
Tesla’s Troubles Mount: Shuttered Showrooms and Sinking Shares - Pharmakon
https://www.nytimes.com/2019/03/06/business/energy-environment/tesla-stock-strategy.html
======
mdorazio
“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s
just that people literally don’t have the money to buy the car.”

Saying your product is in high demand when people can't afford it is pretty
ridiculous. By that logic, demand for Ferraris is through the roof even though
they only sell a few thousand a year.

~~~
joekrill
Yes but Ferrari has no intention of making their product affordable for those
that want it, even if they were able to.

Tesla _wants_ to offer an affordable car that more folks can afford. It's been
making steady progress in getting to a lower price point, but there are still
A LOT of people that would buy a Tesla if it were just a bit more affordable.

~~~
gamblor956
Companies make products affordable by lowering the unit cost of the product
(generally through increased efficiencies, economies of scale, substituted
inputs, etc), not by cutting non-COGS operating expenses.

Reducing unit costs affects every unit sold equally, so it scales with sales
growth. The benefits of cutting opex expenses is inversely correlated to sales
growth.

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CPLX
The new lack of a retail strategy just seems insane to me.

I should be squarely in the target audience for them, I've purchased a couple
BMW 3-series cars in a row, but there's literally 0.0% chance I would ever
consider buying a car without a test drive.

I guess people have done that with Tesla, but once that group of superfans is
exhausted (perhaps it already is) and the pseudo-exclusivity aspect has worn
off then who in their right mind wants to make a purchase of that magnitude
without even being able to try the product?

~~~
bryanlarsen
You don't need a show room for a test drive. The "schedule a test drive" page
is still up on their web page,

~~~
CPLX
My understanding from recent news is that they are discontinuing all test
drives in favor of a liberal quick return policy:

[https://www.wsj.com/articles/tesla-takes-new-road-in-
pushing...](https://www.wsj.com/articles/tesla-takes-new-road-in-pushing-car-
sales-online-only-11551620986)

------
braythwayt
When Tesla launched, it came across as a car company being run like a startup.
They hired laptop people to work on battery tech, they disrupted legal
impediments to direct sales (much as Uber and Lyft have disrupted taxi
cartels), and they had the de rigueur charismatic but eccentric founder.

Now it seems that like other startups, much of their early success comes from
using investor monies to undercut the competition and operate at a loss.

But when investor patience with losses runs out, like all startups, hard
choices must be made about the business model, and the company's honeymoon is
over.

It may yet succeed, but this challenge feels like the challenges a lot of B2C
startups have faced when it came time to turn a profit. Many had to change
their business model in a way that alienates some of their market.

~~~
bordercases
Is that a tradeoff inherent to B2C models, or could they have done
differently?

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threeseed
The problem for Tesla is that they needed to sort these problems out years
ago. Now we are approaching the mass-consumer part of the adoption curve where
every car company will start offering electric cars:

Audi, BMW, Hyundai, Jaguar, Kia, Mercedes, Mini, Nissan, Polestar, Porsche,
Renault, Smart, Volvo, VW

And I just don't think Tesla are going to be stable enough to compete against
the big players.

~~~
leesec
In my mind, these big players need to sort out the fields where they're
lacking years ago. I can think of about 4 off the top of my head.

1: Batteries and battery tech ( the supply field is limited and Tesla has the
biggest leverage here )

2: Self driving, just way way way ahead of the competition you listed ( though
i do think Japanese and European brands will start to catch up)

3: Supercharging network (way faster charging, way more coverage)

4: Operating system (Tesla's car is a comprehensive piece of code, the rest of
the OEMs can't even send over the air updates for much more than their map,
Tesla just gave its car 15 mile extra range for free, has fixed breaking
issues in the past, etc... with software update)

And I just don't think they're agile enough to compete with Tesla.

~~~
JBReefer
1: Money fixes this, the others have more money than you can imagine.

2: Tesla self driving is statistically shit, the only two players that count
are Cruise and Waymo, and only one of those makes cars. Either way, we're
really far off from most people caring outside of HN

3: Electrify America in the US, and a bunch of public stations in Europe. It's
a fancy plug, I don't get why people act like they're unobtanium. You can
throw one in a Target parking lot and boom, extra customers for an hour or so.
I bet they'd even pay for the installation.

4: Sure, I'll give you this one

I love America and American cars, and I want a great new American car company.
Tesla is acting like a Silicon Valley parody, and needs to get their shit
together. If they can, they can use their brand advantage - they're the new,
true Cadillac - and mindshare to kick serious ass.

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kumarm
>>The “flip-flop” on retail strategy, he added, “makes it seem like Musk is
winging it and the board is letting him wing it.”

That sounds like a founder who is not afraid to experiment and course correct
when necessary to me.

~~~
benj111
I can't make my mind up on the closures.

I just think, in 5 years time when they're having to sell to average people,
not just Tesla fans, how are they going to compete with everyone else. Is your
Mum or Dad going to buy a (new fangled electric) car, on the internet, sight
unseen?

Now its still not necessarily a bad decision _now_ to be closing stores they
don't need, but is it going to hamper them later?

~~~
kumarm
Why would anyone buy a book online and wait for 3-5 days? -- Almost everyone
in 1995.

~~~
benj111
A book is a bit different to a car.

If I don't like a book I can take it to the charity shop and buy a new one,
can't really do that with a car.

And if lack of 'test drives' for books did turn out to be a problem, it is at
least a trivially solvable problem, technologically speaking.

Plus you might need to add at least 5 years to that date.

~~~
dwighttk
look inside the book is Amazon's test drive for books.

~~~
benj111
That's what I was alluding to. :)

It didn't exist in 1995, and wasn't clear if it was needed, just like it isn't
clear if test drives are needed for Teslas today.

------
czr
For context,

"An Electric Carmaker Struggles as Its Production Lags"
([https://dealbook.nytimes.com/2012/09/25/questions-about-
elec...](https://dealbook.nytimes.com/2012/09/25/questions-about-electric-
cars-as-a-manufacturer-struggles/)) - September 25, 2012

"Stalled Out on Tesla’s Electric Highway"
([https://www.nytimes.com/2013/02/10/automobiles/stalled-on-
th...](https://www.nytimes.com/2013/02/10/automobiles/stalled-on-the-ev-
highway.html)) - Feb. 8, 2013

"Lurching Start for Tesla in China"
([https://www.nytimes.com/2015/02/11/business/international/te...](https://www.nytimes.com/2015/02/11/business/international/tesla-
seeks-a-stronger-foothold-in-china.html)) - Feb. 10, 2015

"For Tesla Owner, Losing a Wheel Was Just the First Surprise"
([https://www.nytimes.com/2016/06/11/business/tesla-motors-
mod...](https://www.nytimes.com/2016/06/11/business/tesla-motors-model-s-
suspension.html)) - June 10, 2016

"Tesla Model 3, Elon Musk’s Grail, Remains a Costly Pursuit"
([https://www.nytimes.com/2018/02/07/business/tesla-
musk.html](https://www.nytimes.com/2018/02/07/business/tesla-musk.html)) -
Feb. 7, 2018

"Tesla Looked Like the Future. Now Some Ask if It Has One."
([https://www.nytimes.com/2018/03/29/business/tesla-elon-
musk....](https://www.nytimes.com/2018/03/29/business/tesla-elon-musk.html)) -
March 29, 2018

~~~
gamblor956
??? What's the context? That The NY Times has published factually accurate
articles about Tesla over the past 7 years?

If Tesla didn't want the negative coverage they could have avoided it all by
simply executing their strategy properly instead of fucking up on some of the
most basic details over and over again. Even if they had just executed
adequately, the media coverage today would be very different.

~~~
czr
The context is that Tesla has had troubles in the past, and will continue to
have troubles into the future, so this particular article is not indicative of
any inflection point. It's the continuation of a long trend of mismanagement,
shifting timelines, and questionable decisions that have nonetheless failed to
take the company down.

------
cynoclast
Worth noting:

>As Mr. Musk lays it out, the change is not so radical. In an email to
employees, he said that 78 percent of Model 3 orders were already placed
online, and that 82 percent of the model’s buyers made their purchase without
a test drive.

They're losing at most ~22% of possible sales. And some of those people might
still buy online.

A lot of this piece is economic crystal ball gazing and comparing the magic of
a super safe, fast, fun, and wildly popular (self driving?!) car to existing
car manufacturers.

Maybe someone at NYT wants to drive their stock price down so they can buy.

~~~
pkulak
82% of buyers, sure, but those were the most motivated buyers. People who have
been on waitlists for years, or even (like myself) waiting since the Roadster
was announced in 2007. It's a real stretch to assume that the next wave of
possible owners are going to put up with buying a car that can't be test
driven.

------
b_tterc_p
I have always seen car advertising as the most wasteful of all commercials.
Tesla doesn’t do this and I, as someone who couldn’t care less about cars,
know more about Tesla cars than all competitor cars combined. I don’t think
they need the stores. Were I to get a car, I would probably get a model 3 if I
confirmed the charging situation was reasonable and risk of repairs was
reasonable (at this point I think not).

Test driving is an issue. Renting to test drive isn’t a practical thing to
expect people to do. But really I just think the value prop of Tesla is the
image. If you drive one, it’s because you’re smart or trendy or whatever you
think it shows off. It’s a distinct offering from all other car manufacturers.
When someone thinks “I want a Tesla” and googles how to buy one, I’m pretty
sure they will just go for it, because it’s easier to do than go to a
dealership, and it’s the one they already wanted to buy.

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gopher2
Tesla just reminds me so much of what I've read about the story of Enron.

Selling the dream of a bright, new energy & technology future. Finding
creative ways to take money now while (maybe) delivering the tangible product
later. Not delivering on the promises made by the marketing several years
later.

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cynoclast
Straight from [https://www.tesla.com/](https://www.tesla.com/):

>If you haven't test driven the car, you can return it within 7 days or 1,000
miles, whichever comes first.

That's the test drive right there.

~~~
rad_gruchalski
Sure, while locking up $35k to $65k for up to six weeks. Pretty damn expensive
test drive.

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marssaxman
Seems like I've seen one variation of this headline or another every few
months for as long as Tesla has existed, but they just keep on selling cars.
The negativity seems disproportional.

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busterarm
Very surprised to not see Ed N and his writing/commenting/voting ring on this
one. Or Bertel.

