Elon Musk says Tesla will raise prices and slow down store closures

[electricar]

A car person would be good - someone who understands supply chains, parts procedures, aftersale procedures, and the rest of the nuts and bolts of manufacturing cars. Doing these things correctly would just make the innovative side of the company function more efficiently. What worries me is that people who fit these criteria have probably already worked at Tesla and left because of the crazymaking. Time for the board of directors to step up and do their job ( I’m talking to you Larry Ellison ). This is a large public company and if the board can’t stop the current hobby shop approach the SEC will try to do it and that won’t go well for the shareholders.

 

[flyhigh123]

My guess is they wanted to close all the stores but forgot that those stores had long term leases bound by contract.

Close the store but still pay out 5-20 years on a triple net lease would be insane. Plus I’d guess they would need to pay that amount upfront as well.

Most stores are in premium locations so it’s not easy to get out of lease.

 

[OPRCE]

Absolutely. He can still be the visionary and driving force behind the company, but he needs to hand off day to day operations to someone who will bring additional stability to the organization. That's really how he runs SpaceX - he has a strong COO. He needs to do the same at Tesla. It will make Tesla a better company and give him more time to dabble on other projects and ensure there is a strong vision for Tesla's future.

Very true, but for ego reasons I think he needs someone else to kick him out of the CEO position ... maybe that's why getting in the hair of SEC is a hidden cry for help?

Larry must step up and do the merciful.

 

[electronblue]

Is there any reason to think this did not go down exactly as planned?

With the reveresal of the Autopilot prices this seems to have been a masterful play to slash sales force compensation (removal of incentives) and create a demand lever (cash injection) for people to rush to buy software upgrades (EAP+FSD), and get people to buy cars with lowered prices, and then — with those objectives reached — continuing business as usual afterwards with similar to old store and pricing structure.

I mean it is not like we haven’t seen this before with demand levers from Tesla?

 

[kavyboy]

Is there any reason to think this did not go down exactly as planned?

With the reveresal of the Autopilot prices this seems to have been a masterful play to slash sales force compensation (removal of incentives) and create a demand lever (cash injection) for people to rush to buy software upgrades (EAP+FSD), and get people to buy cars with lowered prices, and then — with those objectives reached — continuing business as usual afterwards with similar to old store and pricing structure.

I mean it is not like we haven’t seen this before with demand levers from Tesla?

I just learned that the opposite of Hanlon's Razor is Grey's Law.

 

[R.S]

You can close half the stores for the good reasons and keep half the stores open for the good reasons.

Or you can close half the stores for the bad reasons and keep half the stores open for the bad reasons.

Your choice.

No, it really isn’t. This isn’t something where everyone can feel their own truth. This has to be a decision made on facts.

I don’t have those facts and surely Tesla can’t be 100% sure what will happen, but you can either say these brick and mortar stores are needed, or they cost more, than they help.

If they help, then Tesla, a growing company, needs to grow their stores, too. If they don’t, then keeping them open is just a waste of money.

So Tesla has to collect some data from surveys, sales data etc. and then decide how to proceed. And it doesn’t seem like they really have a plan here, or really looked at the data.

And from a leadership standpoint it’s really stupid to first fire all sales people and then keep 50%. They will be super motivated to keep laboring for the mission...

 

[electronblue]

My guess is they wanted to close all the stores but forgot that those stores had long term leases bound by contract.

Forgot? Seriously. How likely is that.

 

[R.S]

I take it nobody here has Netflix.

I would have, but just for the trial, I‘d have to sell my used HBO subscription and take out a loan. And if I don’t like it, I‘d be without a streaming service after the week trial and might be forced to get a new one under pressure.

Of course that’s different with a car, because it’s super cheap, nothing physical that looses value and nothing I need to get to work. So I don’t really get the comparison.

 

[dethman]

And... Autopilot prices to go back up. This guy can't make up his mind.

 

[timk225]

If Tesla the company crashes and burns, it won't be because of their technology and products, it will be because their management and pricing structure is a Cluster F***.

And the average non-technical person won't be able to see past that.

 

[Barklikeadog]

If Tesla the company crashes and burns, it won't be because of their technology and products, it will be because their management and pricing structure is a Cluster F***.

And the average non-technical person won't be able to see past that.

All the good people keep leaving. At some point you have to realize that they aren't the ones with the problem.
Where is the Tim Cook who can crack the whip and think 5 steps ahead on all of the boring stuff?

 

[OPRCE]

Worthwhile to read how Tesla store employees react to the gratuitous skull-föökery:
https://jalopnik.com/tesla-employees-call-bullshit-on-online-sales-claims-am-1833201246

 

[googlepeakoil]

EM: Our highest priority this year is fixing slow crash repairs...
<inhale>
EM: Our highest priority this year is fixing service delays...
<inhale><munch><munch>
EM: Our highest priority this year is making a 35K Model 3
<snort><sneeze><inhale>
EM: (What, we need to close stores to make a 35K Model 3). Our highest priority this year is closing stores
<scratch><sniff>
EM: (What, discarding our employees isn't going down well in the twittersphere). Our highest priority this year is not closing stores
<falls over>
EM: Oh yeah, and the SEC can s..k my b..ls.

People have a habit of equating success with skill rather than luck.
Hubris does not equal skill. Luck runs out eventually.

Having listened to every quarterly call since 2013... 4 memorable EM quotes (paraphrased)...
Elon to investors - Model X will be really straight forward (2014?) we have the skateboard base.
You should see the plans they're like an alien dreadnaught.
5000 model 3's by end of 2017 - I guarantee it.
You should see model 3 - it's like a spaceship.

and then it all takes a MASSIVE 180.
Elon to investors, X being 2-3 years late... Model X is incredible. Probably the most complicated car ever made. It's amazing. It's a work of art - just the seatbacks (the ones that scratch really easily). We probably over-engineered it. I'm guilty of that.
Humans are over-rated. We had this machine. This fluff layer. It was crazy. The robot couldn't pick it up, it didn't work. Then we realised we didn't need this fluff layer. We had conveyor belts everywhere. (I'm really not joking - the wording was that stupid, like Trump stupid).
(on the 2 big Gigafactory battery assembly delays). We over-estimated our core things. I'm responsible. Production barely at 1000 cars.
Then the under-sell starts... well - it's minimalist. You want 2 screens - buy a model S or X. You want a hatchback. Same. You want a heads-up-display? "no soup for you. Next!" Ok, that last bit's a joke

And I haven't even mentioned Vernon (the caver) or the $420 fiasco.
Any other CEO would be ousted for just 1 or 2 of these.

I wonder if the latest fiascos about pricing are because that guy took over from Deepak (who left for the 2nd time) - and Tesla really doesn't know their pricing strategy any more... or fundamentals about lease commitments!

 

[kavyboy]

Forgot? Seriously. How likely is that.

Exactly what I was thinking, then I started to wonder if maybe they didn't just forget. It's the simplest explanation.

 

[googlepeakoil]

Having listened to every quarterly call since 2013... 4 memorable EM quotes (paraphrased)...
Elon to investors - Model X will be really straight forward (2014?) we have the skateboard base.
You should see the plans they're like an alien dreadnaught.
5000 model 3's by end of 2017 - I guarantee it.
You should see model 3 - it's like a spaceship.

and then it all takes a MASSIVE 180.
Elon to investors, X being 2-3 years late... Model X is incredible. Probably the most complicated car ever made. It's amazing. It's a work of art - just the seatbacks (the ones that scratch really easily). We probably over-engineered it. I'm guilty of that.
Humans are over-rated. We had this machine. This fluff layer. It was crazy. The robot couldn't pick it up, it didn't work. Then we realised we didn't need this fluff layer. We had conveyor belts everywhere. (I'm really not joking - the wording was that stupid, like Trump stupid).
(on the 2 big Gigafactory battery assembly delays). We over-estimated our core things. I'm responsible. Production barely at 1000 cars.
Then the under-sell starts... well - it's minimalist. You want 2 screens - buy a model S or X. You want a hatchback. Same. You want a heads-up-display? "no soup for you. Next!" Ok, that last bit's a joke

And I haven't even mentioned Vernon (the caver) or the $420 fiasco.
Any other CEO would be ousted for just 1 or 2 of these.

I wonder if the latest fiascos about pricing are because that guy took over from Deepak (who left for the 2nd time) - and Tesla really doesn't know their pricing strategy any more... or fundamentals about lease commitments!

I do love everything Tesla has done. Was blown away from the opening minute of that Discovery Channel special on the model S 8 or so years ago. They've had some amazing strategies. The supercharge network. Even surprising everyone with it. The battery replacement idea was put out there - but dropped rightly so (nobody wants someone elses 2nd hand battery). And JB has some brains behind him too with the battery tech, 18650, 2170s, liquid cooling. But wow they're making some massive miss-steps now.
I do wonder if they have a sales drop / cash-flow problem caused by so many cars being a month on ships to China and Europe, and the $7500 credit drop and the massive fire-sale price cuts (30% internationally on the Ludicrous S / X). UK price went from £135k to £95k overnight. Taiwan and China were reported after the protest, but think it was ALL international markets. There's going to be a lot more competition from the Germans soon. Jaguar have their car out and the interior is better than an S/X. Range and boot size is rubbish - it's a compact SUV. I've sat in it at FullyCharged - UK event last summer.
For Tesla to suddenly announce model 3 base model when a month before they were saying mid 2019 - it was very odd.

 

[Barklikeadog]

I do love everything Tesla has done. Was blown away from the opening minute of that Discovery Channel special on the model S 8 or so years ago. They've had some amazing strategies. The supercharge network. Even surprising everyone with it. The battery replacement idea was put out there - but dropped rightly so (nobody wants someone elses 2nd hand battery). And JB has some brains behind him too with the battery tech, 18650, 2170s, liquid cooling. But wow they're making some massive miss-steps now.
I do wonder if they have a sales drop / cash-flow problem caused by so many cars being a month on ships to China and Europe, and the $7500 credit drop and the massive fire-sale price cuts (30% internationally on the Ludicrous S / X). UK price went from £135k to £95k overnight. Taiwan and China were reported after the protest, but think it was ALL international markets. There's going to be a lot more competition from the Germans soon. Jaguar have their car out and the interior is better than an S/X. Range and boot size is rubbish - it's a compact SUV. I've sat in it at FullyCharged - UK event last summer.
For Tesla to suddenly announce model 3 base model when a month before they were saying mid 2019 - it was very odd.

it's so fyre festivally. people waiting around for hours, trusting the process, then the CEO comes out and yells: Everyone just grab a tent!

 

[googlepeakoil]

This was an article about the UK price cuts. Claims the reductions were £50,000. $70,000 at current exchange rates !!
Tesla Model S and Model X HUGE price drops in the UK | Cars UK
"The new range-topping Tesla Model S Ludicrous Performance starts at just £83,300, a drop of getting on for £50,000 compared to the previous range-topping Model S P100D."
"It’s a similar story for the Model X, with the range-topping model replaced by a new Ludicrous Performance model costing £50,000 less."

If the price is going to go back up - if you want a UK S or X then BUY now!!!
I think the US changes were "as little as 3%" - I'm not sure quite where Elon gets 3% from. The above is over 40% and has nothing to do with tax. UK VAT (Value Added Tax) is 20% on all things from a box of tissues (used to wipe away the tears of people who bought the week before) to the most expensive cars. Few exemptions. Energy bills are 5% I think. Ladies sanitary products don't have this applied. Not much really. I guess it's the equivalent of US state sales taxes.

 

[googlepeakoil]

FYI - on the UK website. For Full Self Driving it says "£4900" "£6800 after delivery" "After delivery prices are subject to change". How long has that disclaimer been there?

 

[Blueblood]

What if this was all done on purpose to drive sales before the quarter is up?

 

[WabiSabiIam]

A car person would be good - someone who understands supply chains, parts procedures, aftersale procedures, and the rest of the nuts and bolts of manufacturing cars. Doing these things correctly would just make the innovative side of the company function more efficiently. What worries me is that people who fit these criteria have probably already worked at Tesla and left because of the crazymaking. Time for the board of directors to step up and do their job ( I’m talking to you Larry Ellison ). This is a large public company and if the board can’t stop the current hobby shop approach the SEC will try to do it and that won’t go well for the shareholders.

Since the opening of the large gig factory in Arizona, I thought that Tesla doesn't rely on the same type of supply chain used by the big four and that they actually manufacture much of what goes into their cars.