Elon: No Discounts !

[3Victoria]

Agree with above, @jeffro01 @Pdub2015

As to

Who's really "slandering" EM.. me or you?

You are the one that mentioned lying.

 

[number12]

Agree with above.

As to


You are the one that mentioned lying.

And you implied he does not know his own company well enough to know of sales practices that defy his whole model... in what he says could be most important quarter in Tesla history to date (for cash raise for solvency and model 3 production)

 

[trils0n]

So if I can show you of a brand new custom order getting a discount (destination fee waived) you will take back everything you just said?

No, certainly not. I was talking about new inventory cars being sold at discount. Discounts to custom orders has nothing to do with that. For a long time Tesla had a policy that discounted loaners/test drive cars $1/mile and 1% per month, but they needed a minimum of 3 months of service before sale. All I was saying was that an easy way for a store to sell as many cars as possible would be to offer discounts on inventory cars before that normal waiting period. Then they would still abide by the no discounts, except for inventory/damaged vehicles.

I expect the majority of new cars sold at discount were ordered by the stores as inventory cars, and immediately sold before serving as inventory vehicles. I said nothing about new custom orders receiving discounts, as that appears to be rare and I don't know much about it. Even if that happened, and I'm sure it did because it prompted a response from the CEO, it doesn't change the fact that they could sell new inventory cars quickly with discounts before they served their normal time as inventory cars.

 

[3Victoria]

And you implied he does not know his own company well enough to know of sales practices that defy his whole model... in what he says could be most important quarter in Tesla history to date (for cash raise for solvency and model 3 production)

Yes, that's right. He gives direction to his staff. He reads his tweets. Expected, not bad, no implied slighting. In fact, I applauded his quick response.

 

[RedP85+]

Gotta love all the whining in this thread... Good lord people... This is a problem that was inevitable for Tesla and wasn't a matter of "if" it could happen but "when" it would happen...

As Tesla continues to sell cars they are going to continue to expand their market reach which is why you see so many changes to the low end battery sizes in an effort to draw more buyers in. Tesla also has to balance this practice with demand and the mantra of the company which is "no discounts for anyone"... Eventually those two things were going to intersect and they did at the end of this Q...

Tesla has to build inventory cars now, it can no longer rely solely on custom orders as too many people can't wait and must have it NOW. Unfortunately this type of demand is very hard to forecast so Tesla is likely going to fluctuate between having too many inventory cars and not enough of them. Keep in mind that a lot of Tesla employees are not new to the automotive industry and old habits die hard... As such, it's not surprising that discounting became a sales tool that was abused towards the end of this Q. All Elon is trying to do is make it clear what the company policy is and reinforce that in an effort to avoid this issue in future quarters. I suspect he also was trying to make it clear to perspective buyers that this shouldn't have happened in the first place and you shouldn't expect it to happen again at the end of the next Q.

I don't see anything wrong with Elon's response, his email, or the policy in general. Some of you have quite the imagination as it pertains to the various conspiracy theories and such that have been floated around here. Simple fact is, no one here knows what Elon did or didn't know before that email came out. We do know how he dealt with it and how it'll be handled going forward.

So what exactly is the problem here? Are some of you really that jealous that others were able to capitalize on a perfect storm of circumstances and you weren't???...

Jeff

Perfectly put.

 

[RedP85+]

Sorry, didn't follow.

I'm just saying that all other dealers have been doing this forever and people still buy cars each month.

 

[number12]

Yes, that's right. He gives direction to his staff. He reads his tweets. Expected, not bad, no implied slighting. In fact, I applauded his quick response.

What is quick about a month? I guess in EM time that is like a day and a half.

Damage (aka stellar eoq numbers) is done. He gets his capital raise. Sends email to say stop discounting now.

I'd like full margins on my 2.0 hardware.. no need to artificially inflated numbers anymore. And btw I didn't even know you were discounting!! So (customers) please don't feel bad about paying full price on my cars in 4th quarter on 2016 cars when everyone else has their biggest mark downs!

 

[u00mem9]

I'm just saying that all other dealers have been doing this forever and people still buy cars each month.

Oh no question. But I haven't heard Mark Fields or Mark Reuss claim you will never see a discount on a new Ford or GM...and if they did say that, they would have the same credibility as Mr. Musk.

Also, I guess I just hate to see the great work of Tesla (which is many great people other than Musk) put at risk by the recent spat of desperate moves. Model X decisions, SolarCity bailout, and the resulting need to do another equity raise in Q4...There is a reason he was kicked out of the drivers seat at a couple of his previous companies. His work here is done.

 

[number12]

No, certainly not. I was talking about new inventory cars being sold at discount. Discounts to custom orders has nothing to do with that. For a long time Tesla had a policy that discounted loaners/test drive cars $1/mile and 1% per month, but they needed a minimum of 3 months of service before sale. All I was saying was that an easy way for a store to sell as many cars as possible would be to offer discounts on inventory cars before that normal waiting period. Then they would still abide by the no discounts, except for inventory/damaged vehicles.

I expect the majority of new cars sold at discount were ordered by the stores as inventory cars, and immediately sold before serving as inventory vehicles. I said nothing about new custom orders receiving discounts, as that appears to be rare and I don't know much about it. Even if that happened, and I'm sure it did because it prompted a response from the CEO, it doesn't change the fact that they could sell new inventory cars quickly with discounts before they served their normal time as inventory cars.

You do understand I don't mind or even blame Tesla for discounting cars (ahead of new hardware especially).

Not knowing it was happening. Or implying it had nothing to do with EOQ is insulting. We all saw his first email a couple months ago

 

[davidc18]

It will be interesting to see what happens to 4 qtr sales.

 

[RedP85+]

Oh no question. But I haven't heard Mark Fields or Mark Reuss claim you will never see a discount on a new Ford or GM...and if they did say that, they would have the same credibility as Mr. Musk.

Also, I guess I just hate to see the great work of Tesla (which is many great people other than Musk) put at risk by the recent spat of desperate moves. Model X decisions, SolarCity bailout, and the resulting need to do another equity raise in Q4...There is a reason he was kicked out of the drivers seat at a couple of his previous companies. His work here is done.

I'm sorry. Elon is the most credible public person I have followed. He was replaced in Paypal (the only company he was replaced in) but was man enough to not rock the boat and came out with the most money of anyone there. I have watched hours of interviews and read countless articles and he is very consistent with what he wants to do. "Accelerating the advent of sustainable energy" Tesla with Solarcity and make humans interplanetary SpaceX. You might not like the way he is doing it but everything he does moves closer to those two goals. His work is far from done. I would not bet against him.

 

[lolachampcar]

The D announce.
691 hp.
It took them 18 months to finally deliver 691 hp and those that purchased the car based on representations at the D announce were provided zero consideration for moving to a version of the car that had 691 hp. Hardware upgrades (battery swap) were not an option as there were hardware modifications needed to the car as well (cooling and wiring) to support the hp.

Another example. The P90DL was promoted as doing a 10.9 second 1/4 mile. It took Tesla 12 months to actually deliver even ONE P90DL (the Tesla Racing Channel car) that matched or bettered that number. Again, no acknowledgement of the failure to deliver a represented specification.

Elon says no discounts. The price is the price. Then comes "referral credits". I used my ID to get the credit for my wife's S90D replacement. Then comes "inventory" cars at a discount. It is no coincidence that this happens exactly when Tesla has its last chance to show a profit before having to spend a ton on M3 tooling. Now Elon says he did not know about it and has stopped the practice. This happens at the exact point where no new discounted sales could be closed in the quarter. Another coincidence; I do not think so.

Hey, its not that big a deal. I took Elon at his word on integrity. It was not the case. He is just a normal businessman with normal still better than the average ethics. I just no longer believe everything that he says and I no longer believe he gets out over his skies but intends well and will make it right in the end. The D announce taught me he will not always make it right in the end thus I have learned and will make more informed decisions moving forward.

Still a fan.

 

[brianman]

I guess the better question would be: What is the official Tesla policy for pricing of inventory cars?

There is an age component ($/month discounting) in addition to the mileage discounting. At least there was in April 2015.

 

[brianman]

Yep. I LOVE discounts too, so I'm all for it. But to think that the top guy doesn't know about it is denial. We're talking about thousands of dollars per car here. At any other company, if that was done without approval, the employees would be fired. Also,it is not just the employees doing the sales, their immediate superior had to sign off on the sales, and THEY would be fired too. As of today, there's no news of any Tesla employees getting canned. Therefore, the discounts were authorized.

Logic alone does not prove your conclusion. Just sayin'.
(You're missing some assumptions.)

 

[u00mem9]

There is an age component ($/month discounting) in addition to the mileage discounting. At least there was in April 2015.

Maybe we can reverse engineer the calculation with some data:

2016 75D
<50 miles
0 days old
$9300 discount

 

[brianman]

... he will not always make it right in the end thus I have learned and will make more informed decisions moving forward.

Still a fan.

I used the phrase "trust erosion" long ago. Unfortunately, it continues.

 

[lolachampcar]

Even with a little trust erosion, Elon is still light years ahead of the competition when it comes to quality of person.

 

[brianman]

Maybe we can reverse engineer the calculation with some data:

2016 75D
<50 miles
0 days old
$9300 discount

I'm pretty sure that car didn't exist in the timeframe I spoke of (April 2015).

 

[brianman]

Even with a little trust erosion, Elon is still light years ahead of the competition when it comes to quality of person.

Granted, but it is still negative for the brand and the vision to have any such erosion -- especially easily avoidable.

 

[lolachampcar]

I wonder if, like so many things, it was a calculated decision.

Take the hit from "having an underling discount without permission" then having to step in and "fix" it versus not being profitable Gap/NonGap for the quarter. The market was lining up to slaughter the company if they missed guidance this quarter.