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Why is Tesla pushing people to custom order
- Thread starter quicksilver99
- Start date
In the 4th quarter of 2017, Tesla made 22K S and X but sold 28K and in the process drained their inventory. Since the end of the year orders appear to continue to outstrip production, so wait times are getting longer and there continues to be very little inventory. It’s as simple as that. Nothing purposeful about it — I’m sure Tesla would love to produce more S and X if they could.
As they begin production of Model 3 they're getting to the point that they don't need to push sales of the S and X any more.
My inner cynic* says that since they're dependent on Model 3 they're going to bite early bullets this year, and push 200k into Q3.
* It's really the same as my outer cynic.
My inner cynic* says that since they're dependent on Model 3 they're going to bite early bullets this year, and push 200k into Q3.
* It's really the same as my outer cynic.
Brando
Active Member
It is Tesla business model. That is one of the benefits to sell directly to customers - customers get what they want when they want.
Lessen inventory costs and storage costs. Maximises profits.
Everyone pays the same and continuous improvement (no model years) so cars are always improving slightly all the time.
Lessen inventory costs and storage costs. Maximises profits.
Everyone pays the same and continuous improvement (no model years) so cars are always improving slightly all the time.
Tiger
Active Member
My bet is low inventory levels due to delayed orders due to imminent refresh because of New competition for Tesla, The Jaguar I-Pace
Brando
Active Member
imminent refresh of model 3 ??
Tesla inventory are test drive [display, in store] cars, used cars, cars in transit to customers
delayed orders - is this the backlog? which are the ~400,000 deposits
the order is created when people configure their car (your custom order) [Model 3 depositors must be invited to order]
i.e. there is no inventory that customers "select" the car they want - that would how US car dealers work [Estonia the same?]
hope this clarifies rather than confuse
techiegirl
Member
Towards the end of 2017, they were anticipating the cancellation of Federal tax credits and thus reduction in demand of the Tesla. Tesla pushed all their existing inventory out.
Yinn
Active Member
The intention is definitely custom order. Selling inventory cars isn't the business model. Outside the US, most people do not go to a dealer and just pick up a car the same day. It's normal to place an order and wait for your car to arrive. It's just something we're not used to here in the US.
Despite that, other manufacturers are alllocation based. The cars are typically building even as you place an order. Tesla doesn't build a car until an order has been placed. I'll have to dig up the article, but there was an interview with a german auto exec. They were impressed at the end of the day by how Tesla's business model allowed them to remain uncomitted in resources and finances until they had orders on hand. Where as traditional auto model required blind investments into model development, assembly lines, and even build before they ever saw a penny on the hopes that they will recoup the cost.
In the end, having a lack of inventory means there isn't a need to offer manufacturer incentives. It saves them money on both the back end and the front end. For us, this also means better overall residual values.
Despite that, other manufacturers are alllocation based. The cars are typically building even as you place an order. Tesla doesn't build a car until an order has been placed. I'll have to dig up the article, but there was an interview with a german auto exec. They were impressed at the end of the day by how Tesla's business model allowed them to remain uncomitted in resources and finances until they had orders on hand. Where as traditional auto model required blind investments into model development, assembly lines, and even build before they ever saw a penny on the hopes that they will recoup the cost.
In the end, having a lack of inventory means there isn't a need to offer manufacturer incentives. It saves them money on both the back end and the front end. For us, this also means better overall residual values.
Tesla added several hundred inventory cars in the US yesterday. The most expensive models have discounts of over $23000 off the original price.
FlyF4
Son of a MX
Though I see the replies, can you enlighten me as to what you mean by pushing people to custom order? How about an example
FlyF4,
There is now inventory, so people can now make a choice to custom order or not. In previous weeks, it seemed Tesla was specifically holding back inventory and/or sold out last quarter. The advice I was receiving was to order custom now because of the lack of inventory and the potential for loss of the tax credit if I wait any longer...
There is now inventory, so people can now make a choice to custom order or not. In previous weeks, it seemed Tesla was specifically holding back inventory and/or sold out last quarter. The advice I was receiving was to order custom now because of the lack of inventory and the potential for loss of the tax credit if I wait any longer...
FlyF4
Son of a MX
Ok I see what you mean. Then it is just a helpful suggestion. I wouldn't infer that to be pushing you to make a custom choice. There is no advantage to Tesla either way.
As for the "potential" loss of the FEDERAL tax credit, your advisor is likely referring to the fact that Tesla will hit the 200,000 unit threshold this year. Sooner rather than later. BUT it drops off in stages. Not long after the FULL CREDIT threshold is reached, it then drops to half the amount ($3,750) for 6 months and then half that amount again for 6 months. It sort of works the same way as solar credits in some states like California when that was going on. AND you have to take delivery of the car to get the credit.
I am editing to clarify that that last statement. You can't get in the tax credit queue by simply ordering the car. You have to pay and take delivery. That is the date determining if you get the tax credit.
Yinn
Active Member
That sounds like an individual OA pushing you to buy. The inventory gets held back every year sound this time. But inventory cars aren’t actually built to be inventory, they’re usually showroom, demo, press cars or order cancellations and switches.
FlyF4
Son of a MX
Yup. bingo, and that is likely to be true for some time to come. There is just too much demand to build inventory.
