I've seen a lot of confusion and debate over the closure of retail stores. In the past few months, Elon has also started making some very ridiculous promises about service hours. For example, he has promised that same-day and even same-hour service is a new goal for service, and that emergency roadside assistance will be deployed almost instantaneously in the event of an accident. The cost associated with these tasks would be astronomically high.
However, I think Elon has a new master plan. One that sort of mimics how Amazon became so powerful and efficient that they can deliver for free in under two hours in many locations. I think Tesla may have provided us an important clue on how Tesla transforms car ownership into an on-demand service of the 21st century.
Same Hour Service Calls, for Free? Seems Ludicrous...
First we have to talk about reality. Having a huge amount of mobile techs drive out many miles to one singular point and back, versus having customers bring cars into one central location, generally doesn't make much sense financially. No matter how you spin things, buying several work vehicles, adding transit time, hiring enough employees to make individual service calls, and so on doesn't make sense. Just check out the cut-throat on-demand delivery services out there--receiving delivered meals often adds a good amount of cost to any transaction, and that's with people who maybe make near minimum wage and who use their own cars. And of course, the brick and mortar costs must still exist for the biggest repairs--so at most you're just cutting down on the number of service bays and size of a center, but cannot possibly remove service center costs.
It especially doesn't make sense that these techs could do same-day or even same-hour calls in every area of every country in a financially sustainable way. That'd be a lot of techs to account for holidays, seasonality, and recalls if you had as much coverage as average repair center business hours! The instant deployment of Roadside Assistance also seems similarly impossible while maintaining 24/7 coverage. Unlike service centers, you can't simply have cars waiting on a lot for a few hours or a couple days until staff becomes available--you must handle each event in real time.
So How Could Elon Possibly Make These Promises?
Having a boatload of mobile techs makes a lot of financial sense if you actually give them more to do, especially if they have flexible tasks that could be completed during downtime.
Test drives? Mobile techs can perform those at potential customers' houses or on their workplace. They could replace dozens of stores. Test drives, unlike service calls, can be scheduled far more flexibly with demand forecasting as well as 1-2 hour arrival windows. They may even be able to do these test drives on modified S/X/3 service vehicles. This would help realize very real savings in that mobile techs can replace many stores and several cars from a test drive fleet, without hurting demand--it could possibly pay for itself. Tesla's own data saw 20% of orders originate from stores, but could only drop prices by 6% by cutting those costs and this doesn't even include people who had to sit in cars or look at them in person to finalize orders.
Emergency roadside assistance? This fits in with the similarly crazy promise of "a tow truck is on the way before your vehicle has come to a stop". This one would require additional technology to work, though I imagine a modified Model X could have the towing capacity for this task. Keeping an emergency roadside assistance fleet essentially available for deployment instantaneously would be ridiculously expensive and unreasonable if it were only for that single purpose, but it makes more sense in this context.
Deliveries? This also brings about direct savings. Service centers generally aren't big enough to deliver at the volumes that will be needed as they continue to ramp up with the $35k Model 3. This is especially true as more and more work is offloaded to mobile tech. They do need to pay people today to deliver cars to customers. Fortunately, a car delivery is also relatively flexible (2 hours) and could be scheduled with proper demand forecasting. This does result in direct money saving, too.
What About Another Crazy Promise--Driverless Coast to Coast Summon without Full Redundancy?
Now for a big one--a possible eventual end goal that I think the store closures are preparing for: the Tesla Ride Sharing service that's planned. How in the world is Hardware 3.0 supposed to actually accomplish this when HW 3.0 (basically current cars with an upgraded computer) doesn't have the necessary redundancy to operate with full autonomy? How would a car be able to drive coast to coast through a command on your app with current hardware? HW 3.0 cannot clean most of its cameras off by itself. One bad encounter with slush, one errant bird poo, a bit too much road salt, etc. at this point and suddenly your car can't safely make road changes, or safely back up. These aren't a big deal when a human must still drive, but that's not really acceptable for a car that you just sent on a five hour trip to pick up your mother. It's also not acceptable to have ride-sharers that must take over, or must get out of a car to clean sensors. It is one of the largest disadvantages to a vision-heavy autonomy solution. These are very real issues that must be solved for Tesla Ride Sharing to work and without drastically increasing car prices.
Unless promises are reversed on FSD, level 5 autonomy, and the Tesla Ride Sharing network, Tesla very clearly needs a large volume of "human touch" to make things work.
That was a Tangent--What Does This Have to do with Same Hour Service Calls?
What if, however, Tesla already had a huge fleet of same-hour deployment-ready workers for the Tesla Ride Sharing network launch? What if the mobile tech fleet is actually the same solution that will enable HW 3.0 cars to be summoned cross-country reliably? If Tesla reaches such a large scale and availability, you could easily have a mobile tech re-routed to clean up bird poo off of your B pillar camera 3 hours into its journey to pick up your mother. A stranded Tesla Ride Sharing vehicle would be back on its feet and earning income much more quickly. These workers could be deployed as quickly as the "instant roadside assistance" call. It could potentially be a huge cost advantage compared to other fully redundant autonomous cars, which would cost many thousands or tens of thousands more.
With a huge number of additional tasks and flexibility, it suddenly makes a lot more financial sense. A mobile tech may only have a few minutes of driving between each task in urban areas, with very minimal downtime--sort of like how an Amazon contractor fulfills <2 hour deliveries for free. They can remove the impact of no traditional test drives / seeing vehicles in person / sitting in vehicles that may hold back buyers--despite Tesla's statements, I think they fully realize how important this is. They can reduce the number of test drive vehicles needed, and shut down the current more traditional roadside assistance program. They can allow HW 3.0 cars without full redundancy to actually work without customer worry and fulfill promises of the FSD and the future Ride Sharing network.
I think this is one of Elon's new master plans: I believe Tesla is laying the groundwork for a vertically-integrated ownership experience that no other competitor could ever touch. Tesla will be to other car companies as Amazon will be to brick and mortar stores. A cheaper Uber competitor could launch in a single country practically overnight, with a software update, after regulatory approvals. It may sound completely crazy, but Amazon did something similar--they became so massively vertically integrated and efficient with their core business of online shopping, that they could begin offering free two hour delivery in most urban markets. No legacy service that maintains brick and mortar retail stores is able to touch this, and I think other car makers are in for a huge surprise.
Sorry for the huge wall of text. I know it's a lot of speculation, but it all makes sense to me.
TLDR: Tesla made crazy promises with same-day/same-hour service, is closing stores despite obvious value, and they still promise country-to-country app summoning with no driver in cars that can be disabled by well-placed bird poo or slush. Tesla is actually planning to have a tremendously versatile and powerful mobile fleet that will transform them into the Amazon of car ownership while still maintaining all promises made on these subjects.
However, I think Elon has a new master plan. One that sort of mimics how Amazon became so powerful and efficient that they can deliver for free in under two hours in many locations. I think Tesla may have provided us an important clue on how Tesla transforms car ownership into an on-demand service of the 21st century.
Same Hour Service Calls, for Free? Seems Ludicrous...
First we have to talk about reality. Having a huge amount of mobile techs drive out many miles to one singular point and back, versus having customers bring cars into one central location, generally doesn't make much sense financially. No matter how you spin things, buying several work vehicles, adding transit time, hiring enough employees to make individual service calls, and so on doesn't make sense. Just check out the cut-throat on-demand delivery services out there--receiving delivered meals often adds a good amount of cost to any transaction, and that's with people who maybe make near minimum wage and who use their own cars. And of course, the brick and mortar costs must still exist for the biggest repairs--so at most you're just cutting down on the number of service bays and size of a center, but cannot possibly remove service center costs.
It especially doesn't make sense that these techs could do same-day or even same-hour calls in every area of every country in a financially sustainable way. That'd be a lot of techs to account for holidays, seasonality, and recalls if you had as much coverage as average repair center business hours! The instant deployment of Roadside Assistance also seems similarly impossible while maintaining 24/7 coverage. Unlike service centers, you can't simply have cars waiting on a lot for a few hours or a couple days until staff becomes available--you must handle each event in real time.
So How Could Elon Possibly Make These Promises?
Having a boatload of mobile techs makes a lot of financial sense if you actually give them more to do, especially if they have flexible tasks that could be completed during downtime.
Test drives? Mobile techs can perform those at potential customers' houses or on their workplace. They could replace dozens of stores. Test drives, unlike service calls, can be scheduled far more flexibly with demand forecasting as well as 1-2 hour arrival windows. They may even be able to do these test drives on modified S/X/3 service vehicles. This would help realize very real savings in that mobile techs can replace many stores and several cars from a test drive fleet, without hurting demand--it could possibly pay for itself. Tesla's own data saw 20% of orders originate from stores, but could only drop prices by 6% by cutting those costs and this doesn't even include people who had to sit in cars or look at them in person to finalize orders.
Emergency roadside assistance? This fits in with the similarly crazy promise of "a tow truck is on the way before your vehicle has come to a stop". This one would require additional technology to work, though I imagine a modified Model X could have the towing capacity for this task. Keeping an emergency roadside assistance fleet essentially available for deployment instantaneously would be ridiculously expensive and unreasonable if it were only for that single purpose, but it makes more sense in this context.
Deliveries? This also brings about direct savings. Service centers generally aren't big enough to deliver at the volumes that will be needed as they continue to ramp up with the $35k Model 3. This is especially true as more and more work is offloaded to mobile tech. They do need to pay people today to deliver cars to customers. Fortunately, a car delivery is also relatively flexible (2 hours) and could be scheduled with proper demand forecasting. This does result in direct money saving, too.
What About Another Crazy Promise--Driverless Coast to Coast Summon without Full Redundancy?
Now for a big one--a possible eventual end goal that I think the store closures are preparing for: the Tesla Ride Sharing service that's planned. How in the world is Hardware 3.0 supposed to actually accomplish this when HW 3.0 (basically current cars with an upgraded computer) doesn't have the necessary redundancy to operate with full autonomy? How would a car be able to drive coast to coast through a command on your app with current hardware? HW 3.0 cannot clean most of its cameras off by itself. One bad encounter with slush, one errant bird poo, a bit too much road salt, etc. at this point and suddenly your car can't safely make road changes, or safely back up. These aren't a big deal when a human must still drive, but that's not really acceptable for a car that you just sent on a five hour trip to pick up your mother. It's also not acceptable to have ride-sharers that must take over, or must get out of a car to clean sensors. It is one of the largest disadvantages to a vision-heavy autonomy solution. These are very real issues that must be solved for Tesla Ride Sharing to work and without drastically increasing car prices.
Unless promises are reversed on FSD, level 5 autonomy, and the Tesla Ride Sharing network, Tesla very clearly needs a large volume of "human touch" to make things work.
That was a Tangent--What Does This Have to do with Same Hour Service Calls?
What if, however, Tesla already had a huge fleet of same-hour deployment-ready workers for the Tesla Ride Sharing network launch? What if the mobile tech fleet is actually the same solution that will enable HW 3.0 cars to be summoned cross-country reliably? If Tesla reaches such a large scale and availability, you could easily have a mobile tech re-routed to clean up bird poo off of your B pillar camera 3 hours into its journey to pick up your mother. A stranded Tesla Ride Sharing vehicle would be back on its feet and earning income much more quickly. These workers could be deployed as quickly as the "instant roadside assistance" call. It could potentially be a huge cost advantage compared to other fully redundant autonomous cars, which would cost many thousands or tens of thousands more.
With a huge number of additional tasks and flexibility, it suddenly makes a lot more financial sense. A mobile tech may only have a few minutes of driving between each task in urban areas, with very minimal downtime--sort of like how an Amazon contractor fulfills <2 hour deliveries for free. They can remove the impact of no traditional test drives / seeing vehicles in person / sitting in vehicles that may hold back buyers--despite Tesla's statements, I think they fully realize how important this is. They can reduce the number of test drive vehicles needed, and shut down the current more traditional roadside assistance program. They can allow HW 3.0 cars without full redundancy to actually work without customer worry and fulfill promises of the FSD and the future Ride Sharing network.
I think this is one of Elon's new master plans: I believe Tesla is laying the groundwork for a vertically-integrated ownership experience that no other competitor could ever touch. Tesla will be to other car companies as Amazon will be to brick and mortar stores. A cheaper Uber competitor could launch in a single country practically overnight, with a software update, after regulatory approvals. It may sound completely crazy, but Amazon did something similar--they became so massively vertically integrated and efficient with their core business of online shopping, that they could begin offering free two hour delivery in most urban markets. No legacy service that maintains brick and mortar retail stores is able to touch this, and I think other car makers are in for a huge surprise.
Sorry for the huge wall of text. I know it's a lot of speculation, but it all makes sense to me.
TLDR: Tesla made crazy promises with same-day/same-hour service, is closing stores despite obvious value, and they still promise country-to-country app summoning with no driver in cars that can be disabled by well-placed bird poo or slush. Tesla is actually planning to have a tremendously versatile and powerful mobile fleet that will transform them into the Amazon of car ownership while still maintaining all promises made on these subjects.
