
Tesla to raise prices and keep more stores open - elemeno
https://www.bbc.co.uk/news/business-47521940
======
docker_up
This is a company in absolute turmoil.

How can a company go from closing almost all their stores, to reversing that
decision in a week. How was that initial decision made in the first place? Was
it Elon Musk snapping his fingers like Thanos? And then to turn it around in
less than week shows a complete misread of the situation. Whoever made that
initial decision should be fired, including Elon Musk.

I think Elon Musk has great vision, but he is in over his head with running
and growing the company. He needs to hand the reins over to something who is
better at this than he is. His behavior, including calling a person a
pedophile, tweeting about going private, and fighting the SEC over Twitter
shows a person who is mentally unfit to be a CEO. This last decision really
cements it, and the company, employees and shareholders could truly suffer
going forward if he continues as CEO.

~~~
martythemaniak
Well, it's now approximately 11 years since the infamous "Tesla Death Watch"
series of blogposts. 11 years of constant "turmoil", "cash flow problems",
"near bankruptcy", "Musk needs to quit", etc, etc, etc. Through these 11
years, they've gone from shipping a few hundred cars/year to hundreds of
thousands of cars per year which are whole generation ahead of anything any
other car manufacturer has been able to put out.

Have you considered that maybe they're actually on a roll and doing just fine
and this is mostly just tiresome media noise?

~~~
FireBeyond
Yes, there's a lot of media noise, tiresome or otherwise. BUT:

1) TESLA, not the media, were the ones they said they were closing ALL their
retail stores, _a week ago_ - is this not newsworthy?

and

2) TESLA, not the media, were the ones who said they're now NOT closing retail
stores open, _a week later_ - is this also not newsworthy?

If so, what makes them so trivial?

~~~
hndamien
This is why they don't need to pay for marketing.

------
CedarMills
Getting to test drive all three current models, I can say that the actual test
drive was what convinced me to start looking at purchasing a Tesla and making
compromises/adjustments in my life (charging stations, range, etc). No amount
of marketing can give you the thrill that you get when you slam the
accelerator.

~~~
morsch
Seems like the right moment in time to legislate a maximum acceleration for
street legal cars.

~~~
extrapickles
It’s already regulated as reckless driving. If you burn rubber starting from a
stoplight a cop will probably write you a ticket for it.

~~~
georgerobinson
A Model S, and most other 500HP+ all wheel drive cars with launch control
don't burn rubber. The launch control and ESP are programmed to limit wheel
spin as much as possible as loss of traction is not useful for maximum
acceleration.

There are a couple of good videos of Model S doing launch control on YouTube:
[https://youtu.be/8I-6_H0haAw?t=248](https://youtu.be/8I-6_H0haAw?t=248)

~~~
mikestew
_A Model S, and most other 500HP+ all wheel drive cars with launch control don
't burn rubber._

If one can afford a Model S, one can afford a lawyer to ask the judge for the
court's accepted definition for "display of speed". My money says a Tesla with
pedal mashed and launch control on would not fit the definition. All one is
left with is pulling an illegal number of Gs, which I don't think cops have a
measuring gun for yet.

In the real world, I've launched plenty hard on motorcycles on a regular basis
to this day, and have occasionally blown past a sitting cop while doing it
(getting around traffic from a light, or what have you). No smoke from the
rear tire, front wheel stayed on the ground, speed not exceeded (or not by
much), I've never been pulled over. Squeal tires, or have another car next to
you accelerating at the same rate, or maybe even an overly loud exhaust, and
now you've got problems.

------
Shivetya
They should never had cut the prices to begin with. For a company in need of
cash I don't understand the fascination with the price cuts. There is demand
sufficient to keep them going and with the TMY coming it should open a new
market.

The S&X price cuts are only warranted if they don't plan to bring their
interiors up to par. The TM3 price confusion seemed mostly caused by their
change up in how auto pilot and full self driving were sold. With enhanced
auto pilot being removed for a lesser version and FSD taking some features
from EAP. Even at the new two thousand dollar price for FSD presented to
existing EAP owners I wonder what the take rate is. They haven't shown
significant improvement.

My concern long term with Tesla is that they still don't have up to date
features for the driver other than "autopilot" and that feature is quickly
becoming the norm for many cars. Their blue tooth support is half baked, you
cannot select music from your phone through the car's UI, you have to use the
phone. Automatic wipers and high beams are both sporadic with the latter being
near useless. The promised voice commands never arrived. Their energy
monitoring screen is the least useful of all EVs.

They are quickly turning into a two trick pony in a world where everyone else
has their own stable.

~~~
rcMgD2BwE72F
>They are quickly turning into a two trick pony in a world where everyone else
has their own stable.

What everyone else has?

* No battery tech

* Substandard electric drive trains

* No OTA systems

* No charging network

* Crappy entertainment systems (your long term concerns are ridiculous: Bluetooth, USB connections, auto wipers and high beams, voice commands, energy monitoring > this is nothing compared to the issues that the competition has)

* Poor self-driving tech and almost zero data

* No control over the distribution network (the dealerships are a PITA for a manufacturer that tries to sell EV, because dealer can't service cars that don't need service except washer fluid)

* etc

I'm not even talking about their conflict of interests (continuing making
profit from ICE sales while increasing EV production without cannibalizing
their own ICE sales... in a market downturn)

~~~
JumpCrisscross
> _No battery tech_

I thought Tesla’s batteries are fairly run of the mill. The competitive
advantage is they’re producing them at scale. That’s a moat, but an expensive
one to maintain. Cutting prices would seem to remain a mistake.

~~~
TheSpiceIsLife
Doesn't _Tesla 's batteries_ really mean _Panasonic 's batteries_? Gigafactory
1 is a joint venture with Panasonic.

What's stopping any of the other vehicle manufacturers from entering a joint
venture agreement with any of the other large battery manufacturers?

~~~
kjksf
Panasonic makes battery cells. Think AAA battery.

Tesla designed and makes everything else, and that's a lot. The technology
that goes into making sure that the battery lasts a long time, works decently
in cold and hot, can be charged at high speeds, doesn't explode etc. is very
sophisticated and no other car maker has this knowledge in house.

Even at the battery cell level Tesla doesn't just rely on Panasonic. Browse
LinkedIn a bit and you'll see that they have in-house R&D for battery cells,
they sponsor well-known cell-level academic researchers and they just spent
over $200 million on Maxwell Technologies to get their cell-level IP.

The first thing that stops other car makers from making big moves in the
battery space is lack of conviction. They still act like they are only half-
convinced that EVs are 100% of their future in very short order (speaking
relatively in car business years).

And the second thing that stops them is massive investments needed to build
their own battery gigafactories.

Third is probably lack of internal expertise (which Tesla was building since
the days of roadster).

Even those most committed (like Volksvagen) project for 2025 maybe 1/4th of
(projected) Tesla's production.

Fun fact: Volkswagen wants to partner with SK Technologies on battery
factories.

Reportedly their current supplier (LG Chem) threatened to cut them off if they
proceed.

It's unprecedented for a supplier to threaten their biggest buyer which should
tell you the current distribution of power in battery technology.

~~~
anth_anm
> Panasonic makes battery cells. Think AAA battery

or think "the individual cells that make up the tesla battery pack".

~~~
rcMgD2BwE72F
My hand has 5 fingers, but 5 fingers don't make a hand.

------
whoisjuan
Are they doing their math on a napkin? I don't understand why they make such
dramatic spins on pricing and cost in less than a month.

Either they have real-time data that supports the rationale of changing the
model based on revenue predictions or they financial math is a joke.

I'm inclined to think is the latter, simply because I really doubt they have
any early indicators to compare physical floor vs online performance. But if
they do, then this means that their early online performance is way way lower
than they expected, which is troubling by itself.

~~~
zawazzi
I actually think data is the problem. People were making their purchases
online but the in store experience is what was convincing them to make the
purchase in the first place. Hard to measure that kind of conversion.

~~~
vezycash
There's this article about a Google engineer who reduced the size of the
player from over 1MB to less than 100KB. But the data showed that page load
times increased to 2 minutes instead of reducing.

They couldn't figure out why. They almost rolled back the change until someone
figured out the reason. Millions of users with very slow internet couldn't
even open YouTube before the change. Now, they could.

Tesla probably weren't tracking store visits, and test drives in relation to
online purchases. And this missing info misled them.

[http://blog.chriszacharias.com/page-weight-
matters](http://blog.chriszacharias.com/page-weight-matters)

Edit: Changed 20 minutes to 2 minutes. After rereading the article.

~~~
mandeepj
Can't find this article. Please share if possible

~~~
vezycash
Took over an hour of search (before ur request) - both Google and Bing were
useless. Just crossed my mind that I may have upvoted it here on HN and voila!

[http://blog.chriszacharias.com/page-weight-
matters](http://blog.chriszacharias.com/page-weight-matters)

~~~
mandeepj
Thanks a lot.

Also, thanks for updating your original comment. Your numbers were stuck in my
head. After reading the article - I was like - It's not making sense. So, I
reread your comment and saw the updated numbers :-)

------
godzillabrennus
Again, follow the SilverCar model and let consumers rent a Tesla.

Apply a one day rental fee toward the purchase price if they buy within 365
days of renting the car.

Use this to get more people in Tesla’s experiencing them.

~~~
pickle-wizard
I bought my last car from Hertz and they let me rent it for 3 days before I
bought it. When I bought it they refunded the rental price. Much better than a
15 minute test drive. I agree Tesla should do this.

------
CPLX
Well I'll give them credit for being able to recognize and reverse a mistake.
That's a good sign for the future.

The original plan was pretty much a death sentence for them, it's impossible
to compete seriously without giving people an opportunity to actually see and
drive the product.

~~~
mattbeckman
I wouldn't say it was a death sentence. Maybe it depends on strong word-of-
mouth reputation, but I'd prefer to buy one online without ever stepping onto
a sales floor.

From their original announcement: "You can now return a car within 7 days or
1,000 miles for a full refund. Quite literally, you could buy a Tesla, drive
several hundred miles for a weekend road trip with friends and then return it
for free."

This is how buying a car should be, if it was up to me.

~~~
tivert
> "You can now return a car within 7 days or 1,000 miles for a full refund.
> Quite literally, you could buy a Tesla, drive several hundred miles for a
> weekend road trip with friends and then return it for free."

> This is how buying a car should be

No it isn't. How realistic and practical would it be to choose between
multiple makes, models, and option packages if you had to _buy_ all of them
and return the ones you didn't want within 7 days (or be stuck with them)? The
only situation where Tesla's model makes any sense is for a customer who's
already 99% committed to buying a Tesla, but most buyers aren't like that.

One awesome thing about the traditional dealer model is that you can try cars
out at a leisurely pace with _absolutely no obligation_ to buy. Tesla's model
is twisted so that you have a Sword of Damocles handing over your head.

~~~
outworlder
> you can try things out at a leisurely pace

Yeah, but that's the only 'pace' available. Last time I leased a car, it took
an entire afternoon.

~~~
tivert
> Yeah, but that's the only 'pace' available. Last time I leased a car, it
> took an entire afternoon.

You mean filling out all the paperwork when you've decided to make a deal?
That's not what I was talking about. I was talking about the experience of
walking into a dealership on a Saturday, test driving a car or two, and
leaving without even having to sign any contracts or give anyone any payment
information.

Yeah, the dealer warranty/coating up-sell song and dance is obnoxious, but it
sounds like heaven compared with needing to buy cars just to test drive them.

------
pureliquidhw
Would hate to be an employee working for a Tesla dealership. Closing, not
closing, but maybe closing. If they don't already, I'd expect most employees
to have one foot out the door.

Fortunately for Tesla, there is a bit of a cult surrounding their brand so
maybe up-and-comer type salesmen might stick around for the "prestige" of
working at a Tesla dealer?

~~~
tivert
> Would hate to be an employee working for a Tesla dealership. Closing, not
> closing, but maybe closing. If they don't already, I'd expect most employees
> to have one foot out the door.

There was post about the dealership employee reaction to all this, but it
didn't gain much traction:

[https://news.ycombinator.com/item?id=19361710](https://news.ycombinator.com/item?id=19361710)

------
zepearl
> _The company says it has a "generous return policy" to avoid the need for
> test drives, as would-be buyers can return a car after 1,000 miles or seven
> days._

I wouldn't define it "generous", if I cannot test-drive the car.

Concerning the rest: mmhh, the move seems suspicious after the previous
statement, which was very clear => maybe the early in/direct
feedbacks/indicators were more negative than expected, and/or the stock market
did not react according to the expectations and/or etc..., therefore the mgmt
decided to find some middle ground? And/or maybe some conflicts in the board
of directors?

------
moron4hire
I'm worried about whether or not Tesla will still be a company in 5 years. I
think I would love to have a model S, but not having confidence in whether or
not if be able to get it serviced is a huge impediment.

~~~
giancarlostoro
It may be worse once we see other manufacturers producing all-electric
(mostly) self-driving (capable) cars. For example I know Toyota intends to
have an all electric lineup in the next few years[0]. However, I think it's
possible for Tesla to remain despite all this. They seem to be quite ahead of
the competition in having both all-electric and useful self-driving
capabilities at least from my limited viewpoint.

Disclaimer: I drive Toyota, but I don't work for any car companies.

[0]: [https://www.cnet.com/roadshow/news/toyota-to-
introduce-10-el...](https://www.cnet.com/roadshow/news/toyota-to-
introduce-10-electric-cars-by-mid-2020s/)

~~~
freerobby
Prediction: In ten years it's going to be very funny to look back at Tesla as
the supposed bankruptcy risk and not Toyota.

We've heard variants on the parent-comments line of thinking ever since the
Model S came out in 2012. Yet, fast forward to 2019, and the gap between Tesla
and traditional automakers has only widened (to name a few axes: EV sales, EV
margins, rate of software improvements/OTA updates, Supercharger network,
battery production).

This is what should terrify big automakers: it's not that Tesla's gap is per
se insurmountable; it's that the pace at which Tesla is improving and
innovating is far greater than the pace at which any other automaker is doing
it.

Most comparative analyses between Tesla and other auto companies suffer from a
fallacy that relates to this: they compare the Tesla of today to the ___ of
tomorrow. Perhaps some day a traditional auto manufacturer will offer an all-
electric, self-driving car. But how long is it going to take them to get
there? Not to announce something, or to design a concept car, but to actually
build them and sell them at scale and with positive margins? And what will
Tesla offer by the time they do?

My wager is that by the time Toyota offers a compelling all-electric car (by
today's standards), the feature gap between a $x Tesla and a $x Toyota will be
so great that the Toyota will no longer be compelling to the market.

Throw in lower margins as companies build their first EVs, the baggage of
dealerships, a likely recession some time in the next decade, and it's not at
all clear to me how traditional manufacturers like Toyota will survive the
transition.

~~~
TheSpiceIsLife
> the pace at which Tesla is improving and innovating is far greater than the
> pace at which any other automaker is doing it.

What portion of Telsa's pace of improvements and innovation would you say is
due to Telsa only recently having got started at this, 16 years ago, compared
to Toyota 86 year history of automobile manufacturing, or Ford's 116 years.

~~~
HeadsUpHigh
Their ability to iterate fast for one thing. The fact that their structures
are built around an all EV company. Toyota will have pressure from other
departments to build and fund ICE research at the same time. Tesla is 100%
focused on one thing. Plus they have the lowest cost batteries which plays a
huge role. I think what the other car manufacturers are waiting for is to jump
straight into solid state batteries once that train is going. That should at
least reduce the advantage Tesla has right now.

~~~
gamblor956
Fast iteration is great for software.

It's not so great for hardware, because iteration means that newer builds of
existing models may not share the same parts or designs, increasing the costs
of maintenance. It's even worse for consumer hardware, because consumers will
do all sorts of crazy things to/with their hardware.

Tesla couldn't keep up with the demand for repair parts _before_ the Model 3
surge last fall. How will they manage if every part essentially needs to be
custom made since they're constantly changing the parts?

~~~
freerobby
> How will they manage if every part essentially needs to be custom made since
> they're constantly changing the parts?

That's not what happens in practice. Their revisions still obey interfaces
wherever possible and follow the principles of modularity. E.g. when a v1
Model S door handle breaks, they replace it with the v3 version. When a v1
battery fails, they replace it with the v6 version.

------
dmode
I am a huge Tesla fan and a Model S owner for almost 3 years. I love my car
and think Tesla makes the best 21st century car, period. But, I have lost all
faith on Elon at this point. These decisions and his hubris (like Falcon wing
doors or Model 3 line automation) is actually costing the company at this
time. Tesla needs a Tim Cook type operator to just take advantage of the car
platform and stabilize the company, rake in the profits, and build a long term
sustainable company. The innovations going forward mostly need to be
incremental.

------
wurst_case
My thoughts on this aren't really about Elon or media coverage, though I think
all sides have valid points. My thoughts are that Tesla lowering prices
overall was a bit strange to begin with. Not many were calling for a price
reduction in model s and x. Everyone wanted the 35k model 3 because that was
what was promised. So by lowering the prices of all 3, they had to close
stores. Bad move IMO. Relying on online sales is putting faith in a change in
consumer behavior. When i buy a new car, sure I look for the car online first
but I NEVER buy a car without a full physical inspection. That would be
bananas in my world. So keeping stores open is smart. Keeping the savings for
just model 3 is smart. Increasing the prices of s and x back up to what they
were is smart. Reversing recent decisions makes me nervous but at least I get
why they're doing it.

On a second note, from friends of mine who work there I hear that this kind of
'change of heart' manuevering is common from top to bottom. They'll be working
on a project and then a decision will be made, often without warning and often
because it's what manager think Elon wants, and they'll spend hours in
overtime transitioning to the new regime. In one case I was told about, they
refactored their codebase to a different language in a week and a half only to
be told to refractor to yet another language half way through. They are always
stressed that whatever they're working on is going to be scrapped at any
moment. Not sure if anyone else has had this experience where they work but i
have not.

~~~
grey-area
The market is huge at 35k compared to higher price points. Musk is trying to
get to that price first to grab substantial market share and brand loyalty in
evs. That has always been the plan since the roadster.

I agree he's not a good manager and clearly doesn't have competent and
confident operations people to reign him in as he does at spacex.

------
OscarTheGrinch
Closing the stores made me, potential customer, worry about whether Tesla the
company will be around, spare parts will be available, software I am
entrusting my families life to will be debugged promptly. Can parts of their
business cease to exist on a whim from The Mad King?

Reversing their decision hasn't made me worry less.

~~~
xkjkls
More worrying than that is the crashing Tesla resale prices:
[https://www.cargurus.com/Cars/price-trends/Tesla-Model-
S-d20...](https://www.cargurus.com/Cars/price-trends/Tesla-Model-S-d2039)

Normal cars don't decline 20% in resale value in the last year.

~~~
MatthewMcDonald
I wonder how much of that is related to Model 3 availability. To me, a high-
end 3 seems like a better buy than a lower-end S.

If you expand your date selection farther back, it looks like the S price
decline really started around July 2018.

------
giancarlostoro
I suspect a good number of those stores are already in strategic locations,
compared to other major car manufacturer locations which are all around major
cities, I can think of at least several places I can get Toyota / Lexus cars
in my city. For Tesla in my city I can only find one location and it's 58
minutes away from where I live. Let's see, I can drive 15 minutes or less to
try out a Toyota, Lexus, and other cars from other manufacturers, or I can
drive an hour to try a Tesla, worse yet if I _can 't_ even test drive one, how
will I know I want one? This would be a problem if they closed up enough Tesla
locations.

~~~
walkingolof
I find it hard to believe that 40 minutes difference in travel time matters
when buy an expensive thing like that

~~~
ptero
I think it matters quite a bit, but for testing rather than buying. If I
_know_ that I want a Tesla I can drive for an extra 40 minutes to buy it. If I
am deciding between, say, a Volvo, BMW or Toyota I might test drive a Tesla if
it is close, but not if I have to drive 40 min each way. This may not be
completely rational (test drives take longer than we budget for), but it still
affects such decisions.

~~~
treis
>I might test drive a Tesla

I don't think you can do that anymore

~~~
r00fus
Yes you can. You're just limited to a floor model rather than the one you buy
(personally not an issue for me).

------
b_tterc_p
I'm a little disappointed they're reversing but it feels to me like they're
still playing with it. They're making almost all sales go online still so most
of the benefits of their previous approach are still there. They're also not
going to be carrying much inventory in store so it will presumably it will be
cheaper than most dealerships. However, with the stores now serving such a
small purpose, I do wonder if there's not a better model. Ah well.

~~~
stcredzero
_They 're also not going to be carrying much inventory in store_

If I were Tesla, I would make the number zero.

~~~
MBCook
I always thought most of their ‘stores’ were actually showrooms and didn’t
sell cars, they only helped you pick options and let you test drive.

Do they have any ‘traditional’ dealerships that keep inventory on lot?

------
mnemotechny
I prefer second hand cars because it hardly matters when they get a small bump
or scratch in the tiny weeny supermarket car parking spaces.

I also prefer the price.

