The new fantasy sales framework will fail

[GoTzillaR]

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

Like I said, if I just need a transportation, I could careless on a lot of things. However, I still need to know how the car drives, how I fit into the seat, how I can hold the goods from grocery stores and etc. Thus, the one to seal the deal was an overnight test drive on X on top of all the youtube videos I watched and assumptions I had from those.

People do want test drive. Taking orders online doesn't mean the deal has completed. BMW, Porsche and Audi are doing that now for their EVs and X7. You really think people will just wire the money to them without test driving a car costs over 6 figures?

 

[traxila]

Good perspective. But you may just pointed out the biggest issue Tesla faces, people who are well aware of Tesla brand are under age of 30, but they are also the group that tend to have less financial resources to buy an EV (which price above gasoline car on average).
In the same token, people who are over 30 years old are usually much less aware of Tesla, but they are the one that can more easily afford to buy it.

Maybe Tesla needs to put their official Facebook page back up, it is a totally free marketing platform for Tesla. I found it absolutely absurd that Elon decided to take it down two years ago just because Facebook has some short-term problems with privacy.

Not me. F#*# Facebook. Ridiculous that everyone has willingly given up the house to that prick.

 

[PhilDavid]

.....overrated? Yet they sold how many model 3 online? Funny how this whole internet thing doesnt seem to work.

Yes, because it had ZERO competition. The game will be different in a year when Porsche and others start selling premium EVs with much better sales and service and the ability to visit any local dealer for a test drive...

 

[MS_Dream]

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.

I do consider myself to be a typical car buyer. Like most buyers, I always took a test drive mainly because it was part of the buying process. I think most buyers have already made up their minds about a car and take the test drive as a formality. They don't need to drive a car to know they will love it. But some people need the test drive and that's fine. Those folks will find another way to drive a Tesla or they will choose another brand. This new sales model will not work for all buyers but I believe it will work for Tesla.

Also, I don't believe that the 95% vs. 5% split is accurate. According to poling by Autotrader and others. the percentage of buyers who would buy a car without a test drive is much higher than 5%. It's actually closer to 50%.

How Important Is the Test Drive to Car Buyers? - Autotrader

 

[PWlakewood]

Yes, because it had ZERO competition. The game will be different in a year when Porsche and others start selling premium EVs with much better sales and service and the ability to visit any local dealer for a test drive...

Only time will tell and I'm taking the side of Tesla. They have a huge head start and have more knowledge about the issues that will arise from going all electric. All manufacturers are playing catch up with Tesla. Good luck catching them.

 

[erik_k]

Yes, because it had ZERO competition. The game will be different in a year when Porsche and others start selling premium EVs with much better sales and service and the ability to visit any local dealer for a test drive...

I’m taking a wait and see on this. I don’t think they’re going to ramp production numbers up to the point that there’ll be multiple EVs at each dealership. I’d wager a small amount that only 2 in 5 of the VW/Porsche/Audi dealerships will even get a demo car. If you actually want to buy one other than the demo you’re going to have to wait quite a while to get what you want. Then there’s no support network or experienced techs and it is a version 1.0 product that’s sure to have some kinks like the early Roadster and early S.

I think there’s a lot of hype about “Tesla-killer” EVs from Europe but I’m skeptical. Even if they pull a rabbit out of the hat they’re only going to negate some S and X sales. People looking at the <$50K market are looking at Bolt, Leaf, and Model 3. Easy choice there I think.

If there’s to be a real threat, I think it’ll come from China.

 

[P100D_Me]

I think there’s a lot of hype about “Tesla-killer” EVs from Europe but I’m skeptical. Even if they pull a rabbit out of the hat they’re only going to negate some S and X sales.

With the unexpected price massacre to the premium S & X, Tesla themselves have guaranteed current owners will be looking to Euro EV's when it comes time to replace their cars given Tesla have shown no appreciation to them. You wouldn't get caught out again surely!

If there’s to be a real threat, I think it’ll come from China.

Yeah for sure, the NIO EP9 shows they can make fast ones too.

 

[Tic-tac-toe]

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.

I test drove but the car was brought to me at my house at the day and time of my choosing which is the kind of service expected for a luxury car... I was told what cars they had available, color etc and had my pick. I didn't have to go to a Tesla store even though there is one less than a mile from me. I test drove by taking the car to pick up my kid from school, etc. I was sold

I hope they sell more cars by lowering the prices but the market for ~100K+ cars isn't huge. It's already a sunk cost for me like shoes and I am not planning on selling/trading in my car anytime soon so I hope this move increases Tesla's sales and helps makes them into a mainstream automaker not a niche seller of luxury autos.

 

[PhilDavid]

I test drove but the car was brought to me at my house at the day and time of my choosing which is the kind of service expected for a luxury car... I was told what cars they had available, color etc and had my pick. I didn't have to go to a Tesla store even those there is one less than a mile from me. I test drove by taking the car to pick up my kid from school. I was sold

You do realize a central gallery is cheaper than driving cars to everyone who would like a test drive -- right?

I think what we are witnessing is not really the end of test drives but they will likely be coordinated coordinated by larger service centers that happen to have a gallery and sales staff.

They will also likely continue to have galleries/stores in major cities,

 

[Tic-tac-toe]

You do realize a central gallery is cheaper than driving cars to everyone who would like a test drive -- right?

I think what we are witnessing is not really the end of test drives but they will likely be coordinated coordinated by larger service centers that happen to have a gallery and sales staff.

They will also likely continue to have galleries/stores in major cities,

The store near me is in a very high end retail store area with Hermes, Louis Vuitton, Gucci, etc. smack in the middle of DC with the usual horrible traffic and premium rents. I don't think they actually have anyone test drive from the store but bring a car to the customer if they want a test drive. The store is mostly a gallery to showcase the cars not a place you go for a test drive.

Also, while this store makes sense for selling S/X, it really isn't the market Tesla is targeting for the model 3.

 

[whitex]

Like I said, if I just need a transportation, I could careless on a lot of things. However, I still need to know how the car drives, how I fit into the seat, how I can hold the goods from grocery stores and etc. Thus, the one to seal the deal was an overnight test drive on X on top of all the youtube videos I watched and assumptions I had from those.

People do want test drive. Taking orders online doesn't mean the deal has completed. BMW, Porsche and Audi are doing that now for their EVs and X7. You really think people will just wire the money to them without test driving a car costs over 6 figures?

People who just need transportation are not Tesla's target market. There are plenty of more economical transportation options out there, so Teslas won't compete well (you can get where you need to go in a Toyota Yaris the same as in a Model 3, and no, the gas savings will not offset the price difference). They can't compete on comfort features either (you can buy a much more comfortable car for the price of a Model S or X). Tesla target market are people who love the EV driving experience, and that cannot be conveyed without a test drive. Unless of course Elon things people buy Tesla because it's a fad, then sure, online will work for people who just need something branded with a Tesla logo.

 

[whitex]

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.

Elon one liner hype:

• "you can buy a car in 1 minute on your phone, return it within 7 days"

Reality:

• you spend a 8 hrs filling out online paperwork, getting financing, evaluating your trade-in, etc.
• you pick up your new Tesla, trade your car in
• you decide to return it
• you don't get your trade-in back, now you have to shop for a new car, if you get lucky and track down your old car, pay the new dealer $5K-$10K more than you got in trade-in credit
• you get any deposits back in 4-6 weeks, minus loan origination fees and early termination penalties

Elon is completely disconnected from reality. His one liners are famous - remember "everyone will get a P100D while their car is in service, and get a chance to purchase it upon return". Remember "[AP1] summon will find you anywhere on private property" which turned out to be "car will drive in a straight line up to 40 feet forward or backwards while you hold a deadman switch making sure the car doesn't hit anything". That is the level of disconnect between Elon one liners and reality.

The only way Elon's one liner works, if you are a billionaire like him, can buy the Tesla with 1 click after his assistants setup direct debit payment method, and when he returns it he doesn't car, the money will eventually go back to top off the account which had millions in it to start with. For Elon, buying and returning a Tesla is like buying a $20 piece of clothing on Amazon with free returns is for everyone else.

 

[jerry33]

Reality:

• you spend a 8 hrs filling out online paperwork, getting financing, evaluating your trade-in, etc.

I don't dispute the other points, but eight hours was a lot longer than I spent. Maybe two hours, so about the same as driving time to a store. The second from last time I purchased a car from a dealer, the time spent at the dealer during delivery was over eight hours. (I believe they really hated me because the manufacturer set the price on a special deal and they couldn't charge the $5K extra they were gouging others.)

 

[whitex]

I don't dispute the other points, but eight hours was a lot longer than I spent. Maybe two hours, so about the same as driving time to a store. The second from last time I purchased a car from a dealer, the time spent at the dealer during delivery was over eight hours. (I believe they really hated me because the manufacturer set the price on a special deal and they couldn't charge the $5K extra they were gouging others.)

The 8 hrs was my estimate of the total time spent through the process, chasing down all the data you can't find, for example something as simple as "give me the residuals, interest, or money factors, for 48/60/72 months", or chasing trade-in details, or "why does my payment end up being $50 more per month than what initially talked about" or even correcting the financial paperwork because someone entered incorrect numbers. If you don't care exactly how much you get for your car and whether your payment is +/- $100 a month, you could save some of that time. I will say that the last 2 I had great OA's which took care of everything like money factors, terms, etc. all in one email (since I asked all questions in one email), but there were still hiccups in the process with finance and trade-ins.

If I didn't care to comparison shop rates, or how much I would get for a trade-in, I can see the process take much shorter - sign here, bring your car when we call you that your car is ready, we'll tell you how much a month you owe.

 

[Sonic_78]

I’m sure Tesla has data that supports the decision. It’s just not an “idea”. The cost of the stores vs the renevue they bring in. Yes, it may slow sales some but the reduced overhead will increase margins and reduce prices.

I mean anything can happen but I’m sure this was a well thought out and heavily considered matter. I would disagree with the OP and give benefit of the doubt to Tesla.

 

[scaesare]

So the vast majority of Teslas (86%? something like that he said) are already purchased this way. Hence it's already a success, now, yet you predict it can't work in the future.

Interesting.

 

[bob_p]

As a concept - online sales should work - and it's likely Tesla will have to adapt to make this process work well for everyone.

We've purchased 3 vehicles online (Texas doesn't allow direct sales), and the experience has improved each time. The biggest issue was with the lack of transparency on the status of our vehicle - where was it in the manufacturing, transport, and preparation process - which Tesla can address, just like they've now done for service status.

Clearly there are going to be challenges with the 7 day/1000mile return policy. Tesla requires $$$ to be paid upfront before you can pick up the vehicle. When someone returns a vehicle, they should also expect Tesla to immediately provide them $$$ once Tesla has possession of the vehicle, so the customer is able to immediately purchase a replacement vehicle. And there are clearly going to be issues with items such as backing out of license plate/sales/property tax plus dealing with financing of the vehicle.

Tesla WILL offer test drives. Even if they temporarily stop them in some areas as stores close, they will find there are a lot of customers who will want to test drive a vehicle before they purchase it. So if there isn't a gallery close by offering test drives, Tesla could do this out of service centers or go back to having a travelling test drive event.

Or... Musk will just tweet "When FSD is released late this year, test drive vehicles will come to you", just like he's previously tweeted that FSD vehicles will drive themselves to service centers for maintenance...

 

[GoTzillaR]

People who just need transportation are not Tesla's target market. There are plenty of more economical transportation options out there, so Teslas won't compete well (you can get where you need to go in a Toyota Yaris the same as in a Model 3, and no, the gas savings will not offset the price difference). They can't compete on comfort features either (you can buy a much more comfortable car for the price of a Model S or X). Tesla target market are people who love the EV driving experience, and that cannot be conveyed without a test drive. Unless of course Elon things people buy Tesla because it's a fad, then sure, online will work for people who just need something branded with a Tesla logo.

When a person completes a deal on a car with no test drive nor see it in person, he simply just needs a "Transportation", IMO.

EV driving experience is exactly my point. It doesn't matter what Tesla's target market is. Why would anyone, who wants to have EV experience but don't know how that will work out, buy a car with no test drive? That 83% number from Tesla saying these people bought a Model 3 with no test drive is overlooked. If the number were true, those 83% owners could have already owned an S or X, rented an EV from somewhere or borrowed an EV from friends. The most convenient and cheapest way to know EV driving experience is to request a test drive. IF Tesla is thinking that 7 days/1000miles after a transaction has completed could just simply replace a test drive, they are out of their minds and will be out of business.

 

[GoTzillaR]

So the vast majority of Teslas (86%? something like that he said) are already purchased this way. Hence it's already a success, now, yet you predict it can't work in the future.

Interesting.

Only if you believe that 86%. Why does Tesla need to lower the price on S and X and introduce $35k model 3 if they have already succeeded in the way they had before? Sorry Tesla, the demand has dropped and competitions have rose. Within this year, the only advantage Tesla will have is supercharging network.

I'm not saying Online will fail. All other manufacturers start doing that. But, cutting their workforce in OA and test drive is not the way to succeed.

 

[jerry33]

When a person completes a deal on a car with no test drive nor see it in person, he simply just needs a "Transportation", IMO.

EV driving experience is exactly my point. It doesn't matter what Tesla's target market is. Why would anyone, who wants to have EV experience but don't know how that will work out, buy a car with no test drive? That 83% number from Tesla saying these people bought a Model 3 with no test drive is overlooked. If the number were true, those 83% owners could have already owned an S or X, rented an EV from somewhere or borrowed an EV from friends. The most convenient and cheapest way to know EV driving experience is to request a test drive. IF Tesla is thinking that 7 days/1000miles after a transaction has completed could just simply replace a test drive, they are out of their minds and will be out of business.

This assumes that no one will have "already owned an S or X, rented an EV from somewhere or borrowed an EV from friends" going forward. And the idea was to reduce the number of test drives. For many folks, just sitting in the car in a gallery is enough to verify seat comfort, which is one of the more usual concerns for the average driver. For the performance drivers, there won't be any problem with getting a test drive. This whole no test drive thing has been blown way out of proportion. It's really going to end up being a non-issue.