Genius level IQ people. Explain what Tesla is doing!?!

[TT97]

For Question #1, it's Economics 101 - supply & demand. If Tesla produces more cars in a given week than they sold, they reduce the price to increase demand. When they sell more than produced, they raise the price to reduce demand. They are just looking for that perfect equilibrium.

 

[jerry33]

2.) How can they announce store closures one day and just go about face the next? Leases to pay are common sense?
Do they know what they are doing?

In my opinion the store closure announcement was way overblown by everyone. The original statement was that they would close stores in low traffic areas (I suspect many of these will turn out to be the stores that are in the same building as the service centres), turn into galleries stores in high traffic areas, and reduce the amount of test drives. It was never said (by Tesla) that they would close them all and stop every test drive. That part was made up by the media and shorts. The only change has been the rate at which they would do it.

No idea about my IQ, but we'll say I'm average, so only answering one of the questions.

 

[SunCharged]

In my opinion the store closure announcement was way overblown by everyone. The original statement was that they would close stores in low traffic areas (I suspect many of these will turn out to be the stores that are in the same building as the service centres), turn into galleries stores in high traffic areas, and reduce the amount of test drives. It was never said (by Tesla) that they would close them all and stop every test drive. That part was made up by the media and shorts. The only change has been the rate at which they would do it.

No idea about my IQ, but we'll say I'm average, so only answering one of the questions.

Just imagine the morale of the store personnel. One day you’re losing your job, probably. Then the next day, probably not. This should make for fantastic customer service!

 

[S4WRXTTCS]

If I were to give them the benefit of the doubt (which I do), I would guess they're doing AB testing on a whole new scale. A good way to experiment is with incremental and measured changes. A good way to learn quickly is by making sudden and radical changes. Tesla obviously gets a lot of commentators on every action they take and with the data they have, they might be able to quickly see how viable a direction could be just by making a public statement and measuring the social response without having to actually do anything.

There are too many dependencies to do AB testing.

Like when they lowered the price they tried to make up for it by lowering the post install price for EAP and FSD for existing owners.
Upgrading to Autopilot and Full Self-Driving Capability

There was also the change in the bonus structure that likely was written in anticipation of the stores closing.

Basically they screwed up, and now they're in damage control.

 

[Glamisduner]

I'm no Genius, but I think it's just the left hand not communicating with the right. Or perhaps it's because their announcement didn't raise stock prices.

 

[timx]

Tesla doesn't seem a whole lot different than my drywall contractor with regards to pricing...

Contractor: "If you want to add this room, we can do it for $800"
Me: "No"
Contractor: "It turns out we can do it for cheaper because we picked up another job nearby, so don't have to account for trips. So $600 if you want to do it."
Me: "Yes"
Contractor: "Oh, you wanted to cover up the floors against damage? We didn't figure that in, so that will be $1000."

Tesla just seems much more creative in justifying their price changes, and takes every opportunity to turn everything into a media story. They seem just as capable at marketing as engineering, maybe more so.

 

[TANGO SUKKA]

the board is just a magic 8 ball

 

[jerry33]

"What is clear is that Tesla sales in 2019 have been disastrous. InsideEVs, a publication close to Tesla, tracks US electric vehicle deliveries, and, according to its numbers, January and February deliveries were down by around 80 percent compared to the months leading up."

Now that might not necessarily be as bad as it's made out to be. We know they've been concentrating on shipping oversees, and we know that they really pushed out a lot of deliveries in late 2018. So of course it's going to pale in comparison.

That statement is number manipulation. To have the quarterly deliveries closely match production, the first two months are mostly sent overseas and the last month of the quarter is delivered locally. That way the deliveries match production in the same quarter. If you look at every other Jan/Feb you'll find the same pattern. In other words, the numbers show business as usual, and the article was written either from ignorance or maliciousness. Only when the quarterly numbers are released will we know what actually happened.

 

[jerry33]

Just imagine the morale of the store personnel. One day you’re losing your job, probably. Then the next day, probably not. This should make for fantastic customer service!

That was the case for the last 15 of 20 years with my last employer. Didn't affect customer service at all. People either have a good work ethic or they don't.

 

[GeoX750]

I'm no genius, but I think the real problem with Tesla's pricing it that it is totally transparent.

The sales prices of other car manufacturers can fluctuate daily with supply and demand through their dealer networks and no one would care, because they don't even know the price fluctuations happened.

Tesla does not have this buffer, it has to post its sales prices all the time. Thus, people can notice and complain.

 

[gringotuanis]

I like this opportunity to state IQ. I'm greater than 130 IQ. Because of this I see that both your questions (or multitude of questions in each question...) Are really just one question. WTF is Tesla doing zipping from a to b?

Answer: Musk is in charge. He goes from thing to thing without even thinking of consequences in any way. Probably because his high IQ does make him impatient with other ppl as he sees things ahead of time or his brain is working fast. However, he has great difficulty considering other people's point of view or feelings (IE salespeople) because of it. This answers both questions. Elon is too impulsive. That's all this is and he's the boss so Tesla is hostage to him.

 

[commasign]

In my opinion the store closure announcement was way overblown by everyone. The original statement was that they would close stores in low traffic areas (I suspect many of these will turn out to be the stores that are in the same building as the service centres), turn into galleries stores in high traffic areas, and reduce the amount of test drives. It was never said (by Tesla) that they would close them all and stop every test drive. That part was made up by the media and shorts. The only change has been the rate at which they would do it.

No idea about my IQ, but we'll say I'm average, so only answering one of the questions.

Agreed. Part communications flub, part exaggeration by the media. People (even those here on the forums) have short memories. Just a few years ago, if you went to a Tesla store or gallery, test drove and then wanted to order a car, they just sat you down at one of the iMacs and pointed you to the Tesla website. At some point they added $100k/yr commissioned sales staff and a separate back end ordering system for stores which added cost and complexity. Putting stores/galleries in low traffic areas also doesn’t make sense. If you remember the threads here in second half of 2018, there were a lot of “help! my sales advisor isn’t responding to my calls or emails”. Bottomline, it was a lot of cost for little or no added value. So probs to Tesla for trimming the fat. They probably went a little too far with number and speed of store closures, but quickly course corrected. I don’t fault them for making bold decisions and taking risks.

Note: No clue what my IQ is but it’s probably just average.

 

[EinSV]

Elon (1) thinks from first principles; (2) does not succumb to the sunk cost fallacy; and (3) isn't afraid to change his mind as new data becomes available.

Initially, he was apparently persuaded that there was enough data available to conclude that Tesla would be better off switching to a lower cost online sales model that would allow Tesla to reduce prices and sell more cars than would be lost by not having as many retail locations.

What caused them to slow down the process is hard to say. One possibility is that they saw enough orders for SR+, MR, LR, and P with the 6% price reduction that they felt comfortable with a less risky experiment that involved less of a price reduction and closing fewer stores/galleries. They also may have realized that slowing down the price reductions would be less likely to irritate existing customers.

Now they can collect data on how store closures v. reduced prices impact sales, including the cost/benefit of closing specific locations, and take it from there. They can always close more stores later if the data suggests that customers are comfortable buying online and the increased sales/cash flow from reducing prices outweighs the benefits of having more retail locations. This could be the beginning of a trend to having less and less brick and mortar over time as the sales function shifts online.

It's all just a big experiment and they'll make the best decision they can based on the available data. As more data comes in, they can tweak the decision or change course again.

 

[commasign]

Also, Tesla store and gallery closures are not irreversible like they are for restaurants and large box stores. Media is spinning this like Toysrus or Applebee’s closing it’s stores but it’s not the same thing. Tesla can easily open or reopen stores/galleries at any time. Just need a few demo cars, and few iMacs, some tables, some posters, a wall display, and a few minimum wage workers.

 

[more863-also]

Also, Tesla store and gallery closures are not irreversible like they are for restaurants and large box stores. Media is spinning this like Toysrus or Applebee’s closing it’s stores but it’s not the same thing. Tesla can easily open or reopen stores/galleries at any time. Just need a few demo cars, and few iMacs, some tables, some posters, a wall display, and a few minimum wage workers.

No they literally cannot. That's now how higher end real estate leases work, which to this point is mostly where they've been.

 

[commasign]

No they literally cannot. That's now how higher end real estate leases work, which to this point is mostly where they've been.

That makes no sense. What's to prevent them from starting a new lease? Retail stores at malls and shopping centers turn over all the time. The point is a Tesla store or gallery is so simple that opening one would take weeks compared to months or years it takes to open a restaurant or big box store.

 

[more863-also]

I have a 161 IQ and I think randomly closing and opening stores is a brilliant move.

 

[socal_suburbanit]

IMHO the last two weeks shows that Elon ignores the highly paid professionals he has hired to run Tesla and dictates policy impulsively and by fiat.

If the decision to close stores was planned they’d have already gone over the numbers in detail and there wouldn’t be a reversal. If the plan to discount AP/FSD was made in advance the website would have been built to support it at announcement.

Marketing and sales had a plan for Q1 2019 that didn’t involve an 80% drop in sales numbers. First assumption, Elon is an egomaniac. My guess is that Elon’s long term plan was to phase out sales centers and decided to make it happen now based upon some poorly defined spread sheets showing showroom expenses. I can picture him dropping in for a weekly update meeting with senior staff and just ripping apart their plan and implementing what we’ve seen. Any professional that was actually involved in negotiating those leases could have pointed out the immediate issue of rental agreements. But either that person wasn’t in the room or he/she was overruled because Elon.
The constant stream of high level ‘defections’ from tesla imply a poor working environment. I know if I had spent the past year or two planning in detail how to maximize profit via sales/stores and upgrades I’d be furious to see it seemingly all discarded in a day then reversed.
I hate how he appears to completely disrespect the people he has hired to run tesla day to day.
He needs to hire good people and let them do their jobs. I hope the board agrees and puts him on notice over this fiasco.

 

[OCR1]

I wonder what sales figures will look like on March 19th, the day after the price increase. If it’s anything like January 1 when the tax incentive was cut in half, sales could plummet, at least in North America. It’s only 3% but whoever is ready to place an order at this point is likely going to do so before the price increase. Time will tell.

 

[SunCharged]

Also, Tesla store and gallery closures are not irreversible like they are for restaurants and large box stores. Media is spinning this like Toysrus or Applebee’s closing it’s stores but it’s not the same thing. Tesla can easily open or reopen stores/galleries at any time. Just need a few demo cars, and few iMacs, some tables, some posters, a wall display, and a few minimum wage workers.

Clearly you have never worked in commercial real estate. Stores just can’t come and go as they please. Not to mention A rated real estate isn’t always available when you want it to be.