Is this the end?

[The Rookie]

Thank you for that. What I missed was not that they are closing but that stored will be transformed to galleries and information centres.

In some locations the lease will mean they will have to pay unless/until they can find someone to take over the lease, if they are going to be paying anyway they may as well use them.

 

[Garlan Garner]

They have way to many stores right now. I'll take Denver where I live. They have one at their main service center, and then two additional stores in high end shopping malls. The shopping mall locations are a pain in the but to test drive a vehicle (10 minute walk through the food court to get to the vehicles). So why not close the shopping mall locations and keep open the service center showroom.

Also take a look at some other major cities like LA and New York. LA has 17 stores. That seems like an excessive number.

In his letter he mentioned most of the stores would close but some will remain open. I would close everything outside of a service center to start. Maybe keep some really high traffic stores in other locations open.

There are only about 82 stores in the US.

How is that too many?

 

[Shock-On-T]

This is the beginning. What is Tesla's mission statement? What is their secret master plan?

Everything Elon did on Thursday was a fat "mission complete" for secret master plan part one.

You have to remember that Tesla wants EVERY CAR ON THE ROAD to be electric ASAP. Time is running out, and Elon started this company not to sit on a pile of cash but want to curb CO2 emissions. Their mission has always been to cut prices as fast as they can down to a level that is highly competitive to ICE counterparts REGARDLESS of demand.

The last two quarters have show us that they can generate an operational cash flow positive of over 1 billion/quarter(that's profit prior to capital expenditures). Elon have solved production bottle necks and have multiple new battery lines since Q4 to drive prices down. He has trimmed the fat wherever he can while maintaining the same production growth. The demand for the M3 high trim version was high enough to give Tesla the ability to drive down all Tesla prices and the plan is working BETTER than Elon has hoped.

This is no fire sale, this is the beginning. Tesla currently has the cheapest electric car with a positive margin. Legacy automakers as of last Thursday just went from 2-3 years behind to 5-6 years behind.

This exactly.
The master plan is to move the human race entirely to electric.
Think what these price cuts look like if you are BMW or Mercedes. Your M5 and C63 suddenly seem very uncompetitive.

 

[The Rookie]

I don’t think investors see that as the primary mission, for most of them (big institutions) it’s to stay solvent and make some money.

 

[neroden]

3/ Also hidden in plain sight was the evisceration of Solar City with even further layoffs, they pulled the Home Depot sales into Tesla stores, but now how are they going to be selling them? There is no longer a pretence or making SCY work, they have penalty payments coming next year to the state of NY now.

No they don't. Almost *everyone* misunderstood the SolarCity merger. The purpose, stated fairly explicitly (though nobody listened), was to be able to provide their own solar farms simultaneous with Powerpack sales. It was specifically a response to the headaches of the Kauai project, and Musk said so.

The Buffalo factory, which was essentially free, was a bonus. They'll get it working, though it's definitely been delayed (Elon Time). They'll hit the employment targets, which just require employees somewhere in NY, and they're expanding upstate NY service. Rooftop solar panels will be sold to people buying Powerpacks, pretty much. They do have the problem that their solar panels aren't the best deal, but they're working on that.

They are *deliberately* eliminating solar leasing (the basis of the SolarCity business model, and of its failure), while cashing out all the old leases (which provide nearly enough cash flow to make the merger pay for itself on a cash basis). A lot of people have missed this; the slow liquidation of solar leasing actually started a year before the Tesla merger, but it's been taking longer than it should have. Cash sales have actually been rising.

5/ A profits warning for Q1 which just a month ago was meant to be profitable but will now be a loss,

Boy, you can't remember. He said last month Q1 was iffy and was borderline breakeven. Severance and other one-time costs will bring it negative.

Work still hasn’t commenced on the Shanghai GF

Are you a complete idiot? Follow the photos of the ground being raised, the worker's dormitory, and the pile driving. They're fun!

 

[ggnykk]

What happened this week made me very uncomfortable. Tesla had to pay back more than $900 million which coincided with the announcement of the standard Model 3. Tesla always maintained that they were production constrained. Demand remained high even when standard range M3 was not available yet. Why come now with standard M3 when they said it would be the middle of the year.

Now standard M3 is available and deliverable within weeks. How can that be? If you have still a high demand of higher priced M3's and you are production constrained, why come with a lower price M3 which will obviously have lower margins?

Than the price slash of Model S and X. How can this happen? How can they remain producing them with these prices and still remain profitable?

Slashed prices for current owners to upgrade EAP and FSD. Desperate for cash? Again coincides with huge payment of over $900 million

Than closing of stores.

All in all it looks like a closing sale to me. Everything must go. Take it while you can!

Any thoughts? Am I too negative?

I double check how the new prices in Model 3/S/X compare to competition within the same class (EV or gasoline). The latest Tesla prices is still quite a bit higher than competition. I think Tesla is still making a profit margin above industry average even after the latest price cut.

 

[TheGrimSweeper]

The Rookie is an obvious troll. Here's a video from 2 months ago on Gigafactory 3.

 

[Peteski]

Having been in an S and an I-pace it’s no contest, the Jaguar is far and away a better car.

I didn't think so myself, but you should go and buy an iPace then. Can you even get hold of one within a decent lead time?

 

[u00mem9]

I think it might be (the end). Tesla is making radical changes because they see something on the demand side that we won’t see for a few months in disclosures. I think the 300,000+ people on the waiting list evaporated...and now it’s a $35k ‘Honda Civic’ that just isn’t that compelling.

I’m afraid Elon and Co thought hitting $35k was going to do it, but they were very close to that already...and many in 2016 reservation time thought they were going to get the full tax credit making the car $27.5k. It was laughable that they thought making some cost saving moves in the car was going to radically reduce costs, and when they finally realized what everyone in the industry was telling them, they decided to delete the sales infrastructure.

Q3 and Q4 sales were based on people waiting since 2016 or 2017. Of course you didn’t need stores for demand creation. Now, with plummeting demand and no way to drum up sales, it could go REALLY wrong REALLY quickly. Suppliers get spooked and they stop shipping parts when the bills are getting paid a bit late...and then BAM... it’s over.

 

[gilscales]

and now it’s a $35k ‘Honda Civic’ that just isn’t that compelling.

Not that compelling? please, there is nothing in the category that comes close, if more people knew about this car and actually drove it then Tesla would have much higher demand, I think at this sub 40k price range it is the most compelling car on the market, problem is everybody wants a SUV/CUV and are not really aware of all the advantages of the EV drivetrain so it's going to be a few years before demand peaks.

 

[D.E.]

The price cuts may be in response to the recognition of other car companies entering the market. If you were faced with developing a new battery operated car that had to be better than the Model 3 and you needed to sell it for less than $35K, it would probably be much more challenging than building a car that had to compete with a $45K car. Then add in the cost of developing, building, and supporting nationwide supercharging network supported by profits from the $35K car.

The margins are higher on the higher end cars, but Tesla has those covered as well, and they’ve just made themselves much more competitive there as well.

I don’t think this is a fire sale. I think Tesla is making it much more difficult for others to enter the market and out compete Tesla.

 

[Zaxxon]

now it’s a $35k ‘Honda Civic’ that just isn’t that compelling.

 

[u00mem9]

Not that compelling? please, there is nothing in the category that comes close, if more people knew about this car and actually drove it then Tesla would have much higher demand, I think at this sub 40k price range it is the most compelling car on the market, problem is everybody wants a SUV/CUV and are not really aware of all the advantages of the EV drivetrain so it's going to be a few years before demand peaks.

I agree that it’s unique and a steal for 35k. I didn’t state it clearly, but my point was that to someone that isn’t aware of EV life and all the unique things Tesla has is left looking at a vehicle with roughly the size and build quality of a Honda Civic, and at 35k...it hasn’t compelled them to buy one. I asked around at work, and got a lot of shrugs.

Like Tesla, I thought the price would do it... but I’m not seeing it now. Tesla sold to the environmentalists moving away from Prius or leaf EV, the luxury car buyers, and finally the hipsters and folks wrapped up in the cult of Tesla scene. Just seems like the regular car buying public is a different nut to crack. In any market that experiences cold winters, buyers who aren’t bringing the true-believer mindset are going to have many surprises.

Hope I’m wrong... I still have 6 years of warranty on the S!

 

[GeoX750]

They have just over 3billion cash in the bank so paying back the bonds is no big issue.

Slashing the price of s x I don’t agree with especially the P but everything else they did makes perfect sense. I mean everyone is going nuts about online only.

I ordered my MX in April 18, I took deliver at an SC in September, I signed my finance on an iPad so in my mine it was already online.

Less stores don’t seem like an issue at all.

Did you have a trade in or any financing ?

 

[⚡️ELECTROMAN⚡️]

So is FSD being offered to AP2.0 owners with EAP for $3,000?

 

[gilscales]

I didn’t state it clearly, but my point was that to someone that isn’t aware of EV life and all the unique things Tesla has is left looking at a vehicle with roughly the size and build quality of a Honda Civic, and at 35k...it hasn’t compelled them to buy one. I asked around at work, and got a lot of shrugs.

Yes, I understand your point now, living in Southern California we are in a Tesla bubble almost like that of the Bay area so it is harder for me to see it, I personally think Tesla should spend any advertising budget they deem appropriate and use it for road shows with test drives, they could load up a trailer of cars (mostly model 3's with at least an S an X) then use a Tesla Semi to draw even more attention towing these around the country and spreading the word like an old school revival!

Do you FEEEEEL me brother! Hallelujah, Praise Tesla!

 

[⚡️ELECTROMAN⚡️]

I do now wonder why anyone would take a job at Tesla if alternatives exist.

In the real world jobs aren't guaranteed. And the flip side, employees are free to leave whenever they want and aren't held captive by their employer. Not sure why I see so many comments that Tesla shouldn't lay off unneeded employees.

I personally had two negative test drive experiences with Tesla employees riding along with me. They should just hand you the key card and let you take the car for a few hours or a day if they have enough demos. That was how I was treated by Honda and Toyota. They didn't send a "sales person" along to babysit me. I wish Tesla would have laid off their commissioned sales people years ago.

 

[gilscales]

I wish Tesla would have laid off their commissioned sales people years ago.

My experience as well, went for a test drive as I had never even rode in a Tesla, Wife and I went out in a maxed out P100DL and it was eye opening to say the least, I being a gentleman let the misses go first, she was understandably timid and afraid of autopilot, I rode in the back seat patiently waiting my turn when the salesman directed her back to the dealership I said "ok, my turn" and the salesperson looked puzzled when he replied "oh, you want to drive it?, give me a minute" 30 minutes later I walked out pissed off.

Good news came when a sales manager called and asked how I liked the car and as soon as I said "I didn't get to drive it" he asked when I could come pick one up for a 24 hour test drive, a few days later I was REALLY sold! that was a fun day even though I made myself nauseous a few times with those crazy launches! I'm not a roller coaster kinda guy so....

 

[Camera-Cruiser]

You know what’s weird, is us. The members of this forum. We know too much, or more accurately, think we do about everything Tesla.

A friend of mine just told me that his 73 year old mother just ordered a mid-range 3 and is getting it next week. Neither read the forums, but heard the news about the price drop and ordered. No drama. Easy.

They’ll get the car, do a quick walk around, not think to check panel gaps or paint density, and drive it. They won’t look back, they won’t wrap the car, they won’t lower it, tint it, change wheels, or wonder about removing the aero covers. And they most certainly will not read blogs about it.

They will never know the joy we feel talking about how unhappy we are about Tesla.

It’ll be as it should be. Easy.

 

[gilscales]

You know what’s weird, is us. The members of this forum. We know too much, or more accurately, think we do about everything Tesla.

A friend of mine just told me that his 73 mother just ordered a mid-range 3 and is getting it next week. Neither read the forums, but heard the news about the price drop and ordered. No drama. Easy.

They’ll get the car, do a quick walk around, not think to check panel gaps or paint density, and drive it. They won’t look back, they won’t wrap the car, they won’t lower it, tint it, change wheels, or wonder about removing the aero covers. And they most certainly will not read blogs about it.

It’ll be as it should be. Easy.

So what will they do with all the extra time? Road Trip!