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This is how Elon should make the "no profit from service" work

Discussion in 'Tesla Motors' started by jeff_adams, May 8, 2013.

  1. jeff_adams

    jeff_adams Member

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    Since Elon made the announcement that Tesla should break even on their service center work, I've been thinking about how he could do that and prove to his customers and shareholders his commitment to that ideal.

    I believe that Tesla should run the service centers in the black for the year than "rebate" back the profit amount to the owners that purchased service plans. The more expensive a plan purchased, the higher the rebate.

    This move should encourage more owners to purchase better service plans and allow Tesla to properly staff the centers so great service can become the Tesla legacy.

    What other car company or dealer does that for their clients? Can you imagine the customer loyalty a move like that would create?
     
  2. Citizen-T

    Citizen-T Active Member

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    Interesting. My one concern is that it would be rather confusing for consumers.
     
  3. jeff_adams

    jeff_adams Member

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    Shouldn't be that confusing.

    After a customer has bought a service plan, they should receive a form letter from Elon that says "Thank you for purchasing a service plan for your Model S. As you may have heard, I made a promise that Tesla service centers will not be run at a profit. To fulfill that promise, I have directed our accounting department to tally up service center revenue and whatever profit is gained from that department will be shared back with service plan members such as yourself in the form of a rebate check at the beginning of the next calendar year. The amount will depend on the type of plan you purchased, the number of participating service plan members and of course the amount of profit generated. I am unaware of any other car company or car dealership that operates this way, but that shouldn't surprise you. Tesla is like no other car company in the world. We look forward to serving you and thank you for purchasing the world's most innovative car!
     
  4. Discoducky

    Discoducky Active Member

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    That's what Costco does. I'm only comparing the rebate check I get every year; not the service provided. :wink:
     
  5. ElSupreme

    ElSupreme Model S 03182

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    But charging higher costs for people who don't have the plan, seems almost sinister. If my per-service cost was the same, but I paid per visit I would be fine not getting a rebate. But charging significantly higher on the per-use people and then giving that money to others seems like a bad PR nightmare.
     
  6. jeff_adams

    jeff_adams Member

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    I don't think you have to charge them any more, just set the service rates and plans to make sure you can produce a profit and offer great service.

    It's not fair to run in the red, so costs to Tesla need to be covered. Pre-paid service plans allow Tesla to invest in building out service centers and provide training and staffing up front. People that don't buy service plans and just "drop in" are not going to allow Tesla to do proper financial planning.

    I think it's easier to show the value of buying a service plan to consumers if you show them that you're not looking to profit from their purchase. They are paying the "up front" costs that enable you to provide world class service. They are the ones that should be entitled to the residuals at the end of the year. The better plan they purchase, the higher percentage of the residue they should be entitled to. I can't see how it could be more fair than that....
     

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