Tesla's new Strategy?!?!?

[Svetlin]

I heard loaner model S are coming off the line right now.

How cool would this be! You approach the loaner with your key fob and it instantly transforms into your car! All your software settings and preset positions are there.

Except it doesn't change color. That's only if you buy the chameleon package.

 

[SFOTurtle]

Turtle, since the time of the 5 part trilogy announcement I've been cautiously optimistic that cost of service will be slashed or eliminated. I don't want to raise false hopes, but I still see this as a real possibility.

I won't go through all details again (you can see a post I wrote 4/9), but it makes sense strategically... i.e. in terms of earnings, and retaking the high ground that EVs have far lower maintenance cost than ICE.

It would delight current owners, and it would create greater receptivity to EVs from the general public (well in line with Tesla's fundamental purpose of accelerating the advent of EVs).

Hey, I agree with everything you say although I'm not expecting it. I went ahead and purchased the 4 year service plan. If I can see any of that $$ coming back to me, I will be quite happy, and I'm sure all Model S owners would be as well.

 

[FredTMC]

Hey, I agree with everything you say although I'm not expecting it. I went ahead and purchased the 4 year service plan. If I can see any of that $$ coming back to me, I will be quite happy, and I'm sure all Model S owners would be as well.

I agree with SFO. I'd be shocked if they made service plan free. I think TM needs this revenue stream

 

[mikevbf]

announcement will be regarding service per reuters article

Tesla CEO tweets strategic announcement coming Friday - Yahoo! Finance

In the article Elon says,
"I'm an engineer, so service is not something that I naturally do," Musk said in an interview on April 2. "But it's the right thing for the company and I think we have the opportunity to re-engineer service."

I would guess that Elon strategized Tesla's service plan around a statement something like,
"Ok, what sucks about getting your car serviced..." and "So how can we make service free from all these things. How can we create the best service."

Maybe the new "strategy" is not a new strategy for Tesla, but instead a new strategy compared to the rest of the auto industry. To me the two things that suck most about getting my car serviced are 1) the unpleasant surprise that something much worse and more costly than what I was expecting and 2) the time lost due to not having my car or at best having to drive around in a crappy loner.

Although, many do not like the price of the service plan, it does solve the "unpleasant surprise" aspect of the first problem. And having a top of the line Performance Model S loaner goes a long way toward solving the second biggest problem. Did I miss something? What do you hate the most about service?

I believe words like "change in strategy" and "owners will like this" are just the usual hype we get before an announcement of something nice, but well short of our wildest dreams.

 

[Jason S]

Haven't been following entire thread, so please forgive if ideas already posted...

Wildest dreams: every car (or a subset of cars: Signature edition) gets every upgrade available to the model -- this will stop short of performance plus upgrades to performance versions, but can include the other items (CHAdeMO adapter, parking sensors, heated widgets, etc).

Reasonable Strategy: partnership with existing dealers -- E.G: Fisker, Toyota, MBZ. The cars can be sold through those other dealers, to get around the continuing bucking of the industry. Seems unlikely tho, but it is a change in course.

Still reasonable: replace tires with every service. That would make the $$ for service sting less and Tesla gets tires in bulk anyhow.

 

[Soflason]

Haven't been following entire thread, so please forgive if ideas already posted...

Reasonable Strategy: partnership with existing dealers -- E.G: Fisker, Toyota, MBZ. The cars can be sold through those other dealers, to get around the continuing bucking of the industry. Seems unlikely tho, but it is a change in course.

+1

Been thinking it would be announced with either (or both) Mercedes and/or Toyota because of the existing relationships there...

 

[SteveG3]

I agree with SFO. I'd be shocked if they made service plan free. I think TM needs this revenue stream

Fred, my point has been service plan was a misstep from day one. Customers were quite upset, and it took away strategic advantage of lower maintenance cost in educating the public about the advantages of EVs.

My speculation (and definitely speculation), was that the $2,500 price increase that began Jan 1 this year was a way of baking the cost of service into the cost of the car, to later announce slashing of service plan cost, and basically undo the misstep of the original service plan. If they cut the cost of service in half, 8 years of service would go from $3800 to $1900. So the $2,500 price increase in January would more than cover lower service plan price as far as Tesla's revenue stream.

Elon talks repeatedly about reasoning from first principles rather than analogy. The service plan was reasoning by analogy... what other ICE car companies in the luxury realm would charge for service. Well, the words service and warranty have different meaning for an EV than an ICE. Where does service begin and end as opposed to warranty with an EV? pretty murky at this point (notice the confusing wording in many of the Tesla announcements on this). I am hopeful Elon comes out with first principles tomorrow and really delineates service and warranty for EVs as the more appealing realities they are compared to ICE.

 

[anticitizen13.7]

Elon's tweet says that "owners" (I think that means Model S and Roadster drivers) will like the announcement, so I doubt this will have anything to do with selling cars through a Mercedes dealership. Dealers are basically separate franchise owners, so Tesla would have to make deals with each dealer network, which is a headache I think they would want to avoid.

Tesla already confirmed to Reuters that tomorrow's statement will be service related.

I'm as puzzled as Mikebvf though. I have the same objections that he does regarding unexpected costs, lost time, and crappy loaners. The service plan and P85 loaners covers these problems, so I'm just not sure what Elon has in mind.

 

[DonPedro]

+1

Free service plan doesn't seem like it either. That would mean returning millions and millions in cash to customers, at a time when the company really really needs to show a profit every quarter.

I'm having thoughts about reducing the frequency of the car having to go somewhere for service. Remote diagnostics, rangers fixing things, longer service intervals etc. But none of this feels like a "new strategy".

We'll just have to see tomorrow, I suppose.

 

[SteveG3]

Don, agree Tesla needs revenues... that was the point that the price increase in January ($2,500) may have been a planned move to more than compensate for diminished revenue by lowering cost of service (likely about $2000 reduction). Announcing lower cost service plan would also stimulate higher demand (including access to cash helping revenue as well (and increasing near term access to cash through increased number of reservation deposits).

 

[Andrew]

Perhaps they're just going to give us all the 3G connectivity for free? (For life of the car, or perhaps included with the annual service fee.) Better yet, they'll enable 4G/LTE and then give that to us for free!

That would be an excellent service decision, and wouldn't require any complicated backtracking/refunds for people who have already prepaid for their 4 or 8 years of service.

 

[Kipernicus]

+1 Andrew, was just thinking of free 3G forever

 

[mitch672]

+1 Andrew, was just thinking of free 3G forever

That could be one element of it, Perhaps they've decided to "shelve" the WiFi access they where supposed to enable, maybe it's gone the way of the "40KW" Model S - too costly to put resources and effort into, therefore free access if you have any prepaid service plan (which certainly adds value to the service plans).

 

[Arnold Panz]

That could be one element of it, Perhaps they've decided to "shelve" the WiFi access they where supposed to enable, maybe it's gone the way of the "40KW" Model S - too costly to put resources and effort into, therefore free access if you have any prepaid service plan (which certainly adds value to the service plans).

That doesn't sound like something current owners would be happy with, which is what Elon promised in his tweet.

 

[Discoducky]

Really like the idea of integrating with Solar City and offering free charging for life at home. I could really see this as a possibility in the future. But for this service announcement I think TM is going to add more value to the plan, but not reduce the cost even though I wish it would be true. And note that I really don't like paying $450/12.5K miles to keep our warranty since our driving habits will eat that up every 8 months or so (aka More than an ICE car).

 

[smorgasbord]

the Rav4EV is not sold worldwide ... you gotta think globally. the MB Tesla supplied EV will be however so thinking along the same lines gives us servicing at the MB service centers.

Yeah, but Mercedes is so far behind that there's no way their service centers are prepared for anything like that. If announced, that would be a far future thing, further out than I'm expecting. Also, we don't know in which countries Mercedes is planning on selling their B class car yet. Might also not be world-wide.

 

[PureAmps]

A lot of people probably think you're crazy, but I think you're pretty close. He said something earlier this month about how they have made significant progress without any word getting out.

I don't think it's that crazy at all. At least not as crazy as building a rocket company from scratch to fly to Mars.

I agree my idea is unlikely, but it occurred to me after a recent road trip using the superchargers. My rationale is below.

Elon is clearly trying to get the monthly cost of ownership down to the magic number of $500/month. Unfortunately he cannot currently get there without some voodoo economics. Nobody bought into his $500/month pitch earlier in the month. The only way to truly get the price down is to reduce the vehicle's price or the operating costs. He can attack operating costs through reducing maintenance costs, insurance or fuels costs. He controls the first, has no control over the second, and can offer to "pay" for the third.

Let's say on average people drive 40 miles a day, so Tesla could offer to pay up to 40 miles a day when you charge at home. At 320 Wh/mile that would be 12.8kWh of energy. Using the national average of $0.11/kWh that would be $1.41/day or $42.3/month. That's not a huge expense if they can cost-effectively scale out a matching energy generation solution. They could even pay you via PayPal. Not sure how well it would scale to hundreds of thousands of vehicles, but I think it could be economical for current Model S production rates.

Using Tesla's calculator that brings the monthly cost of ownership down to $650/month for a 60 kWh vehicle. But that is for a loan term of 63 months. After that point, the vehicle's cost of ownership goes negative compared to a gas vehicle (excluding maintenance for this discussion). Assuming you are saving $329/month in fuel (from Tesla's calculator), then only 12 months after your loan is paid off your average cost for the 75-month period is now $493/month. Own your car 10 years? Now your average monthly "cost" over that time period was only $185/month (again, assuming fuel savings). Good luck finding *any* other car that can match that 10 year cost of ownership at 15k miles/year. That's only $22,200 over 10 years.

Remember Tesla's stated goal is to create *sustainable* transport through adoption of electric vehicles. Their goal is not to just build another automobile company. How better to support this goal than to provision your vehicle's sustainable energy generation solution when you purchase the vehicle? That is what I call a strategy an owner would like!

Disclaimer: I recognize I did not include maintenance costs, the actual energy rates people pay are often higher than $0.11/kWH (mine included), etc. This is just a quick back of the envelope calculation for discussion purposes. I also know little to nothing of large scale solar installation economics, so feel free to tell me I'm crazy.

 

[ckessel]

I think it's just the loaner car bit. We already know about it and Elon's mentioned it in passing, but this will just be the formalization of a loaner car, maybe with pickup/dropoff depending on your service agreement and/or issue.

Essentially living up to what luxury car buyers are used to from many luxury dealerships.

It'll be greeted with a big "meh" from us in the know

 

[FredTMC]

Media Advisory | Tesla Motors Announcement


PALO ALTO, CA, Apr 25, 2013 (Marketwired via COMTEX) -- Tesla Motors, Inc. TSLA +3.11% will hold a conference call on April 26, 2013 at 10:30 AM Pacific Time (1:30 PM Eastern Time) for members of the media, to make an announcement about Tesla Service. Following remarks from Elon Musk, Tesla Motors co-founder and CEO, media is invited to participate in a question and answer session.


What: Tesla Motors, Inc. Announcement When: Friday, April 26, 2013


Time: 10:30 AM Pacific Time / 1:30 PM Eastern Time Press Release will be available at: Press Center | Tesla Motors Webcast: ir.teslamotors.com (live and replay) Live Call: (877) 312-5519 / (760) 666-3771 (International)


Approximately two hours after the call, a digital recording of the Q&A session will be available for a period of two weeks following the date of the call. To access the recording, please dial in to one of the following numbers using the conference ID shown.


Replay Dial-In #: (855) 859-2056 Conference ID: 58875812


International Replay Dial-In #: (404) 537-3406 Conference ID: 58875812


The webcast will also be archived on the Company's website for a period of one year following the date of the call.

 

[gaswalla]

Yep... they hired an entirely new service staff at HQ to ensure that service remains a priority (per a Tesla employee), and they have loaner cars.

Just glad we're only kept in suspense <24 hours and that the announcement is in the morning