Elon's demand "secret weapon" ...what is it?

[adiggs]

I've had similar thoughts before, though not with partnering with Apple. I was thinking about Amazon or AutoNation. In any case, the basic idea is to partner with strong online marketer, who is content to sell at fixed prices and will acquire dealership licenses in every state. Apple could certainly fit the bill.

Another possibility is that Tesla itself could become a franchized dealer of electric vehicles of other makes. This is my Electric Avenue concept. Tesla, the operator of Electric Avenues, would sell EVs from multiple automakers. As an authorized dealer, they get licenced by the state as a new car dealership. Then there is no problem selling Teslas too. More importantly, they would use their sales and service resources more efficiently and satisfy more customers who want to buy EVs. Altogether, this would accelerate the EV market.

Problem with Tesla operating a dealership network is that most or all of the franchising laws don't allow the car maker to own dealerships. This would only work if Tesla was selling anything EXCEPT Teslas.

But somebody not already in the car business that doesn't really want to get into the service business, and likes selling at a fixed price as was mentioned earlier. That sounds like almost a no-brainer for the company that's going to be own the franchises. The one fly in that ointment I can see are states where manufacturers also can't operate service / repair shops, and instead dealerships are required to have service. I guess for those states, Tesla continues to not have it's own sales or service in the states.

 

[Causalien]

Solar city to become exclusive TSLA dealership.

Elon Crowd funds idea by having the internet guess his secret weapon against dealerships.

 

[mrdoubleb]

What is people's biggest fear when buying an EV, next to charging infrastructure and range? Battery durability, the fear of needing to spend 20k on your car after 200k miles to buy a new pack or live with a <200 mile full charge. I think they may have already mentioned once that packs no longer "good enough" for driving around would still be excellent for stationary storage. They are now saying they have completed the design of their home battery prodcut and unveil it in about 2 months. So here is what I'm thinking: When your battery pack reaches <80% original charge capacity Tesla would offer you a "cheap" upgrade (5k?) to a brand new pack, effectively buying back the old one and recycling/reselling it for industrial or home stationary storage.

 

[Lerxt]

It's going to be battery leasing. Brings down the initial outlay for the car and all you do is pay a monthly leasing cost on the battery. Makes it viable for many and removes battery degradation worries.

 

[schonelucht]

Given the statement was 'for demand side generation' AND related to battling the dealer situation. I'll go with a massive worldwide dealership distribution agreement with Apple. Overnight, every Apple Store will become an authorized dealer, CarPlay included. Concurrently delivering massive distributed demand at the lowest automotive customer acquisition cost in history, and immediately establishing 'dealerships' in every state (and every country).

No way. Think about it : what would be in it for Apple? Being seen with the hip kid? Apple is already the hip kid that Tesla is aspiring to become. Tie in sales with their own product? How? which ones? Extra revenue? Apple retail stores are some of the best grossing in the market. Besides Apple doesn't need revenue it wants to earn money. So the only thing Tesla has to offer is a big slice of its gross margin. But Tesla needs the money for capex spending on its built-out. I really can't see Apple being a good partner.

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It's going to be battery leasing. Brings down the initial outlay for the car and all you do is pay a monthly leasing cost on the battery. Makes it viable for many and removes battery degradation worries.

I like this idea. Also makes battery hot swapping a commercial possibility.

 

[Newb]

What about having a Tesla booth at every Walmart/Tesco/otherbigsupermarketsaroundtheworld? Maybe through selling the car in the supermarket would allow for selling it in every state?

 

[Gerasimental]

I don't see that as a way to create demand. It might actually lower demand as you could never count on a fully charged car if the electric utility decides to drain your car. Also people will worry about the extra cycles that the battery would get.

Extra cycles shouldn't be a problem. Charging and drawing rates would be very low and only a small state-of-charge band would be used, say 40-75%, which would massively reduce the strain on the batteries. Maybe they could also find a way to discount the cost of new batteries based on how much a battery has been used for grid buffer storage.

 

[WarpedOne]

I don't see that as a way to create demand. It might actually lower demand as you could never count on a fully charged car if the electric utility decides to drain your car. Also people will worry about the extra cycles that the battery would get.

There is *no need* for any extra cycles.
Where there is enough batteries out there one can create 'virtual' storage by simply controlling how many of them are actually charging (i.e. drawing power) at any one moment.
When demand spikes above production (on microlevel) those batteries stop charging, when demand drops below production those batteries start to charge.

All that is needed is that when a tesla owner plugs in the car he also sets:
- target SOC
- charging end time

Everything else is done by computers. There is no energy flowing from the batteries back to the grid, only smart charging that balances cumulative load on the grid.

 

[RDoc]

It's going to be battery leasing. Brings down the initial outlay for the car and all you do is pay a monthly leasing cost on the battery. Makes it viable for many and removes battery degradation worries.

That's my guess also. The other advantage to this is making battery swapping economically practical, so in addition to lower the immediate cost of the vehicle, it provides a path to eliminate the long charging times. For that purpose though, it would require a lot of battery swapping station deployment.

 

[EternalChampion]

Could be large Government or corporate contract to provide vehicles/battery tech. IE; UPS, Postal Service, even potential military applications.

 

[jhm]

Well, if Tesla has a little extra capacity for stationary storage, then it is.also.possible that they could design and sell replacement battery packs for other EVs. How about a 50 kWh Tesla for the Nissan Leaf that gives an old Leaf a 200 mile range? This would create new demand for Tesla products and services, and they could capture relationships with EV owners that would undermine original dealer relationships. If dealers want to offer Tesla upgrades at their service centers, they'll have to pay a premium to Tesla. Otherwise, it would be cheaper and a better experience for Leaf owners to get their Tesla upgrade directly from Tesla service centers. Tesla can work toward owning the EV used car market. Tesla could prove its environmental chops by repurposing and recycling the original batteries at the Gigafactory.

 

[sandpiper]

It's going to be battery leasing. Brings down the initial outlay for the car and all you do is pay a monthly leasing cost on the battery. Makes it viable for many and removes battery degradation worries.

And how would this be much better than simply leasing the vehicle outright? The reality is that only so many people want to buy a car in this price range. I don't think that this specific scenario would make an appreciable difference.

I also don't see any allegiance with Apple making a difference. And why would Apple even consider this? It's a completely unrelated business, and the synergies are minimal.

There are three factors limiting demand:

1. Absolute price - irrespective of financing/leasing scheme
2. Battery capacity.
3. Charging network

#3 takes a lot of time, and will continue to progress at a moderate pace. #1 and #2 are the only things that I can see that would make much of a difference. But I'm not sure how much could possibly done on either of these.

Very mysterious

 

[Jim MacInnes]

One of the best secret weapons is to get the Supercharging infrastructure built out as quickly as possible.

 

[arondaniel]

And how would this be much better than simply leasing the vehicle outright? The reality is that only so many people want to buy a car in this price range. I don't think that this specific scenario would make an appreciable difference.
...
Very mysterious

My vote is battery leasing too. I don't think most buyers are paying Apple $749+ cash for an unlocked iphone.

 

[sandpiper]

My vote is battery leasing too. I don't think most buyers are paying Apple $749+ cash for an unlocked iphone.

Right... so they finance it as part of their service contract. If you don't want to pay cash, there are already leasing and financing options. Leasing the battery would be a bit of a halfway mix between lease and buy, and maybe that would be attractive to some folks, but I'm not sure why. It's not like the car is of any use without the battery.

As a side point, I had heard that the battery cost had dropped dramatically... to around 15K or so. Or am I misremembering?

 

[GreenT]

The negative comments here
http://www.cnbc.com/id/102418888
are really short sighted ... the shorts are feeling it.

 

[AudubonB]

Am glad to read that so many of you are jumping on the Buy-The-Car / Lease-The-Battery concept. I think it's the very best thing Tesla could do; however, two caveats:

1. I don't see how this can be termed a "weapon against the dealers", as we heard last night (this doesn't detract from it as a viable concept, though)

and

2. I think this would be an enormous financial burden for TM. A $20K battery here, a $20K battery there....multiply that by 500,000 each year and fairly soon it adds up to real money. Now, we did hear last night that CapEx was going to be staggeringly large for the next many years, but we need someone quite creative in accounting to straighten this out, I believe.

Regardless, it would allow TM to sell a spectacular​ economy ($30-35K) car! Imagine what an ICE would cost if its manufacturer didn't have to charge for the engine.....

 

[Runarbt]

One of the best secret weapons is to get the Supercharging infrastructure built out as quickly as possible.

Is this a secret?

 

[Robert.Boston]

If Elon had said only that it was a "weapon against dealerships" I might have thought that they had finally put together an iron-clad lawsuit to file in federal courts to sweep away all anti-manufacturer restrictions in state dealership laws. But he also said it was a weapon that would boost demand.

Conversely, there are a lot of ways that Tesla could boost demand, but which of those are a "weapon against dealerships"?

I'm wondering if we can line Elon's remark next to Deepak's: "Our expectation is that we will establish shop via warehouse line for leasing cars and that will continue to grow and fund the big portion for leasing funding required."

Not that I have any clear idea of what "shop via warehouse line" might mean; does this mean a deal with Sam's Club?

 

[CHGolferJim]

Check out the Adam Jonas interview from CNBC this morning (listed in the posts that show the Yahoo price graphic). Hugely enthusiastic and bullish while saying this morning's market reaction is understandable. He ends with a smile and "we're all in".