musk will most likely do next, is to incorporate Solar, wind, and battery packs into their charging stations and get off grid.
1
@Bob
The idea that there is available space and weather conditions for solar or wind power capture at most locations where charging stations are needed is absurd. The alternative of transmitting such power over new private (i.e. "off the grid") lines from private solar/wind farms to the charging stations would be nearly impossible due to regulatory issues and would be obscenely expensive.
So, yes, Musk is likely to announce the Tesla is going to do just that -- perhaps because Musk actually believes it or because he wants to distract everyone from Tesla's core problems (one of which is now Musk himself).
1
@Bob Tesla battery technology is not three years ahead. But let’s play, by exactly what definition?
Tesla owner here. The car is insanely fun to drive, futuristic, and revolutionary. However, I was in an accident and had to take my car at my own expense seven hours away to the nearest service center. Tesla has to solve the logistical problems for buying and especially service. Without this infrastructure, I fear my car, as great as it is, will soon become an expensive metal brick because I’ll have no ability to get it fixed.
60
Wow! ‘a very expensive brick’. That right there is the problem and legacy Tesla don’t want but seems ever more likely. Are they going to be DeLoreon2.0?
2
@SPN
that's why owner of a car wants to know there is a dealership nearby. on the other hand, not sure how many of the 'showroom' could provide 'service. stuff happens, need that local support.
1
This is no surprise. Cars are expensive to design, test, manufacture, distribute, market, and service under warranty. Different safety and emissions standards for the big markets, and fickle consumer tastes don't help. Tesla is on auto-pilot straight into for the arms of an established, and cash-rich automaker.
3
Most likely one of the established car manufacturers will buy Tesla, including patents, use any of the applicable technology and put the rest on the scrap heap. It remains to be seen what the price per share for the buy-out will be.
Musk will then focus on his other ventures/hobbies and repeat the cycle. Caveat Emptor.
6
@Unglaublich
I am not sure any would want to. Many if not most of them have their own EV manufacturing model already in place with technology and engineering staff equal to or greater than Tesla's. The big European and Asian manufacturers have been selling EVs profitably for a good long while. That leaves maybe American car makers. I am not sure they would buy into a failed production and business model when they could simply partner with another firm (and they have experience doing so already).
5
Tesla would be better off sticking to making electric vehicles for the luxury market, to buyers who are happy to pay a premium for the car. Tesla's efforts to slash the Model 3 price at the expense of its workforce seems short-sighted and doomed to fail. They are unable to meet production numbers that could drive down costs.
11
@ck
Yes, and when they had it together, that would have been the time to expand to a less expensive model
4
@ck
and the luxury market (buyers) can afford not having local service - or a car that they HAVE to depend on.
1
The cheapest Tesla is 35K. The most expensive well north of 100K. The Tesla 3 while impressive also doesn't have a traditional dashboard. This is not like buying soap on AMAZON. Customers need to see feel test drive cars, especially those that are not evangelists but need to be sold. Thus the expression "kick the tires" this does not seem like a strategic decision rather a financial one.
2
What is often hidden in these conversations about Tesla is that when you buy a Tesla car, you are completely dependent on Tesla (the company) for your maintenance. As far as I know, there are no plans for Tesla to train non-Tesla mechanics. So if the company fails, every Tesla owner is on borrowed time in terms of having a working vehicle. Moreover, driving a Tesla is not like driving a regular car. Teslas have just one pedal -- a "go pedal": you push it down with your foot to move forward, and the car brakes when you let up on it. So our acquired instinct to step down quickly on the brake can lead to crashes. Musk is taking risks with the marketplace, but Tesla owners are also embracing risks of which they may not be aware. The other car companies seem instead to be working toward a smoother transition from what we know to what is new -- a business model that in the long term may be more successful.
14
@SLP My Tesla Model 3 has an accelerator pedal and a brake pedal. I just let a 70+ year old friend test drive it without telling her about the regenerative braking you get when you let off the accelerator. She figured it out in seconds and absolutely loved it. She had no problem with the center mounted screen. She loved the comfort and performance as well.
23
@SLP
"Teslas have just one pedal"?? Have you even driven a Tesla? Our new Tesla 3 has both an accelerator and a brake pedal and we've adapted easily to driving this terrific and fun car. We're in our mid-seventies. Perhaps you're one of the people who's "shorted" the stock and are trying to bring down share price by writing negative reviews.
16
The “One pedal” adamantly made comment, that is the premise for a lengthy diatribe is an example of extraordinary level of bias against Tesla.
4
There are many accounts on Twitter devoted to shorting this stock. In between the intentional drumbeat are a few good bits of information, crowdsourced among some intelligent people. Parking lots full of cars that don't go anywhere. Stories of registrations unissued due to no tax payment. Other problems getting normal spare parts (which is why I ultimately didn't buy one....I can't wait a month for a part). Delivery done by people who don't care, zero follow up to inquiry...OK this happens everywhere, but if you can't find another Dealer OR independent repair shop...Tesla folk are married to the factory-they actively work against do it yourself or independent mechanics.
Building cars is hard. Tesla went into it thinking they were disruptable like many other industries, but for some legacy costs, Tesla had to make cars just like the majors...a 100% robot assembly line won't work, and the majors already know that....Musk had to learn it again.
A Tesla owner needs a dedicated parking space with an electric hookup. Not hard for many-upscale suburbanites, mostly, but impossible for some-even if you pay NYC prices for a garage, you don't get a space, and certainly not a 220v Socket. The guy in the Bronx who suffers with Alternate Side parking isn't a potential customer.
You need showrooms, especially in the upscale malls that Tesla people frequent. Pulling back in this way is an error.
8
I have bought three Tesla’s online with zero issues. I have even traded an older Audi for a new Model 3. The first time I went to a Tesla showroom and asked to buy a car there. The salesperson took me to a room with a desktop computer and told me I could only order the car on the Tesla website. I hate dealing with pushy car sales people and managers. I would click away. I don’t see what the big deal is.
67
@Newport Iggy Hate to nag, but who needs three Tesla’s??? The pathway to a Green future does not just include a transition from gas to electric, it also means less consumption. I.e., buying fewer cars!
5
I bought my Tesla Model 3 online including arranging the finance. The purchase was easy. I enjoy the ride on it, every minute of it.
5
Tesla is like Musk. Ahead of its time. A bit crazy and unpredictable. Imperfect but exciting. I don't know the future of Tesla (nor does anyone else) but I don't mind the bumps as I watch where it goes. Musk is the car industry's version of Mark Cuban.
20
You can blame those who manage the federal government for Tesla's woes. The government subsidy will make or break Tesla. I bought my VW eGolf (which I love with a passion) largely because $7,500 from the federal government and $2,500 from California, plus $500 from our local utility brought the sticker price of $32k down to $22k. And I don't pay for gas. We subsidize corn starch, but not electric cars. Let's all be fat and drive gas guzzlers.
133
@Tim Bachmann Smart move to buy the VW, because they are already established and have a dealer/ parts network. What happens when your Tesla breaks down ? No dealer or parts network...
11
@bfranco I've had a Model 3 since last July. I had one problem with the frunk release mechanism. They came to my house and fixed it in my driveway within two weeks. There is much less to go wrong with these cars and very little required maintenance.
20
Look around! We are fat and are driving gas guzzlers aka SUVs already.
6
“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.”
They are rich people toys. After you sell to the rich people who want them, you ain't gonna sell anymore. If I were in the market for a high end German sports car or an American muscle car, I would consider a Tesla. Other than that, it is not even close to affordable, for an everyday driver.
5
@Mogwai
The price is comparable to a high end Toyota Camry range or Honda Accord, except that you will spend a lot less in fuel an maintenance costs over the life of the car. Hardly a rich person's toy.
62
So $35k with a significantly reduced fuel bill(!) virtually zero brake wear and other negligible service costs is unaffordable to the masses?
The highest safety rating in the world, backed up with the massive decrease in frequency of accidents is a positive feature that redefines price/value.
1
@Enid Then there’s the cost to own one. Got a dedicated spot, nope. Maintenance in 2-3 weeks without a loaner, how do I get to work. Man, you’re not being real.
1
You just don't see this kind of immediate pivot from a company on stable footing.
I have to wonder if Musk honestly believed the nearly $1B March 1 convertible debt payment was going to magically convert to shares until the last minute, creating a cash crunch that was entirely predictable and something that could have been prepared for if not for projections of sunshine and rainbows.
How else do you explain touting growing storefronts (and the sales that go with them) and service centers through 2019 in their annual report issued just a couple of weeks ago?
7
Musk is juggling too many things. He should pick one industry and focus on it, solely. His products are fundamentally good.
22
@Tortuga Actually among auto experts, the Tesla cars are notorious for poor manufacturing quality.
2
The fact that there are so many people, who claim to be "Green" and say that they are worried about the climate and our planet, are not buying Tesla's speaks volumes. It also shows that the majority of people only give the environment lip service!
The reality is that a family of four, with a household income of 50 K, cannot afford a Tesla. Not when there are far less expensive alternatives available!
The fact that if you have a fender bender while driving a Tesla, it will take months before it's repaired doesn't help matters.
Now throw in the fact that Tesla is burning through cash reserves and may or may not be in business in 2020 only adds to their problems... Why should I buy a Tesla if the company won't be around?
16
@The Critic
Another problem is that there are plenty of ways one can be green that don't involve buying a Tesla.
20
@The Critic
A house hold with an income of 50K cannot afford any car.
This is a ridiculous irresponsible statement as we all know that to just survive in a bigger city your minimum income has to be around 65 to 120K.
There are hundreds of cars that one can buy for 35 K, which is another empty statement by the author.
You must have seen endless amount of tv commercials that advertise about buying cars online, with delivery to your door.
All these companies must have very poor business sense according to your article.
And since when have economists or business specialist been right?
If that would be the case, the stock market would look very different now.
9
@Sean Eddy
I have spent 50 K on my home that includes Solar panels... most people don't have that kind of money!
Now imagine for a moment, how a person living in Michigan and who wants to be "Green" would have to reduce their fossil fuel energy consumption by 80% - which is what it is going to take if the experts are to be believed... This means driving to work, heating and cooling your home, shopping trips to the store, using 80% less fossil fuels than you do now. How can that be done if the "New Green Deal" is made law of the land?
Imagine trying to heat your home, when it is five degrees outside, with carbon neutral fuel sources. (Solar, Wind, Hydro is not carbon neutral!)
It isn't going to be done by tossing pop cans into the bin. It can't be done by recycling paper. It won't be done by using LED lights!
Being "Green" means not having a closet full of clothes and shoes. It means not buying from Amazon. It means not buying groceries that were brought in from 1000 - 1500 miles away. It means no cars. No plastics of any kind. No electronics of any kind.
It would mean living like the Amish do now!
If everybody in the US lived like that... it would have absolutely no affect on climate change...
Plenty of ways one can be green? Really? Show me one that actually works, that would stop climate change if everyone did it!
The one that would work? Stop having children!
There are just too many people!
11
As a big fan of Elon Musk, it's a sad reality that all of his ventures after PayPal have required heavy government funding and subsidies.
If someone as talented, brilliant and ambitious as Mr. Musk cannot pull off a much smaller version of the Green New Deal, the warning for AOC and her ilk is clear.
We're just not there yet.
7
@Rajkamal Rao How about we stop subsidizing fossil fuels.
2
My husband and I were considering a Tesla and thankfully we were able to go to the showroom in North Austin to see it and schedule a test drive but in the end, after running the numbers, it just didn't make sense for us. While Mr. Musk may be irascible/unpredictable, the staff at the showroom were incredibly helpful, professional and went to great lengths to provide the information we requested and it's them that I feel sorry for as I felt they honestly and truly did believe in his vision to change transportation forever.
25
VW's new line of electric autos will blow Tesla out of the water.
Tesla is currently burning through cash at an unsustainable rate.
Musk makes Wall Street nervous, look for Tesla stock to continue its slide.
6
@Blue in Green Despite many tries, an actual "Tesla Killer" has yet to emerge in anything other than a press release. And VW is famous for press releases.
7
@Leptoquark "And VW is famous for press releases." That's not very different than Musk being famous for tweets - ones that get him in trouble with the SEC.
1
@Leptoquark There won't be a single vehicle that's a Tesla killer. It will be a plurality of more affordable options from more established automakers.
4
One does get the sense that sales fell off a cliff as all the orders for the high-end versions of the model 3 have been fulfilled and now the price cut is being done so that the remaining orders will be filled. Also, the statement
"They are not going to grow faster by being online only than by online plus stores,” he said. “It’s a logical impossibility."
fails to take into account the corresponding price drop. It is possible to grow faster since the change to online only allows for the lower prices. The question is will it????
Despite Tesla's issues, I still hope the company survives because there really is no question that the change to electric cars will occur more slowly if the other companies are not under pressure by Tesla. The environment needs all the help it can get.
73
I think the issue with Musk quoting the figure for online sales is that the Model 3 was essentially vaporware for 2+ years and nearly all the sales were online preorders, a situation that obviously skews that figure. I don't think, though, that the online ordering will make or break them. It is sufficient and for many preferred to dealing with a dealership. But, even so, that analyst is right, eliminating a second option to buy a car can't increase car sales, it's an impossibility.
There's something to be said about discussing this as a society, too. Clearly electric cars, even if they have dealerships, will not bring in the local revenue of ICE cars - the oil changes, transmissions, customizations, etc. - and the old franchise laws, right or wrong, can't boost the local economy like they used to. It will become another source of rural economic decline, along with ride sharing.
5
@mjw
Every one of the last 7 cars I have purchased over 15 years has started out online. I detest dealing with dealerships from the sales shuffle and phony bargains all of the way through to unnecessary service pushed by service managers padding the dealer bottomline. One of the most attractive things about EVs in general is the low maintenance. It is not clear that many commenters here or elsewhere take a realistic view of what ICE vehicles truly cost in time wasted as well as $. Anyone who has driven a Tesla understands the technological change, the safety and the driving pleasure that is amped in the Model 3 at Toyota prices. These are nice cars that are priced rationally. (the price might decline further but for me the whole price of time and money are fine.) I hope they can succeed to overcome the oil economy subsidies (public oil reserves drilled, spilled, extracted and burned for nothing).
7
While we may not love them, car dealers do know how to sell and service automobiles.
18
@skeptic
An advantage of electric cars is that they require little service -- no oil changes, brake replacements, transmission fluid changes, etc. That is also one of the main reasons traditional dealerships are not keen on selling them.
47
...which is of course why everyone enjoys going in to the car dealer to purchase or get the car fixed. Not.
3
@Enid They absolutely require brake replacements, as well as suspension maintenance, gearbox oil, and whatever issues may arise with the complicated electronics.
4