The GREAT Gamble: Online Sales

[lookmtb]

I'm curious to see how the non-enthusiasts embrace the idea of buying a car without test drive. I know Musk said 82% of Model 3 owners bought without a test drive, but that number is skewed because they were mostly Tesla enthusiasts and early adopters. Once the enthusiasts waiting for the $35K model buy their cars in the next 2-3 months, Tesla is going to have to sell to the larger market of regular car buyers. Will they be comfortable buying the car without a test drive?

The 7-day return policy is a good soundbite, but in practice it would be a hassle to get a loan, buy a car, return it, wait for the refund, deal with closing out the loan, etc. You still have to be a very motivated buyer to want to do that.

Perhaps Tesla can start an Uber-like service for test drives and incentivize current owners to offer their cars for test drives in their neighborhoods.

I agree with this. To buy a car is a difficult process. Insurance and a loan would all have to be lined up. That means my credit takes a hit too! also, what about trade ins? If I give them my old car are they gonna keep it on their lot till the trial period is over?

This is a lot of effort they're asking people to go through just for them to decide if they like the car. I'm hoping there is still some way to simply test drive for a bit. My feeling is that would be in their best interests.

 

[StellarRat]

Maybe it will, but I doubt that a typical buyer wants to shell out money for a test drive. Besides, an average buyer wouldn't know to go to Turo for test driving a Tesla. It would have to be promoted by Tesla.

It certainly appears to be a big gamble for Tesla to offer no test drives. But then, I know nothing about selling cars. Hope Tesla is right.

Based on my experience in a few businesses, you can bet that Tesla's sales, accounting, and marketing people analyzed their numbers nine ways from Sunday and determined that the sales hit would be less pain than getting the SR out. Tesla has a ton of data about who buys, how, etc... No one makes this kind of decision without serious research even Tesla .

One thing is certain, we'll know the answer pretty soon!

 

[SMAlset]

My husband and I were discussing how we felt about this approach. He went into a store to place his order for his MS but he decided to buy one when he road in a co-workers MS prior to that store visit. The store facilitated the ordering. He never even took a test drive even when he was at the store which had surprised me. We placed the order for my Model 3 before driving one. None were available in the stores then to even see on display. I had seen one in person at a Tesla event in Monterey but as they were Franz and Jon's cars we could only look at them from standing outside of them. After placing my order I did get a quick drive in one at a Tesla meetup in Kettleman City thanks to a TMC owner who was giving rides. But that just helped cement my decision a bit more. The car was so new it kind of was a blur and I mainly wanted to see how I felt about the center screen. Think I still wasn't sure but I liked the car a lot. After getting delivery and driving it for a very short time, I knew I was glad I had ordered it.

So based on our own experience I'm not sure how much of an impact some of the store closures will have on sales. The stores helped cement the Tesla brand, which by now has good name recognition. I realize California and the west coast are kind of unique in the large numbers of Teslas on the road here, but with so many out there and with the influx of Model 3s and the upcoming SR versions, people will be able to see them locally. We took our MS first year we had it to display at an annual EV event and most owners at Supercharger locations are more than willing to talk to you about their car and some even let you sit in it. Certainly the auto press has come around to appreciating the cars and there's been glowing reports on the Model 3 now that it's out and kind of the undisputed EV winner out there. Just saying it's not like people who are interested and seek out the car can't probably find it and get a better feel for it before putting an order in online. Time will tell. The vast majority of Tesla owners absolutely love their cars and wouldn't buy anything else.

With Tesla loosing its Federal Tax credit advantage, being able to lower the cost of the cars I think will keep them attractive while they work towards improving service and entering more markets and getting the Chinese factory online. Then there will be the release of the Model Y and the pickup that I know people are also waiting for.

 

[CameronB]

@SMAlset There are many current Tesla owners who either ordered a Model 3 before riding in one (or possibly even without seeing one in person, depending on where they were located). And before that, undoubtedly some of the Model S and X owners.

But in terms of the adoption curve, these are "innovators" or "early adopters"

• Innovators adopt something simply because it is new.
• Early adopters are often opinion leaders
• Early majority and late majority are the critical mass that ensures adoption
• Laggards, as the term implies, are slow to adopt.

I assume you and your husband are in one of those first two groups.

Question is, will "early majority" buyers also get on board with online only/no test drives in great enough numbers to get to the "late majority" phase?

 

[nvx1977]

My friends and neighbors could care less.
They have seen the tow truck at my house SO MANY TIMES they would politely decline any test drive.

They likely couldn't care less.

That's cool. Leave the test drives to me then. No tow trucks here for my early-VIN Model 3.

 

[nvx1977]

@SMAlset There are many current Tesla owners who either ordered a Model 3 before riding in one (or possibly even without seeing one in person, depending on where they were located). And before that, undoubtedly some of the Model S and X owners.

But in terms of the adoption curve, these are "innovators" or "early adopters"

• Innovators adopt something simply because it is new.
• Early adopters are often opinion leaders
• Early majority and late majority are the critical mass that ensures adoption
• Laggards, as the term implies, are slow to adopt.

I assume you and your husband are in one of those first two groups.

Question is, will "early majority" buyers also get on board with online only/no test drives in great enough numbers to get to the "late majority" phase?

Most online clothing/shoe retailers have excellent return/exchange policies in place because the buyer won't get to "test drive" the clothes' fit and fashion before purchase. They even encourage buying multiple sizes to minimize return/reship transport. That model is working fine. Tesla's 7-day 1000-mi return policy is more than sufficient compared to the typical less-than-1-hr test drive you get at a dealership.

Sure, you still have people struggling with being "online" and you're likely never going to reach that demographic. But 2-3 generations have spent their formative years with e-commerce. It's not such a jarring change.

 

[Rockster]

Most online clothing/shoe retailers have excellent return/exchange policies in place because the buyer won't get to "test drive" the clothes' fit and fashion before purchase. They even encourage buying multiple sizes to minimize return/reship transport. That model is working fine. Tesla's 7-day 1000-mi return policy is more than sufficient compared to the typical less-than-1-hr test drive you get at a dealership.

Sure, you still have people struggling with being "online" and you're likely never going to reach that demographic. But 2-3 generations have spent their formative years with e-commerce. It's not such a jarring change.

As someone pointed out up-thread, buying a car online requires obtaining a loan, usually obtaining insurance, possibly selling a vehicle (or trading it to Tesla), and likely even having some sort of charging solution installed at home. All prior to taking delivery. That's a significant leap of faith if one has neither sat in nor driven the car. It's not impossible to imagine people doing that, especially since so many have done so already, but as one moves further and further down the innovation/early adopter scale, the emotional barrier to such a buying process is likely to increase.

 

[SMAlset]

@SMAlset There are many current Tesla owners who either ordered a Model 3 before riding in one (or possibly even without seeing one in person, depending on where they were located). And before that, undoubtedly some of the Model S and X owners.

But in terms of the adoption curve, these are "innovators" or "early adopters"

• Innovators adopt something simply because it is new.
• Early adopters are often opinion leaders
• Early majority and late majority are the critical mass that ensures adoption
• Laggards, as the term implies, are slow to adopt.

I assume you and your husband are in one of those first two groups.

Question is, will "early majority" buyers also get on board with online only/no test drives in great enough numbers to get to the "late majority" phase?

I actually don't think I'd classify us in group 1 or 2. More group 3. My husband was aware of Tesla very early on. He followed the Roadster (more than he would have spent however) and he felt he would end up buying a MS but wanted to wait for it to be in production for a few years. He's never really been an early adopter and rather see the kinks worked out of things before buying. He didn't order until 12/31/16. It was something he had in the back of his mind but ended up that day running errands and one was next to the Tesla store. He knew about the free supercharging and said he kind of placed the order spur of moment as it just felt right then.

As for myself, I wasn't into EVs, carbon footprint, etc. In fact I was nervous about going EV. Loved the look of the car but just wasn't sure I'd adapt to the whole electrical charging scenario and more "tech" than I wanted. Personally I hate charging all the devices I have, so doing so at home instead of at a gas station still wasn't that motivating for me. I had an older car that I knew was going to get replaced soon and still was considering having his Tesla, with our other car being a gas car. However once I started driving his car (admittedly nervous about driving the car and concerned I wouldn't adapt to the tech), I saw how easy it was to adjust to all the new screens and honestly Tesla made it so easy to plan your trips in it and charging, that it didn't take me long after that to want a MS of my own. Plus it was so fun to drive and I wanted to spend more time driving. My husband was urging me to hold off and see what the Model 3 was going to offer. I now love plugging in at home. Using the supercharger is incredibly easy as well. I could go on about the other benefits I saw, but within a few months of getting our Model S I was the one who wanted to take the car to the EV event. Never did anything like that before. Tesla really opened up another world for me and I saw the benefits of going EV and have embraced it since. Daughter of a GM employee no less. I'm really happy to see Tesla find a way to market the Model 3 SR at the $35K level so more people can afford one, and just think the car sells itself once you've experienced it.

 

[Nocturnal]

People once thought Amazon was dumb for trying to sell books online too.

Test drives are far overrated. The average buyer is just sitting there seeing if they like the seats and radio. People routinely spend hundreds of thousands of dollars on cars without a test drive. I spent 72k on my car without one.

 

[ninpb]

People once thought Amazon was dumb for trying to sell books online too.
.

I'm going to buy Trader Joe stock. Taking a queue from Amazon, Tesla will circle back to brick and mortar and theyll have model z next to the free coffee sampler.

 

[Sunshine Enjoy]

I have a feeling Tesla can get away with it as long as they have the ev market cornered. With full autonomous driving coming soon, I'm sure Tesla will come out with some kind of 'to your door' test drive service before the competition catches up.

 

[KJD]

Honestly, I think it is a brilliant move but Americans do not take well to change so we shall see. Tesla is also in the enviable position of having a large cadre of motivated owners who happily perform a large part of the olde system for free.

I do agree with everything you said here and I think this part is the key. Will that Tesla good will and the car that sells itself be enough to carry through and make this a change a success. I certainly hope so.

 

[mongo]

After all, even my corrupt state lets people get their non-Tesla cars serviced outside of dealerships.

In Michigan, the problem is that Tesla, or any manufacturer, can't own a repair facility.

 

[SergeyUser]

3k$ is important. It increases competitive advantage for Tesla. I'm pretty sure they will succeed in it. They can enhance the process in many ways in the future as well, to adjust the purchase/process policy as needed. But having 3k$ discount is very welcome.

They are basically outsourcing (for FREE) the test-driving function to existing owners )) I think it is extremely smart. Everyone will soon have a friend with a Tesla to try it.

 

[Dana1]

Based on my experience in a few businesses, you can bet that Tesla's sales, accounting, and marketing people analyzed their numbers nine ways from Sunday and determined that the sales hit would be less pain than getting the SR out. Tesla has a ton of data about who buys, how, etc... No one makes this kind of decision without serious research even Tesla .

One thing is certain, we'll know the answer pretty soon!

I don’t know...the whipsaw pricing models doesn’t give a lot of confidence that there’s a well thought out plan. After the Performance debacle last Fall you’d think yesterday’s big announcement would have been different.

 

[johnnyS]

I think having a $35,000 model is more important than having sales people and test drives. This is going to make it really hard for other manufacturers to compete.

 

[C141medic]

People once thought Amazon was dumb for trying to sell books online too.

Test drives are far overrated. The average buyer is just sitting there seeing if they like the seats and radio. People routinely spend hundreds of thousands of dollars on cars without a test drive. I spent 72k on my car without one.

I’m my case, I totally disagree. I think people test driving cars are more interested than just the seats and radio. Before I purchased the Model 3, I test drove a 2018 Nissan Leaf. And then I test drove the M3. I was a former Leaf owner but I test drove it to see how it handled and how the pro-pilot assist system worked. It sucked. And if i had purchased the Leaf without a test drive I would’ve been very disappointed. Maybe it’s just me but I’m not going to purchase a vehicle without a test drive. If I decide to get the Model Y I’d probably wait to test drive one on Turo before I make my purchase decision.

 

[SageBrush]

Maybe it’s just me but I’m not going to purchase a vehicle without a test drive. If I decide to get the Model Y I’d probably wait to test drive one on Turo before I make my purchase decision

That sums things up nicely: Spend some money on Turo and get an in-depth test drive to save ~ $3k on the car.

 

[Vitold]

It is not a gamble but positioning Tesla to compete with upcoming Chinese entries that most likely will be sold online.

 

[KJD]

I have no regrets buying 2 Teslas and I bought the first one before I had ever driven a Tesla. I knew that I wanted one and the only question I had at the time was 60 or 85. In the end I purchased a CPO 85 because the payments on a new one were more than my comfort level. This past year I sold the S and bought a new model 3.

Having said that I think it is a mistake to close all the stores. Not sure if the Amazon model will work with cars. I looked on Turo.com this morning for Tesla in SLC area and it only showed 3 cars available. Not near enough for a metro area this size.

Just so you know I am very particular about my own car. I have given many people test drives and will continue to do so. However I am not sure I want to rent it out on Turo just so someone else can beat the hell out of it for a day.