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Tesla Fashion Island Grand Opening Weekend (2011-11-18)

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To educate, and also to familiarize people not only with the idea of electric cars, but also with the fact that they are real, that you can actually sit in them and see the touchscreen working etc. ;)

Even if the Model S could be sold just by media reports, word of mouth, website info, plus test drives... the Bluestar isn't that far away, and preparing a 200,000-per-year market needs good preparation. People who go to an auto mall probably want to buy a car soon, and may not have the time it takes to inform and familiarize themselves with the concept of EVs. I couldn't imagine myself buying an EV just a few days or weeks after the first time I heard of their existence. It took me quite some time to get to that point. So they'll buy a more common car type, and then they already have one for the next 10 years or so. Whereas a store in an area with high foot traffic of more general nature allows people to gradually acquaint themselves with the possibility of buying an electric car.
 
I dropped by Monday morning to look and sit in the Model S and spoke to one of the reps about foot traffic and sales during the grand opening. He told me foot traffic was something like 10K (that's 10,000) and 40 people had made reservations.

Not to mention those who may have gone and reserved from home.

I didn't make the store open due to my work schedule, but I like the store being at the mall rather than next to the Ferrari dealership. It's intimidating to pull into that place...a thought that might have been shared by Tesla execs who opted for the mall location to target the less-than-super-rich.
 
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Why wouldn't your cell phone stay in your pocket? That's what BlueTooth is for. Garage remote? Should be handled by the entertainment center using HomeLink. The only things in my Roadster are my sunglasses and company badge.


As for the store concept, time will tell, but I think Fisker took exactly the wrong tactic - tying up with the current very, very broken dealer system means they'll have un-passionate and probably not very knowledgeable salespeople - who almost certainly will not be Fisker employees - as the first point of contact. At places where selling a niche car isn't top priority. That's a huge lack of control there, and quality of that contact will not be very good. The current system is just not the way to sell a durable good. It's said that car advertising doesn't bring in many new sales, but is mostly about trying to make current customers feel better about their purchase - to make up for that sales experience!

At it's pricing level, the customer base for the Model S is quite narrow. Getting the right traffic in the door is important. Alphas, influencers, bleeding edge weenies (hi!). At least here in the Bay Area, the Santana Row store is very well placed, especially compared to where the McLaren/Fisker dealership is (and yeah, it's mostly branded McLaren, for all the... what? 0.4 cars they'll sell a year?). And even though it's 'selling' McLarens, you can still recognize the totally offsetting meta-patterns of a standard not-fun commission-based dealership. Blech.

I'm not sure that Tesla's model is optimal, but it's sure a heck of a lot better than the current model, IMO. A Tesla store is far more inviting than the last two sales experiences I've been through (Porsche and Mercedes).


Fisker's model is much cheaper than Tesla's model, and Fisker's model is proven to move units (conventional Ice). I worry that this new store concept may have a negative impact on the bottom line for Tesla. Take a look at Apple, they did not roll out their new store strategy until they were financially able to do so. I am not sure if Tesla from a cash flow perspective is at the point where they can afford to roll out this strategy effectively. Every two store market takes at least one store away from a new market. Do you think that having an additional store that is a few miles from an existing store will attract more customers as opposed to if that store was placed in a new (demographically equal) market? I think the Bay Area is an anomaly with regards to market trends. The Bay Area has a ton of rich techies who love this type of technology, I do not think the rest of the nation mirrors this type of demographic, but rather wealthy individuals who will cross shop Tesla's with other vehicles priced similarly (i.e. the practicality of a vehicle will be the primary focus and the techie portion of the car will be secondary). Also So Cal and other areas around the country iare more spread out than the Bay Area, so range anxiety will be a huge factor, people often travel hundreds of miles down here daily and frequently, I know this is not the norm up in the Bay Area.

When the Model S and future models start to ramp up I am not sure how this store model will work. I also think (as pointed out earlier) that this is just a short term strategy to create a buzz. Once the buzz is created it will be interesting to see what Tesla does.

The local Fisker dealer here in Orange County is within the confines of a BMW dealership. I think this is the ideal scenario where people essentially are in the market for a luxury car can compare in the flesh a regular ICE car and this new breed of vehicle. The franchisee makes money either way so I do not see them push selling a Fisker over a BMW or vice versa etc. Personally I like the ability to negotiate on a car, and I have never purchased any car at asking price and never will (including my Roadster).

The biggest problem I have with the Tesla stores have been the lack of knowledge by the young sales staff. The people whom I have dealt with really do not have a technical background and cannot explain a lot of the concepts accurately. They are great at using cliches and reciting the marketing material, but if a technical question is posed they seem to be tripped up pretty quickly or give an uninformed answer. Maybe this has improved (it has been a bit over a year since I was last in a Tesla Showroom) but I was not very impressed by the knowledge of the staff.
 
I think Tesla's core business is developing/manufacturing Electric Cars, I know they like to think of themselves as a pioneer in all aspects of the automotive industry...

And marketing as well apparently. New car, new car technology, and new way of selling cars.

And the the old stores like Newport and LA and Menlo are just places they opened before they decided on this strategy. As others have said, once the leases are up they will probably go with the NY, Italy and Japan model of a low(er) rent service site and high end store location. Who knows, maybe the stores in those markets were working so well they saw it would work worldwide as a marketing, advertising, educating, and brand awareness tool that can also sell cars onsite.
 
From the OCBJ:

"Tesla to Shift Service Center as Retail Focus Changes
AUTOMOTIVE: Most local selling moved to Fashion Island store
By KARI HAMANAKA
Sunday, December 11, 2011

Palo Alto-based luxury electric vehicle maker Tesla Motors Inc. will relocate its Newport Beach service center as it pursues a new retail strategy.

The service center location on Pacific Coast Highway is no longer “optimal,” spokesperson KC Simon said. The company plans to open another service center, but its search for a new service site in Newport Beach won’t start until a new tenant is found to assume the 4 ? years remaining on the present location’s lease.

“We will not close down service before we find a replacement service property and intend to execute a seamless move between locations,” Simon said.

Tesla opened the 10,500-square-foot location across from the Balboa Bay Club & Resort on Pacific Coast Highway as a dealership and service center in mid-2010. It took a space previously occupied by a Rolls-Royce dealership.

Emphasis

The automaker has shifted the emphasis of the center to service of late and plans to sublease the space. The developments come weeks after it opened up shop at a former Apple Store location at nearby Fashion Island, where visitors can view Tesla models, order a vehicle, arrange for test-rides or shop for branded merchandise.

L.A.-based CBRE Group Inc. is also listing a 10,000-square-foot Tesla showroom in Los Angeles for sublease. Simon declined to comment on the L.A. property.

“The traditional dealer model is one we want to get away from,” Tesla Communications Vice President Ricardo Reyes said last month.

One of Three

The Fashion Island store was one of three that opened last month. The other two opened at malls in Bellevue, Wash., and Chicago.

Tesla now operates 20 stores and service centers worldwide. Tesla’s debut vehicle was the sporty Roadster, with a starting price of $109,000.

The automaker is now looking to make inroads with more middle-of-the-road customers at malls and other shopping centers with its Model S sedan set to come to market in mid-2012. The sedan is more affordable than the Roadster but still pricey at a starting price of $57,400.

Tesla has about 2,000 Roadster customers, mostly in California.

Reservations

Reservations for the Model S total about 6,500, surpassing the 5,000 model year 2012 sedans set to be made and sold next year. Model S production, which occurs in Fremont, is expected to ramp up to 20,000 annually beginning with the 2013 model year.

The eight-year-old company’s retail strategy could help set it apart from other automotive brands as it looks to grow sales. Tesla reported a loss of $65 million on revenue of $57.7 million for the three months through September. "