Which direction should Tesla go as a company?

[JRP3]

1. They are really under-selling the safety of the Model S. It hasn't had full safety ratings come out yet, but that is a huge factor for a lot of people that are buying in that class of cars. Just think all the Volvo S60 people that pretty much buy because they think it's the safest car on the road.

I don't know how they are underselling the safety of a vehicle that isn't even being advertized, and is still selling faster than production rates.

2. The Model X is a very awesome car, but the falcon wing doors are going to alienate the market, considering that it's already a big change just switching to an EV, it's too innovative for a car that is supposed to be courting those outside the already timid market. And moreover, they are marketing it too myopically to women.

You assume the falcon doors are going to be in all models, which may not be the case, and again, you are talking about their marketing for a vehicle that has no advertising. Way too soon to be concerned about their marketing efforts, which are basically nonexistent.

3. Again, while the X is very awesome, it doesn't add very much value to their business plan for now. They would be better served by going into the 3rd car for 2013and accessing the prius market and doing the X in unison or waiting until 2014.

The X should have a much higher profit margin since it's based on the S platform, and the technology is not ready for the Gen 3 car at this time.

 

[vfx]

Also on the call they made it quite clear they are sold out 9 months in advance are not even trying. That is, that have a output problem, not a sales problem. As much effort as Tesla/Elon put into 5 star safety they will not be shy about it when the time comes that they have to start really selling.

 

[Doug_G]

Elon said on tonight's conference call that he thinks Gen 3 will have a breakthrough battery. Different technology and lower resulting cost. Said he couldn't say any more about that because of NDAs et cetera.

Tesla has patents on "hybrid batteries", which have two types of cells with different chemistry. This would allow you to have both fast power delivery and higher density...

 

[BenTesla]

Anybody have thoughts on when/if they will start an advertising campaign for the Model S? I think the tag line "Car first. Electric Second" is great. They should defiantly talk about safety, handling and performance. But I think the most important thing is that they talk about what good about the Model S and not be overly negatives about other cars.

 

[Eberhard]

As long as they have more then 4-6 month of delivery, there is no need.

 

[BenTesla]

As long as they have more then 4-6 month of delivery, there is no need.

I don't understand that mentality at all. Why does the waiting list matter? And Tesla has said about a billion times they want to sell 20,000 in 2013. Unless they figure out how best to market this car they will have no one on the waiting list by this time next year and then what? They had to continue to generate interest and convert that interest into sales. 12,000 reservations is a good start but they have to continue to get reservations.

 

[VolkerP]

I understand the mentality to closely watch your cash reserves very well.

In the Q2 results Q&A session, George Blankenship stated a goal of having a 3-4 month reservation list. With the addition of a few well-optioned demo cars for the fluent impulse buyer, I might add. Starting to work through the 10 month backlog is scheduled for Q4/2012 so we won't be near that target figure any time soon. The Tesla stores generate a flow of new reservations. Why shell out money on a one time ad campaign?

 

[dsm363]

Also Americans at least are used to getting a car immediately. You start adding too much demand (usually a good thing) and if that causes the backlog to get bigger than production capacity you might anger more people than you added. This is unlikely to happen any time soon as they have plenty of production capacity.

 

[jerry33]

My expectation is that as cars start being seen on the street and new Model S owners show their friends, neighbours, and co-workers, the amount of reservations will increase without any additional advertising. The first 25,000 to 30,000 shouldn't be a problem unless something goes horribly wrong with the first bunch of P cars sent out. After that advertising will likely be required.

 

[BenTesla]

Jerry33: I like that answer! That was exactly what I was thinking! But I hope its an ad campaign and not just a couple banner ads.

 

[VolkerP]

OK time for a new song. How about creating factory capacity in Europe? I think GM would be relieved to get rid of some Opel/Vauxhall plants over here, especially Bochum. GM spokesperson James Cain mentioned that negotiations are under way to close down some EU plants, but later had to retract that statement. GM 'would stick to existing contracts'. They still seek ways to ramp down production.

Source (in German): GM zieht Aussage über Opel-Werksschließungen zurück | tagesschau.de

So how about another plant fire sale?

 

[JRP3]

Maybe someday in the distant future. Until they get a few years under their belt manufacturing in one location and start to maximize the potential of what they have it makes no sense and would just tax their limited resources further.

 

[VolkerP]

Car manufacturers all over the world try to produce close to markets. Shorten supply chains, eliminate currency risks. There is surplus production capacity in EU, so we see more than one manufacturer closing down plants here and opening up new ones in China.
So while we agree that Tesla will do that move some day, I am sure that this future is not that distant.

 

[brianman]

@VolkerP - In addition to financial, there's another good reason: political. Until the loan is paid off, doing anything significant with factories outside the U.S. will lead to drama ala "Fisker taking DoE money to Finland".

 

[raymond]

Anybody have thoughts on when/if they will start an advertising campaign for the Model S?

Although I found some iPhone and iPad ads on the web, I have never seen or heard of any of these ads in The Netherlands. Still, Apple sales have been huge. Given the S and X lineup, and how much a test drive really sells the car, I wonder if regular media ads are the way forward.

What if Tesla would make a deal with luxury hotel chains to use the X to pick clients up from the airport? Much classier than a mini-van, just as practical, and a great way to reach potential customers. The predictability (miles per day) of such rides makes an EV perfect for the job.

 

[raymond]

So while we agree that Tesla will do that move some day, I am sure that this future is not that distant.

Tesla actually closed down their Taiwan factory to bring it all together in California. Prices in China are going up, and Toyota produces cars for the EU market in the EU, because that's their cheapest option.

For a highly automated factory a relocation to China would not save a lot of money. Also with a 400,000 car/year factory at their hands moving production overseas would make no sense.

In short: I don't agree that Tesla will move any part of the production to China.

 

[mmetzie3]

Tesla needs to and im sure will come out with a even more affordable ev around the 20,000 to 30,000 $ range so us broke ass college students can stop dreaming and actually get our hands on one!!

 

[doug]

OK time for a new song. How about creating factory capacity in Europe?

Given the extra capacity they have in Fremont and effort it takes to get production issues ironed out, I wouldn't expect them to manufacture the bulk of the vehicle anywhere else for the near future. Now what's possible and perhaps likely is that they'll do some battery assembly somewhere closer to the target market.

 

[raymond]

Now what's possible and perhaps likely is that they'll do some battery assembly somewhere closer to the target market.

I read (somewhere, can't find it right now) that the EU Model S bodies will be shipped to the Netherlands where the battery will be installed before further distribution through the rest of the EU. Panasonic shipping cells directly to the EU could make sense distance-wise. Would this also save on customs duties or taxes?

But who then assembles cells into packs?

 

[dsm363]

I read (somewhere, can't find it right now) that the EU Model S bodies will be shipped to the Netherlands where the battery will be installed before further distribution through the rest of the EU. Panasonic shipping cells directly to the EU could make sense distance-wise. Would this also save on customs duties or taxes?

But who then assembles cells into packs?

That seems to make sense. They really wouldn't need a very big space to do this. Just a small warehouse to store some cars and a lift to place the battery pack in. Would save money probably over shipping the battery pack to the US then with the car to Europe.