The new fantasy sales framework will fail

[electracity]

Leases have trade-ins and down payments too. Sure, they could set it up so that your trade-in sits for 7 days at Tesla, but that complicates things quiet a bit - unlikely Elon wants to sit on trade-ins for 7 days.

But letting the trade-in sit is also doable. It's the cost of 7 day storage, and the time value of money for seven days.

Perhaps it works to hold the car registration for seven days too. Or perhaps just eating the cost on the registration for 1 in fifty cars is acceptable.

But I expect Tesla is only closing their least profitable stores. They presumably have expensive leases and lease improvements that they can't walk away from. They want staff to quit and then they will consolidate within metro areas.

 

[electracity]

Leases have trade-ins and down payments too. Sure, they could set it up so that your trade-in sits for 7 days at Tesla, but that complicates things quiet a bit - unlikely Elon wants to sit on trade-ins for 7 days.

But letting the trade-in sit is also doable. It's the cost of 7 day storage, and the time value of money for seven days.

Perhaps it works to hold the car registration for seven days too. Or perhaps just eating the cost on the registration for 1 in fifty cars is acceptable.

But I expect Tesla is only closing their least profitable stores. They presumably have expensive leases and lease improvements that they can't walk away from. They probably want staff to quit and then they will consolidate within metro areas.

 

[808?]

Mobile test drives, pop up stores here and there. There will be plenty of options for those who need a test drive.

 

[sandpiper]

Online sales is fine, but there is something visceral about actually sitting in and driving car. Every car I've ever bought, my decision was based on the subjective feelings that I had while driving it. And more so with a Tesla, you can't understand the difference between it and a conventional car without being inside of it.

In my case, I bought online, but it was a chance to drive a friend's car that made the deal, before going onto the computer. And it helped me (a lot) to convince my wife that a +100K car wasn't completely nutso.

Online can work, but they absolutely need to give people a way to try them out before laying down a cheque. Saying "but it and return it if you don't like it" won't work. There may be other ways, instead of the stores. I don't know. It's certainly risky.

 

[MS_Dream]

This new "all online" sales framework is pure fantasy and is doomed to fail.

Even with its stores and sales force, Tesla's sales department is widely seen as one of the worst in the car industry. Many buyers on this forum, myself included, have experienced significant frustration with Tesla's sales and delivery process. Now they plan to get rid of its sales force and stores and make all sales online. This is not only doomed to fail, but will also seriously damage Tesla's financial health and brand value.

I want to discuss two primary reasons. First, many have experience poor sales and delivery from Tesla. For example, it's difficult or impossible to actually get a hold of someone who can give you accurate information about an order or delivery. Moreover, there are frequent and significant delivery issues. Currently, at least you could get a hold of a real person at a store, and try to get some answers. Many have experienced that calls and emails just don't work because you either get slow responses or no responses at all; and even when you get them they may not actually answer your questions or resolve your problems. Without a dedicated sales force with real people that you can actually reach, there will be even greater issues around sales and delivery, increasing customer frustration, and decrease sales.

Second (the main issue), people actually want to test cars before just ordering one online... The car is a major purchase (like just after a house), and it feels ludicrous to just buy one without even testing to see if it fits one's needs. Also the experience of spending time in a store to hear about the car's features propels more to actually buy the car.

Yes there will be a 7-day return, but most people can't afford that. Honestly can you REALLY return a car after spending hours with a bank and completing lots of paperwork to get a loan and then what, just return the car and wait for Tesla to refund you the full amount hopefully quickly enough to pay off the bank before the next loan payment is due? Oh of course you ll need another loan like immediately afterwards since you ll still need a car; good luck explaining that to the bank...

Moreover for most people, a car purchase needs to be simultaneous with a car sale... many people use the money they get on their old cars for a down payment on the new car... like what are they going to do? Can people really afford to keep their old cars and just order the Tesla, and just test it for 7 days? In many cases they would have to have sold their old car when the Tesla arrives so really they wouldn't be able to return the car since they wouldn't have a car if they did... Moreover these transactions would not be simultaneous, creating HUGE hassle on the part of the buyer.

There are many other issues and problems with this new fantasy sales framework. It just wont work. This experiment will fail and Tesla will pay dearly for its failure (loss of sales + customer frustration+ loss of brand value + eventual costs to re-build sales functions and locations).

You certainly have the right to your opinion but I mostly disagree with your assessment.

I took delivery of my wife's Model 3 in December and the changes Tesla is making would have had no affect on my purchase experience. I did not test drive the car and the ordering, loan and trade-in were all done online. The car was delivered to my home and the delivery specialist drove away the trade-in vehicle. My only interaction was with the delivery specialist and I have no complaints. Buying a car this way was an absolute pleasure. Also, 78% of Model 3 buyers ordered their cars online. For the most part the normal sales model just doesn't apply to Tesla.

Although many people do insist on a test drive before buying, Tesla buyers must be of a different breed since 82% of Model 3 owners bought the car without one. This was largely because test drives were just not available early on but Tesla still had more orders than they could fill. I believe this will still be the case now that prices have been lowered.

The customer service issues are clearly real since Elon Musk acknowledged them. However, I believe this problem will be resolved as Tesla matures.

 

[Lasttoy]

I have visited stores in over 20 states. Kids manning most of them, folks that can afford a 100k car dont fell comfortable buying a car from a kid. They didnt know what a ROI was. They send them to a class about the car, but they just came across as kids. Example, a 50 year old couple comes in to buy or at least test drive one. They are not iPad savy. One has to make them feel very comfortable before taking a drive.
I have let over 100 people drive my car. One went right down and bougyt a 55k 3. Others just cant get off 100+ k cars. If the 3s really start showing everywhere they sales will soar.

 

[sandpiper]

You certainly have the right to your opinion but I mostly disagree with your assessment.

I took delivery of my wife's Model 3 in December and the changes Tesla is making would have had no affect on my purchase experience. I did not test drive the car and the ordering, loan and trade-in were all done online. The car was delivered to my home and the delivery specialist drove away the trade-in vehicle. My only interaction was with the delivery specialist and I have no complaints. Buying a car this way was an absolute pleasure. Also, 78% of Model 3 buyers ordered their cars online. For the most part the normal sales model just doesn't apply to Tesla.

Although many people do insist on a test drive before buying, Tesla buyers must be of a different breed since 82% of Model 3 owners bought the car without one. This was largely because test drives were just not available early on but Tesla still had more orders than they could fill. I believe this will still be the case now that prices have been lowered.

The customer service issues are clearly real since Elon Musk acknowledged them. However, I believe this problem will be resolved as Tesla matures.

I am very much an early adopter and tech enthusiast, and I bought online. But I would not have bought it without driving one first. In my case it happened to be a friends' car but that was just fortunate. You're making it clear that the lack of a store would not have affected your purchase. Do you consider yourself a typical car buyer? I can tell you don't and that you aren't,

You can't sell to the 95%, the same way that you sell to the .5% that Tesla has historically sold to.

 

[aerodyne]

This new "all online" sales framework is pure fantasy and is doomed to fail.

Even with its stores and sales force, Tesla's sales department is widely seen as one of the worst in the car industry. Many buyers on this forum, myself included, have experienced significant frustration with Tesla's sales and delivery process. Now they plan to get rid of its sales force and stores and make all sales online. This is not only doomed to fail, but will also seriously damage Tesla's financial health and brand value.

I want to discuss two primary reasons. First, many have experience poor sales and delivery from Tesla. For example, it's difficult or impossible to actually get a hold of someone who can give you accurate information about an order or delivery. Moreover, there are frequent and significant delivery issues. Currently, at least you could get a hold of a real person at a store, and try to get some answers. Many have experienced that calls and emails just don't work because you either get slow responses or no responses at all; and even when you get them they may not actually answer your questions or resolve your problems. Without a dedicated sales force with real people that you can actually reach, there will be even greater issues around sales and delivery, increasing customer frustration, and decrease sales.

Second (the main issue), people actually want to test cars before just ordering one online... The car is a major purchase (like just after a house), and it feels ludicrous to just buy one without even testing to see if it fits one's needs. Also the experience of spending time in a store to hear about the car's features propels more to actually buy the car.

Yes there will be a 7-day return, but most people can't afford that. Honestly can you REALLY return a car after spending hours with a bank and completing lots of paperwork to get a loan and then what, just return the car and wait for Tesla to refund you the full amount hopefully quickly enough to pay off the bank before the next loan payment is due? Oh of course you ll need another loan like immediately afterwards since you ll still need a car; good luck explaining that to the bank...

Moreover for most people, a car purchase needs to be simultaneous with a car sale... many people use the money they get on their old cars for a down payment on the new car... like what are they going to do? Can people really afford to keep their old cars and just order the Tesla, and just test it for 7 days? In many cases they would have to have sold their old car when the Tesla arrives so really they wouldn't be able to return the car since they wouldn't have a car if they did... Moreover these transactions would not be simultaneous, creating HUGE hassle on the part of the buyer.

There are many other issues and problems with this new fantasy sales framework. It just wont work. This experiment will fail and Tesla will pay dearly for its failure (loss of sales + customer frustration+ loss of brand value + eventual costs to re-build sales functions and locations).

I disagree with point 2, as there is an easy and better solution...

Rent the car first using a service like Turo! Once prospective owners figure this out, I believe the buying experience will be improved as most owners are more knowledable than sales staff, no need to get a loan or insurance quote.

If this board really wanted to nip this problem in the bud put up a sticky link to Turo and other Tesla rental options...

 

[Buster1]

Service centers will still be doing test drives. The Vegas SC does 30+ a day. They do as many orders a day, or folks can order online then. I don’t see this as a big deal.

 

[Super_Popular]

....and just like all the nay sayers in the beginning that said Tesla would never make it, blah blah blah. They will be fine going online only.

Exactly. Tesla has been selling online since 2013 and there will be someone to contact with issues, so not much is going to change and they are not closing all stores, just mall stores and really low traffic stores. The crappy customer service will never change, it's Tesla's thorn.

It will be fine.

 

[Barklikeadog]

You certainly have the right to your opinion but I mostly disagree with your assessment.

I took delivery of my wife's Model 3 in December and the changes Tesla is making would have had no affect on my purchase experience. I did not test drive the car and the ordering, loan and trade-in were all done online. The car was delivered to my home and the delivery specialist drove away the trade-in vehicle. My only interaction was with the delivery specialist and I have no complaints. Buying a car this way was an absolute pleasure. Also, 78% of Model 3 buyers ordered their cars online. For the most part the normal sales model just doesn't apply to Tesla.

Although many people do insist on a test drive before buying, Tesla buyers must be of a different breed since 82% of Model 3 owners bought the car without one. This was largely because test drives were just not available early on but Tesla still had more orders than they could fill. I believe this will still be the case now that prices have been lowered.

The customer service issues are clearly real since Elon Musk acknowledged them. However, I believe this problem will be resolved as Tesla matures.

-If- the Model 3 was readily available to test drive, more people would test drive it. This seems like a case of telling the customer what they want. (apple-ish).
I couldn't buy a car without sitting in it.

 

[David.85D]

I am not worried about closing the retail locations. The local staff was frighteningly inexperienced in any case. They can easily morph to having a car brought to a customer for a test drive - very little overhead and easy to adjust resources as trends change (no leases, etc).

I do wonder about the 7 day return and how the bank financing will go. I suspect it will actually increase Tesla financing costs for borrowers. The banks won’t want to “eat” the sunk costs of originating a loan that gets canceled after 7 days, nor will they want the risk of having their loan collateral go from “new car” to “used car”. All solvable problems, but guessing the risk and costs will somehow get shifted to borrowers.

 

[jerry33]

The crappy customer service will never change, it's Tesla's thorn.

I have had my S85 for six years/121K miles. I've yet to have "crappy service".

 

[pdxrajiv]

After reading all the comments and concerns, I am re-realizing that some people like a high-touch experience while others like a low-touch experience during the sales process. I presume Tesla thinks that there is enough demand from the the low-touch set, at least for the time being.

Are DSs also being let go? I hope the DSs can provide the right amount of touching necessary for the delivery process.

 

[Super_Popular]

Are DSs also being let go? I hope the DSs can provide the right amount of touching necessary for the delivery process.

No.

And Tesla is not closing high traffic stores like Portland's Macadam store. They are closing mainly low traffic mall stores like Washington square.

And getting rid of sales staff that are not needed due to slowing sales.

 

[GoTzillaR]

You certainly have the right to your opinion but I mostly disagree with your assessment.

I took delivery of my wife's Model 3 in December and the changes Tesla is making would have had no affect on my purchase experience. I did not test drive the car and the ordering, loan and trade-in were all done online. The car was delivered to my home and the delivery specialist drove away the trade-in vehicle. My only interaction was with the delivery specialist and I have no complaints. Buying a car this way was an absolute pleasure. Also, 78% of Model 3 buyers ordered their cars online. For the most part the normal sales model just doesn't apply to Tesla.

Although many people do insist on a test drive before buying, Tesla buyers must be of a different breed since 82% of Model 3 owners bought the car without one. This was largely because test drives were just not available early on but Tesla still had more orders than they could fill. I believe this will still be the case now that prices have been lowered.

The customer service issues are clearly real since Elon Musk acknowledged them. However, I believe this problem will be resolved as Tesla matures.

There is a huge difference between buying a car for transportation and passion with high expectations. Online will be fine but test drive on high end cars is necessary.

 

[PWlakewood]

There is a huge difference between buying a car for transportation and passion with high expectations. Online will be fine but test drive on high end cars is necessary.

Necessary for you and that's your choice but most Tesla buyers have showed they dont need a test drive

 

[smilepak]

It's an interesting move. It's one thing to buy clothing online without ever having try it out, it's another thing to fork out 90k on a car. It's definitely a different mindset people have to be comfortable with and a custom to.

I suppose it's no different than Carvana and a like have been doing. Not to mention Tesla own CPO program.

It definitely save cost. Hopefully they can redirect those saving towards improvement and availability of their service center.

 

[aerodyne]

There is almost no chance that Tesla would close all it stores at once. My guess is that it would start with the least profitable locations.

They should bring back the refferal program to reward those who demo their Tesla to buyers

 

[Kutu]

The only issue I see with online only ordering is trade ins. Most people still trade vehicles in... Of course this could just help carmax/carvana/etc...

I traded in a pickup for my Model S, then I traded in that Model S for my Model X. There were no negative trade-in issues and the trade-in decreased sales tax here in Florida. Both cars were ordered on-line!