Comments on the strategy of Tesla

[smoothoperator]

So far, besides from a few anecdotes, we don't really have any empirical evidence that proves or provides strong evidence which way is "better". We also have a couple of different metrics: quality of dealer experience, ease/speed of dealer deployment, net cost to Tesla.

The cost thing can probably be roughly figured out from store expenses in Tesla's financial reporting vs dealership expenses (including any difference in profit from the dealer taking the difference in MSRP and invoice) in another publicly traded luxury make, divided by the number of stores/dealers.

But at this point it seems those within Tesla will have to be the one to figure it out. I think what we will most likely see is Tesla sticking to the store model for a while (since initial demand definitely isn't going to be 20k in the first year). If demand gets so overwhelming that it starts to become apparent the store model isn't going to work, then Tesla could always switch to signing up dealers then.

But the recession probably helps implementation of the store, since there were many car dealers wiped out by the recession (I certainly seen plenty close in some of the areas I travel). The estimates I found put thousands closed in the 2008/2009/2010 period. From the GM/Chrysler bankruptcy alone, I think about 2000 closed.

The recession helped close weak GM/Chrysler dealerships in mostly distressed areas. That Rolls Royce dealership in Newport Beach moved over by the airport next to the Range Rover service center. A Rolls-Royce is hardly an impulse buy and they probably didn't need that type of exposure to sell cars. I know that in good markets Tesla looks to spend around 10k/month to lease floor space.

Solely occupying a closed dealership space is overkill (most dealerships were 20k+ Square feet and are contaminated) their preference looks to be straight retail spaces (like West LA), which means higher rent.

The beauty of Tesla is that they can easily fit into most any space as they do not deal with hazardous chemicals etc. I strongly believe their preference are these types of spaces over defunct car dealerships. What will probably happen is a seperation of service center from the showroom which will allow Tesla to acquire high image locations, but not be hamstrung with doing maintenance in the same building.

 

[mattjs33]

I remember replacing failed timing chains, blown alternators, catalytic convertors, doing valve jobs, etc. ...

So just to be clear then, are you a mechanic? Because earlier you stated...

I don't remember ever having to replace a switch or anything other than a headlight in any car, $10K to $100K.

In any case, yes, the Model S will require much less regular service in terms of the powertrain. But it will still require service. So the big issue here as posed by the OP is whether Tesla can afford the huge capital outlay to form a self-owned dealer network to adequately sell and service the Model S. Because the feeling to me (and it seems, to others here), is that the current crop of Tesla stores as they exist at the moment will not fill the bill. So Tesla has a lot of work to to, and/or significant additional capital to raise, and/or a partner (or several) to find.

 

[stopcrazypp]

So just to be clear then, are you a mechanic? Because earlier you stated...

I think the two statements by rotolab was clearly talking about different things. The first one was talking about powertrain, the second one was clearly talking only about auxiliary parts which are shared by the Model S (powertrain independent).

Certainly Tesla still has a way to go with the stores. They plan to have 50 globally by the time Model S is launched, according to the SEC filing. Whether that is enough remains to be seen (Fisker has 42 dealers in the US with a target 15k production worldwide).

 

[qwk]

So just to be clear then, are you a mechanic? Because earlier you stated...



In any case, yes, the Model S will require much less regular service in terms of the powertrain. But it will still require service. So the big issue here as posed by the OP is whether Tesla can afford the huge capital outlay to form a self-owned dealer network to adequately sell and service the Model S. Because the feeling to me (and it seems, to others here), is that the current crop of Tesla stores as they exist at the moment will not fill the bill. So Tesla has a lot of work to to, and/or significant additional capital to raise, and/or a partner (or several) to find.

You are ignoring the fact that existing EV's, although built in low numbers, have had very little maintenance need. The Rav4 EV is a very good example.

While some parts you mention fail, the failure point is well after 100k miles. Not many cars need blower motors, window motors, suspension parts etc., before the warranty is up.

 

[mattjs33]

Well, naturally neither one of us has access to the service records of the Rav4 EV fleet as a whole, so I trust that you are basing that either on personal experience or general hearsay of a small cross section of onwers. But I do accept your point.

You may be surprised of the number of repairs that are done under warranty for exactly the types of components that you mentioned. My wife's job at a BMW dealership is to submit these types of warranty claims to BMW for reimbursement. So it really isn't that uncommon for non-powertrain components to fail during the warranty period. And I just know you're going to counter with some unproveable argument about how much better the Model S will be built than a BMW, so let's just agree to try to get back on topic.

 

[qwk]

Well, naturally neither one of us has access to the service records of the Rav4 EV fleet as a whole, so I trust that you are basing that either on personal experience or general hearsay of a small cross section of onwers. But I do accept your point.

You may be surprised of the number of repairs that are done under warranty for exactly the types of components that you mentioned. My wife's job at a BMW dealership is to submit these types of warranty claims to BMW for reimbursement. So it really isn't that uncommon for non-powertrain components to fail during the warranty period. And I just know you're going to counter with some unproveable argument about how much better the Model S will be built than a BMW, so let's just agree to try to get back on topic.

No, the Model S probably will not be any better.

As a %, the number of cars with such problems during the warranty is relatively small though. If it wasn't most automakers would be bankrupt in the already low profit margin business.

The warranty period servicing is crucial for Tesla. That's all that matters because Tesla is responsible for service. Cars out of warranty are just extra revenue, and Tesla could cover their costs by sending a ranger out to you.

 

[AnOutsider]

And I just know you're going to counter with some unproveable argument about how much better the Model S will be built than a BMW, so let's just agree to try to get back on topic.

Why so hostile?

 

[qwk]

Why so hostile?

His livelyhood depends on cars breaking down frequently, as in the current ICE model. Totally understandable.

 

[mattjs33]

No, the Model S probably will not be any better.

As a %, the number of cars with such problems during the warranty is relatively small though. If it wasn't most automakers would be bankrupt in the already low profit margin business.

The warranty period servicing is crucial for Tesla. That's all that matters because Tesla is responsible for service. Cars out of warranty are just extra revenue, and Tesla could cover their costs by sending a ranger out to you.

I agree. But of course certain types of work requires bringing the car to a proper shop.

Why so hostile?

No hostility intended. Qwk and I are diametrically opposed on certain topics of discussion, so I was merely guessing at what might be coming.

His livelyhood depends on cars breaking down frequently, as in the current ICE model. Totally understandable.

You amuse me Qwk. But you also challenge me. I think maybe I kinda like you.

 

[vfx]

...
The beauty of Tesla is that they can easily fit into most any space as they do not deal with hazardous chemicals etc. ...

More hazards than you would think. Tires are a hazard and the array of chemicals used in an auto shop for cleaning, lubing, and adhering are all pretty nasty. Not a big deal when the car is worse but these products still make the shop "unclean".

I would get the extended warranty on an S. With as many times my car has been to the shop to (warranty) repair what I would consider "growing pains" with Tesla learning what works and what doesn't, I would not expect everything to be worked out on their second car with so many new parts.

 

[smoothoperator]

More hazards than you would think. Tires are a hazard and the array of chemicals used in an auto shop for cleaning, lubing, and adhering are all pretty nasty. Not a big deal when the car is worse but these products still make the shop "unclean".

I would get the extended warranty on an S. With as many times my car has been to the shop to (warranty) repair what I would consider "growing pains" with Tesla learning what works and what doesn't, I would not expect everything to be worked out on their second car with so many new parts.

I was referring to the car sales floor, Tesla tends to sell cars in retail spaces.

I agree my Roadster has been a shop monger hopefully that changes after this most recent stint. Did you get the extended warranty on your car?

 

[vfx]

...Did you get the extended warranty on your car?

2008 cars got extended warranty thrown in. We were in your neighborhood today (check your PM).

 

[Lloyd]

Abu Dhabi National Energy Co. reports 7.6% passive stake in Tesla Motors.

Not sure why Tesla is doing this unless they just bought the stock.

 

[benji4]

I believe that Daimler sold some of theirs to Abu Dhabi sometime ago, not sure how Abu Dhabi National Engergy Co. ended up with it though.