How much more damage will Remarketing do to Tesla sales before they figure it out?!?

[TSLA Pilot]

It sounds more like you are interested in having TSLA subsidize your next MS purchase than helping out "the cause," and that you are taking it personally because they haven't. I hate to be the one to say it, but you sound like the guy in the bar or the store yelling out "do you know how much money I spend in here?!" At the very least, you sound like the guy trying to get a free or discounted product so that he can show it off as "free advertising." I think you overestimate the value of your kindness in just trying "to do [your] part to help."

First of all, Tesla is not going to make $18k on your trade-in, even if they sold it at $116k. In the end, they probably make little or nothing on it at all in the first place. That trade-in will start costing them money from the very moment they take it off your hands until the CPO warranty runs out. They will have to move the thing around, recondition it, store it, market it (not much in that, I know), pay some folks to deal with it, and likely lose a new car sale in the end. To then ask TSLA to intentionally take a loss on that just so that you can get into a new MS for a few thousand dollars less is a bridge too far. It's not like the factory is lying fallow.

Second, the price they offered hardly is insulting. As already pointed out 70% depreciation on a two year old $100+ car. TSLA already tried offering overmarket prices on trade-ins (i.e., the guaranteed buy back). It doesn't seem that was working to well for them.

As far as valuing the after-market products you've added, well, they need to remove them. They don't sell anything other than CPO cars, so after market products really are a liability. How are they supposed to market and value cars that way?

Third, yes, deliveries were down QoQ, but they are looking forward on that, as am I. One quarter does not kill a growth story when something like the Model 3 is coming, along with volume numbers ramping up such that TSLA could very well make more cars in 2018 than the rest of its history combined. They would love to sell you another Model S, of course, but they aren't going to pay you to buy one just to ring the bell one more time. Yes, The MS and MX might be TSLA's flagship for years to come, but the Model 3 and its kin are the real future. Toyota butters its bread via the Accord and Camry, not the Lexus LS. We're still in act one of the play.

Lastly, TSLA really doesn't want to be in the used car business at all. They really, really, really, don't. Frankly, I don't want them in that business, either. It's a pain--far more risk and labor than what they make off it (if anything). It's heavy on logistics and light on margin--a nasty business to be in. The only reason they do it at all is for the same reason you want them to bend even further backwards: to get more Teslas on the road. It's an albatross of a business. As a TSLA stockholder, myself, I shudder at the idea of TSLA turning the CPO part of the business into a cost center (or more of one).

If you really want to help TSLA out, then get in your beloved, wrapped, flawless, 2015 P90DL (with EVERY AVAILABLE OPTION, less 3rd Row Seat) that's worth so much more than what TSLA says it is and drive it over to CarMax or sell it privately when you take delivery on the Model S you'll order sooner than later.

You wrote:

First of all, Tesla is not going to make $18k on your trade-in, even if they sold it at $116k. In the end, they probably make little or nothing on it at all in the first place. That trade-in will start costing them money from the very moment they take it off your hands until the CPO warranty runs out. They will have to move the thing around, recondition it, store it, market it (not much in that, I know), pay some folks to deal with it, and likely lose a new car sale in the end. To then ask TSLA to intentionally take a loss on that just so that you can get into a new MS for a few thousand dollars less is a bridge too far. It's not like the factory is lying fallow.

They could make NOTHING on the trade-in and still come out ahead. Repeat: NOTHING. The fact is that the money will be made on the new car sale. That some trade-ins will require more work than others actually plays to Tesla's strengths as NO ONE has access to parts and labor cheaper than Tesla. Especially for high-wear trim parts, Tesla makes many of their own. It doesn't get cheaper than that. Have no idea what you mean by "lose a new car sale in the end."

The factory isn't lying fallow, but it sure as heck needs ever increasing sales for years to come. The global market for cars and trucks is a little under 100m per year. Tesla is a fraction of 1% of that. We have a massive hill to climb and sales must go UP, not down.

You wrote:

Second, the price they offered hardly is insulting. As already pointed out 70% depreciation on a two year old $100+ car. TSLA already tried offering overmarket prices on trade-ins (i.e., the guaranteed buy back). It doesn't seem that was working to well for them.

Tesla should become known for great resale values AT TESLA. We want and need customers for life if we're to save the planet. It should financially hurt every Tesla owner if they private party or trade in their car at MBZ or BMW or Lexus, etc. We WANT our customers back, and often, for another new Tesla. That feeds to planet with more Teslas, new and used, and the planet needs as many Teslas as we make.

You wrote:

Third, yes, deliveries were down QoQ, but they are looking forward on that, as am I. One quarter does not kill a growth story when something like the Model 3 is coming, along with volume numbers ramping up such that TSLA could very well make more cars in 2018 than the rest of its history combined. They would love to sell you another Model S, of course, but they aren't going to pay you to buy one just to ring the bell one more time. Yes, The MS and MX might be TSLA's flagship for years to come, but the Model 3 and its kin are the real future. Toyota butters its bread via the Accord and Camry, not the Lexus LS. We're still in act one of the play.

Not sure where this is coming from. We have a long road to go before volume M3 deliveries. Second, what the heck does this mean, " . . . but they aren't going to pay you to buy one just to ring the bell one more time." The margin on a P100D is likely around $40k, on a loaded 90D it's probably around $20k. They break even or take a $5k loss on my P90DL trade in and they make $35k or $15k, and they push another MS sale.

That's far better than a 10% drop, and January ain't looking good either. This could be foreshadowing of some bad things . . . .

Source:

January 2017 Plug-In Electric Vehicle Sales Report Card

Because of the extreme end of year production push due to difficulties transition to the new autonomous-ready hardware, Tesla noted that “In addition to Q4 deliveries, about 6,450 vehicles were in transit to customers at the end of the quarter. These will be counted as deliveries in Q1 2017.”

Which might lead one to believe that US sales would see an uncommon spike in January, displacing the trend of low ‘first month of the quarter’ sales for Tesla…but one would be wrong, because as far as we can tell, the vast majority of those EVs just missed being delivered internationally at the end of Q4, or those EVs were produced for international customers near 2016’s end once Tesla felt it had run out of time to both produce and deliver any more cars in the US in 2016.

Looking ahead into the first half 2017, it appears Tesla needs a new driver to push Model S sales higher until the Model 3 arrives, as the current’s car’s demand is basically now flat year-over-year, and demand for the current lineup appears to be exhausted headed into Q1.

********************************************
You wrote:

Lastly, TSLA really doesn't want to be in the used car business at all. They really, really, really, don't. Frankly, I don't want them in that business, either. It's a pain--far more risk and labor than what they make off it (if anything). It's heavy on logistics and light on margin--a nasty business to be in. The only reason they do it at all is for the same reason you want them to bend even further backwards: to get more Teslas on the road. It's an albatross of a business. As a TSLA stockholder, myself, I shudder at the idea of TSLA turning the CPO part of the business into a cost center (or more of one).

And that's why the head of Tesla Remarketing needs to be retrained or canned. (And I'd suggest you stay in the legal field, not the business world, if I were you;-)

There can be huge money for Tesla overall, if they fix it right. As stated earlier, they are the product experts for all things Tesla. They make a huge amount of their own parts for heaven's sake and a CPO Tesla should look awesome and drive great; when you buy tires by the thousands, you can get a good price! They should have an outstanding CPO Sale program targeting every M3 Reservation holder, every Chevy Volt owner, and, most certainly the Nissan Leaf drivers on this planet. Heck, if you come in with worn tires on an older MS, they should be loaning you a newer CPO MS, or a new MS, for a test drive so that instead of buying tires, the customer leaves with a new or newer car because the trade-in value was so great.

That takes care of the demand side of the Tesla CPO world, and the supply side needs to start pulling more new Tesla sales by offering those high trade-in values. Again: EVEN AT BREAK EVEN or even a loss on the trade-in side, it's still a huge plus for Tesla to sell a new car and get more Teslas on the road.

That is the reason Tesla exists and too many here don't seem to understand this. Not to be over the top, but our friggin' planet's future rests on this goal.

The negative numbers needs to stop.

Yesterday.

 

[TSLA Pilot]

I don't really understand your rational for wanting to trade in your 2015 P90DL at this time.

What does a 2017 Model really give you over a 2015? What justifies spending that much money on a car when you barely even drive the one you have? You're like a used car buyers fantasy. Someone willing to keep there car in immaculate condition including a full wrap only to turn around and sell it to get the next shiny thing.

You turned a Tesla into a garage queen. You could have been just as environmentally friendly buying a Ferrari. Plus it's makes for a better piece of artwork than a Tesla.

Yes, this post is about Tesla and their business practices with CPO cars. But, so many times I'm more confounded by the actions of some rich Tesla buyers to be at all empathic to them.

They're more damaging to the resell value of Tesla than Tesla themselves. With that and the $7500 tax rebate it decimates the resell value. I can't wait for the Model 3 to be away from both of you and the tax rebate.

You have to understand the bigger picture.

I don't drive much, but every mile I drive should be electric and support the only 100% BEV company on the planet.

Every car I trade in becomes someone else's Tesla, which hopefully displaces an ICE, planet-destroying vile machine which should be recycled into a new frig somewhere.

The tax rebate is a side-issue; hopefully you have an early M3 reservation is all I can say as it's not applicable to the MAJOR problem of a 10% drop in deliveries . . . .

This is a huge problem for a growth stock story like Tesla's, and it will impact capital raising (or increase its cost) if it's not fixed ASAP.

Sales should be tracked daily at Tesla, and every sale "Fail" should be researched to find out what is going wrong. Had they done so earlier, then perhaps Q4 wouldn't have been so ugly.

 

[MostlyStock]

TSLA Pilot welcome to the real world. A 18.9% markup on trade-in value isn't too bad. There is no guarantee Telsa can sell your car for $116,000. It might take 6 months or more to sell the car and they could get less than $100,000.

Also the Model S deliveries have been down from the 2015 Q4 high for sometime. I'm not sure why you would just decide to have an issue now. Model X deliveries are still growing. Many people are waiting for a Model 3.

 

[eye.surgeon]

Your expectations for the trade-in value of your car are completely unreasonable. The goal of Elon Musk is to promote the use of EVs. The goal of Tesla is to make money for the shareholders, the same as every publicly traded company on the planet.

 

[S4WRXTTCS]

You have to understand the bigger picture.

I don't drive much, but every mile I drive should be electric and support the only 100% BEV company on the planet.

Every car I trade in becomes someone else's Tesla, which hopefully displaces an ICE, planet-destroying vile machine which should be recycled into a new frig somewhere.

The tax rebate is a side-issue; hopefully you have an early M3 reservation is all I can say as it's not applicable to the MAJOR problem of a 10% drop in deliveries . . . .

This is a huge problem for a growth stock story like Tesla's, and it will impact capital raising (or increase its cost) if it's not fixed ASAP.

Sales should be tracked daily at Tesla, and every sale "Fail" should be researched to find out what is going wrong. Had they done so earlier, then perhaps Q4 wouldn't have been so ugly.

Am I? Or is really seeing things from a different perspective.

An electric car like a Tesla Model S has a massive energy requirement to make. To such a degree that it requires a huge number of miles to offset the additional carbon footprint required to make it over a traditional ICE car. Now there are some huge debates about exactly how many miles, and it's highly dependent on where the owner lives. Where I live it happens more quickly because most of my energy comes from hydroelectric dams. That at times they generate so much that they have to turn off windmills. But, even in my best case scenario it's going to take awhile to offset the carbon expended to make it.

The problem with something like the P90DL is it's a hugely expensive car with the one main differential being how quickly it can go in a straight line. Future owners are dissuaded from putting miles on it so they don't hurt the resale value too much. That's just how it tends to be with hugely expensive cars. You can't really use the next person down justification to support what comes across as conspicuous consumption. It's going to take awhile to reach the "I'm going to drive the doors off this thing" person who will be it's one true owner.

Now honestly I don't really care about one persons carbon footprint or weird justifications. I only brought it up because your plight was so unrelatable, and a better approach was where you depersonalized to a list of suggestions.

As to me I have the 70D, and when I do trade it in it will likely be for a Model 3 AFTER the federal tax rebate ends. The federal tax rebate does contribute a lot to the perceived resale value loss. On this site most of us calculate it in to remove it (since we act as an intermediate between Tesla and the government), but magazines/etc won't account for it. When it's gone a new Tesla can compete fairly with an old Tesla. I probably won't sell my 70D until that time. I also probably won't sell it until AP2 either puts up or shuts up. So to speak.

 

[NikeWings]

As for TSLA stock price, I own shares with far more value than all of the Teslas we've purchased combined. I posted my rant because what Tesla is doing on both ends of the remarketing, the purchase and sales, is stupid. AND it hurts shareholder value, big time.

C'mon, you know better than this........the hit to the shareprice was due to acknowledging capex cadence (deferrred capex), extended A/P terms and [gasp-boom] the need to raise immediate capital of $2-$2.5B. They won't even comment on how much more is needed to get through a full 2017. Iinvesting in fully margined X and S sales has a better ROI than unreliable or loss-liter remarketing margins.

No profits on M3 for how long.....until 5k cars per week? And still invest in giga, SvC, SC, retail, (and everything else we whine about wanting)? Do the math.

Their situation now encourages NO SALE, and it's dumb.

No, they are saying NO INTEREST in your car, at your terms. Discipline not desperation is how you build sustainable shareholder value.

 

[JHWJR]

So sell it privately and make more money, and then buy the new car.

Right! If the car is worth so much more than Tesla is offering -- and keep in mind that Tesla gets their cars cheaper than most and must fund future development and production -- then sell it privately and keep that huge windfall the OP seems to think exists. Should be easy. Or buy someone else's trade in since it is apparently easily to outbid Tesla's trade in offer.

 

[brkaus]

Tesla should not over value trade ins. They have to refurb and add a warranty. They also may sit for a very long time and continue to depreciate.

Now they should, in my opinion, do better with marketing. The best of the best should prepped and on a lot somewhere ready to purchased immediately.

 

[timx]

I would think there would always be a large price difference between what a dealer offers and resells -- especially for cars over $100k. To afford such car in the first place, a buyer likely bills north of $400/hr, and estimating 20 hours of time to sell that car, that's $8000 right there, not to mention risk with test drives, scams, safety concerns with private market. Dealer price difference seems easily justified.

 

[Stirthepot]

OP, Ok, i get your general frustration. not being a jerk but given you said you own nearly $1M worth of stock, sell a few shares, spend the $18K on the new car you want, be happy and help save the planet. life is short, its only money.

 

[jeffro01]

I'm still very confused why the OP is reacting in such a visceral way...??? You got low balled on your trade in offer, in other news... Water is wet... You act like you've been done some grave injustice because Tesla acted like a car company and didn't properly kiss your posterior.

As someone who has been accused of being a bit emotional from time to time, I gently encourage you to calm down and relax... Tesla isn't out to get you or treat you in a negative fashion, they are trying to do their jobs. So again, take a deep breath and exhale slowly...

Jeff

 

[TSLA Pilot]

TL;DR version:

I think my used car is worth a lot more than Tesla thinks it is.

What if Tesla told you they'd buy it from you as a trade in for about what they'd sell it for via CPO, which might be what you think it's worth?

Would you be more inclined to trade in your current Tesla?

The answer is likely to be "yes."

Then Tesla has sold you another car, generated cash flow, AND has a CPO car they can refurbish for less than anyone else on the planet to sell to a M3 Reservation holder, or a Leaf/Volt owner.

 

[TSLA Pilot]

I agree the CPO program is run terribly. CPO cars are currently out in the service loaner fleet and listed for sale in unknown conditions. My first CPO was found damaged when it was retrieved. The 2nd took 6 weeks to ship, recondition and be ready for delivery - that's new factory build time-frames there. Another forum member had TWO CPO cars that were in accidents before Tesla could retrieve them from the loaner fleet to refurbish them - he waited months for his car. I think many of us CPO buyers only make it though the process because we are dedicated and REALLY want a Tesla.

I think Tesla uses the CPO program as a handy way to increase the service loaner fleets and make a few extra sales while they are at it. Occasionally they wipe the CPO website clean of cars and they all show up at auctions. I doubt they are making lots money off the endeavor.

Sure, they could offer a trade-up bonus or loyalty program for new car sales from current owners, but I doubt it would ever be a significant bonus amount mostly based on Elon's "no discounts" mentality.

The CPO Program is a joke. There's no Search function, the process is slow and cumbersome, and they don't reach out to prospects (apparently) in any way. And it loses money because it's an afterthought.

CPO should be a tool to generate sales of new Teslas as that's where there's the most money made.

Right now, it's a orphan "dirty" business and because it's so badly managed, and generates such poor trade in values, it's hurting the business.

The new cars can stay "No Discounts," as desired. It's how they massage the trade ins that can charge up, or harm, future sales.

As TSLA shareholder, and as a frustrated customer who has seen it play out first hand three times now, these sorts of game plans matter to Tesla's future success.

 

[TSLA Pilot]

As to your list I would highly advise that Tesla waits until AP2 is more fully baked before dropping off inventory cars to prospects.

I do like the list overall because it's less about one persons situation, and more about ways to improve orders.

Bingo.

It's not about me. I'm just relaying my frustration at a broken process and an opportunity that's being squandered with the ever growing base of Tesla owners that should be on an upgrade cycle, but are not.

It's about filling the new MS/MX order book with repeat sales, not quite like our iPhone trade in cycle, but close would be nice to ensure the future success of Tesla, and the survival of our planet.

 

[FlatSix911]

And, BTW, I'm a shareholder too, probably at the cusp of seven-figures worth of TSLA. Shares are down 6% after conference call, mostly because of the Deliveries drop of 10% without any explanation . . . . Tesla Remarketing being stupid is NOT helping things as I thought I laid out in a cogent and illustrative manner.

As a shareholder you should be screaming at how stupid Tesla Remarketing is being, or do you think your support of their remarkably short-sighted thinking, which results in No Sale, is better?

TSLA Pilot, we really tried our best on this forum to help you understand, but cannot help those that do not accept help
BTW, very poor form to mention your wealth on TMC ... your trade-in value should be of no consequence

 

[TSLA Pilot]

OP, Ok, i get your general frustration. not being a jerk but given you said you own nearly $1M worth of stock, sell a few shares, spend the $18K on the new car you want, be happy and help save the planet. life is short, its only money.

Nah, that's retirement money for decades from now.

Being efficient with money isn't the same as being cheap, but I can't squander it.

In this case, I want to give Tesla money, but Tesla makes it hard to do that; that's not a recipe for success and we need all of them we can get.

Remember, there are three ways to make more money in business, IIRC:

1. Get more customers.
2. Get your current customers to come spend more often.
3. Get your current customers to spend more each time they visit.

It's 2 and 3 that Tesla could capitalize on if they just upped their trade in values and revamped their CPO program to justify the increased trade in valuations.

That's the issue here, as I can personally attest to with various trade in offers over the years, and the two most recent ones as well.

 

[Dwdnjck]

Tesla builds new cars in a factory. Why would they be interested in buying a two year old car at the same price that they can build new ones for?

 

[Eclectic]

It always amuses me when people complain that Tesla is being run as a for-profit company. The primary goal of any for-profit company that isn't a benefit corporation is to maximize shareholder value. Though I haven't been a TSLA shareholder for quite a while, I think that their offer was more than adequate. They are in the business of making money and you don't make money by overpaying for the things you go on to sell.

 

[TSLA Pilot]

I'm still very confused why the OP is reacting in such a visceral way...??? You got low balled on your trade in offer, in other news... Water is wet... You act like you've been done some grave injustice because Tesla acted like a car company and didn't properly kiss your posterior.

As someone who has been accused of being a bit emotional from time to time, I gently encourage you to calm down and relax... Tesla isn't out to get you or treat you in a negative fashion, they are trying to do their jobs. So again, take a deep breath and exhale slowly...

Jeff

Not sure what to make of this. It's not about me, per se, it's about everyone that's ever purchased a Tesla. We should be on an upgrade cycle, repeatedly pulled in with great trade in values to buy new cars.

We're not. On the contrary, as the OA will tell you, we're punished for trying to trade a Tesla in. That's insane and contrary to Tesla's mission.

Tesla's success matters for our planet's future. The 10% drop in deliveries is worrisome at best, or a foreshadowing of another Valley of Death that we're about to cross at worst.

Low-balling the trade in is stupid and hurts orders/sales. I have a hard time with stupid. I don't know the full picture, but just looking at Tesla's website really points out how little they do to make it easy to buy or try out a CPO Tesla. We've heard from Hank how they "flush" the cars into auctions because they can't sell them at retail prices. This ends up with a flood of Teslas at used car dealers around the country, with them making the resale profits, because Tesla couldn't sell them. Crazy.

Tesla ISN'T "doing their jobs" as you suggest; on the contrary, their doing a "lose/lose/lose" for both themselves, their customers, and us as stockholders.

I'm "ranting" because I love smart, and loath dumb. It's dumb and Tesla has smart people that can fix dumb things; let's hope anyway as the trends are not looking good and we have a long, long way to go before we'll see volume M3 production.

Don't confuse passion with emotional; I'm just engaged in Tesla's success and have a personal, repeat, example of a missed opportunity that Tesla needs to fix.

 

[timx]

Remember, there are three ways to make more money in business, IIRC:

1. Get more customers.
2. Get your current customers to come spend more often.
3. Get your current customers to spend more each time they visit.

I couldn't disagree more. More customers or more revenue per customer does not mean more profit; often the reverse happens if a business isn't able to scale. Margin is what matters.