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Tesla will close most of its stores and only sell cars online (theverge.com)
59 points by ceejayoz 17 days ago | hide | past | web | favorite | 79 comments



> a test drive prior to purchase isn’t needed. You can now return a car within 7 days or 1,000 miles for a full refund

Call me old fashioned, but that is in no way a better alternative to a test drive prior to commitment.


Indeed: Usually I make test drives when deciding which car to buy, not to ensure my choice was the right one. When people can't test drive a Tesla, they aren't going to go "well, I can always return it". They're going to buy the best car they test drive.

While helping someone pick a car recently, we test drove two different models of car from the same company multiple times as well, to decide which one was the right one. It's not like Tesla's going to send out a Model 3, a Model S, and a Model X and let me try all three.


You must be very undecided if you want to try all, they are very different cars in terms of size and price. Or is the choice "should I buy an X or 3 M3's?"


> It's not like Tesla's going to send out a Model 3, a Model S, and a Model X and let me try all three.

You're trying to optimize for buying the cheapest Tesla that will work for you. Tesla is trying to optimize for making the most money they can from you. If you can not only afford a Model X but are seriously considering it, why would they put effort into possibly selling you a Model 3?


Because the Model 3 isn't your only cheaper alternative to the Model X.


Wish they'd just let you rent cars instead. A test drive is too short. And a 7 day period is too big a commitment.

Why not let me pay to rent a car, like a normal rental car place, and pay per day.

Would be cool to do anyway, but I bet a lot of people would end up falling in love with the car that way and become owners shortly after.


That is exactly how I ended up deciding on my current car. When my old vehicle was in for service, I drove the car I was considering purchasing as a rental for 3 days and really fell in love with all aspects of it (in my case a Fusion).


I used (but am not affiliated with) Turo.com to rent a model S for 2 days.


They're still offering test drives, just not in as many locations as before (also, FWIW, Tesla owners tend to be very generous in letting friends and acquaintances, sometimes total strangers, test drive their personal vehicles).

There are a lot of people who just want a Tesla. They're not shopping around to find the best car. Offering a refund means those people can buy with confidence, knowing they can return it if it's not all they expected.


Where are you getting that people who own a Tesla sometimes are very generous and let strangers test drive their cars? I can't imagine a scenario where anyone would go for that given how expensive they are and how that kind of thing just doesn't happen with cars in general.


Personal experience. Tesla owners tend to be so stoked on their cars that they want to share the experience. Seriously. I've seen multiple requests and offers on Tesla forums and apparently it's pretty common at Tesla meet-ups as well.


That is wild. I've never heard of anything like that before with cars.


This varies by country.

In Europe, cars are pretty personal items, and typically only insured for one or a few drivers. Lending your car to a friend for a day would typically involve hours on the phone to the insurance company and a few hundred euros of fees. There are apps (cuvva) which try to reduce this, but even so it'll probably be cheaper and less effort to call an Uber rather than borrow a friend's car.

In the USA, loaning a car to a friend or neighbor seems far more common.


Europe where? Maybe the UK.

Here in Italy insurance isn't particularly cheap, but there is normally no limitation whatever about "insured driver(s)", as long as the driver has a valid driving license the insurance covers accidents. (and yes you can lend your car to a friend without calling the insurance) and though I have no direct experience (as car owner), France and Spain afaik work the same.


Most, not all, of the insurance policies I've had here in the UK cover other vehicles. If you actually read the cover, it's not ever enough for lending my mate's Tesla or 911 for a bit of Friday night hooliganism. Only once had that, and I paid significantly extra for it.

It's almost always third party only - legal requirement - cover, unless you have notified the insurance and got approval first. That would usually need you as registered owner, and paying a premium, or even higher fee for not being keeper.

So I can borrow a car, get home legally, and if I cause an accident the other parties have cover against which they can claim. That's it. If it's stolen while in my care or I drive into a tree, no cover. If it catches fire, no cover. If I bash the door on a bollard or seize the engine, no cover. No cover for any of the things that might normally happen lending the thing to a friend.

I would be very surprised to learn you get full comprehensive insurance on any borrowed vehicle. That would make insurance premiums trivial to game.


>If it's stolen while in my care or I drive into a tree, no cover. If it catches fire, no cover. If I bash the door on a bollard or seize the engine, no cover. No cover for any of the things that might normally happen lending the thing to a friend.

Yes, we are talking different things.

The one you just described is a kind of "all risk" (which is commonly called "KASKO" here), it is actually rather "rare", only some firms/businesses use it for their fleet and - sometimes - private citizens for "high range" cars (such as a Tesla or a Porsche 911 might be) that are more susceptible to vandalism or theft.

But there is still a difference seemingly.

If a car is insured for fire, it is insured for fire.

If a car is insured for theft, it is insured for theft.

The above two are NOT connected in any way to the driver.

If a car is insured for "own damages" (such as running the car into a tree) , it is insured for "own damages" and in this case there might be limitations on the drivers (or an even steeper insurance tariff/rate for a "anyone driving is covered anyway").


All risk, or comprehensive as it's known here, tends to be something you age into. When younger, few can afford it, and it's often not worth it anyway when the car or motorbike is several years old and not worth so much.

Yet it's those policies that tend to cover driving other vehicles. The Third Party, Fire and Theft only policies are usually named vehicle only.

Sounds like there's quite different standard ways of doing it. :)


If I recall correctly, the SF Bay Area has quite a few Teslas on Getaround...


That artificially limits the potential reachable market though. Like a comment above says, if you don't have the retail presence, for people who want to test drive before they buy, they just won't have it on their list of options to consider. Feel's like they have to create some way for test drives to happen.


I'm not saying it's ideal. But there's a population of folks for whom Tesla is definitely on their radar, regardless of their retail presence. I live in Hawaii, and I've been following Tesla since the original Roadster. If I could have purchased one with a money-back guarantee, I would have. The real stumbling block for me was that there was no service center on Hawaii at the time. I still wouldn't recommend buying a Tesla if there isn't a service center nearby.


People who will even consider an EV will probably know Tesla and at this point know someone who owns one.

I think this is a smart idea. They can focus this money on creating more superchargers. That sells a lot more than a 20 minute test drive.


Certainly makes it hard to shop around between multiple cars. What do they expect you to do, buy each car, in turn. Return all of them within 7 days. Then re-purchase the one you preferred?


> What do they expect you to do, buy each car, in turn. Return all of them within 7 days. Then re-purchase the one you preferred?

No, they expect you to buy all of them in parallel and return all but the one you want.

I mean, it’s the model lots of people have been using with clothing since online discount retailers with generous return policy started undercutting brick-and-mortar.


There's a big difference in cost and complexity between buying a car online and buying clothing online though, especially if financing is involved (not many people are going to have the cash on hand to float on 2-3 vehicles at any one time).


I can have 7 shirts shipped to my house and they take up a very small footprint. If I'm trying to decide between 7 cars, I'm going to have a hard time finding a place to put all of them, as will most people. That's on top of having to deal with financing multiple cars just to test drive them all.


And as others have pointed out, removing financing from your credit report is not so easy even if you return the car. And I doubt most people would be able to get loans approved for multiple cars at the same time.


buying 3 cars is a little different than t shirts


The implication that the extension of the expectation from online clothing retail to online automobile retail was unreasonable was intended, yes.


I organised a test drive, with no intention of buying the car. It was just as an "experience" day for the family.... I enjoyed it so much, I then bought a Model S. I wouldn't have bought without the test drive.


This means that when you buy online, it's possible you'll be delivered someone else's 1,000 mile return. There's a reason Tesla delays titling their cars; that allows them to resell returns as new.


I was wondering the same thing. Where do all these returns go?


Dunno. I hate test drives, WAY too short to really learn much beyond a general idea of performance and how comfortable the seats are.

Buying a new car for $$$ (I keep them for at least 10 years, currently 14) is a pretty big commitment for a 10-20 minute test drive.

Imagine getting married after a 20 minute date.

I rented a model S for 2 days, I was still learning things about it when I returned it.


I guess Tesla is different, but many dealers will let you take the car for a day or two for a longer test drive if you're serious about buying the car from them. eg to make sure the car fits in you garage, it's convenient for picking up the kids, etc.


So far I bought a Acura Integra GSR, Subaru WRX, and Subaru Forester XT. It required some cajoling to get even a short test drive, even when buying a second car from the same dealer.

All 3 cars were pretty hot at the time, all 3 won car of the year or similar awards in the year I got them. I suspect if cars are in demand (and don't spend many days on the dealer lot) they minimize the test drives. If they spend months on the lot they are more generous with the test drives.


I am not sure if I understood what you meant, but they are not implying that you should buy first and then drive.

The policy is about giving more time to return the car if the customer didn't do a test drive before.

At Model 3's early days, a lot of people bought the car without having the option to take one out for a test drive.


Wait for "brand ambassadors", gig economy for test drives.


The incredible irony here, is that they could, you know, let other businesses operate the stores. They're called "dealerships".

Amazing when Silicon Valley discovers other businesses do things for a reason.


I really hope they never do that. Purchasing a Tesla 100% online was the best experience I ever had with a car company.

No sales gimmicks, no false advertisement, no BS back and forth, no wasted time, etc. That alone would be reason enough for me to buy even a Toyota from them.


Cutting the middlemen is always a good strategy when it works.


...by the definition of "when it works".


It already works great. Every Tesla owner I know purchased the car online after testing another friends' car.


I'd vastly prefer buying a car at a fixed price online than go to a dealership.


I'm not sure if it has been fully appreciated how big of a differentiator this is for Tesla and how difficult it will be for the other auto-makers to shake the dealership model.


Having just purchased a Model 3 in December, I second this wholeheartedly. It was the best buying experience I've ever had.


Maybe switch the dealerships to rental outlets? Kind of like silvercar?

If I rent a Tesla then within 1 year of the rental I buy one then Tesla discounts my purchase the cost of a day of the rental.

It’d be a great strategy and cover the costs of the dealer network.


That's a great idea. Hell, I just want to be able to rent a Tesla whenever I travel out of town.


So do I.

Test-driving is the only reason dealerships even needs to exist. Unfortunately even most vehicle renters only stock a handful of models (typically less expensive trims).

Online sellers need to get together and open up test drive locations. They don't sell from there, just let you figure out what you'll order online.


I believe they're trying to avoid all the tensions and pressures that come from dealing with a dealership network.


And yet I argue all this 'tension' is still preferable to an online-only store. There is just something about a physical location that evokes good customer service. Apple could also go online-only, and yet they aren't.


There's also a lot of state-by-state regulation around dealerships. If cell phone sales were regulated like car sales are, Apple might seriously consider going online-only.


Apple has huge margins that allows them to do anything they want. For the $35,000 Tesla, cutting the stores is the way to be able to reach that selling price.


Dealing with dealers is such a PITA though, they are mostly full of hidden tricks, and you really really have to be savvy to not get ripped off on something. I wish I could just buy the car I wanted without worry about any of that.

Dealers are like legacy taxis, just dying to be disrupted by something much better.


Does Tesla prevent third-party resellers? I don't think they could even if they wanted given property, contract, and consumer protection law.

What Tesla refuses to do is sell to the public for one price and to distribution channels for another, lower price.

If there's an unmet need with sufficient profit opportunity, the only thing possibly holding back entrepreneurs is supply.


Third party resellers can be effectively prevented by limiting the warranty and return policy to the original owner, which is a pretty common practice in many industries.


That's more difficult to accomplish with consumer products. Consumer protection laws (legislative and, to an extent, common law) limit contractual flexibility in that regard. If you sell something to the general public, it can be difficult to discriminate "business" purchasers, which is why retail arbitrage has always been a thing--a legitimate and legal thing.

The usual way to discriminate is by selling to businesses through a separate distribution channel with separate contractual controls. But to convince businesses to purchase through that channel you either need to sell into the channel at a lower price or otherwise provide some value-add. But that's exactly what Tesla refuses to do--sell through multiple channels.


They would still be playing in the the old guard's backyard. Now they'd have to worry about floor-space, and GM / Ford / Chrysler playing games with placement, or restricting which dealers can carry Teslas and which can't.

The fact that so many states have laws saying Tesla is not allowed to open a store is ridiculous.


That's not going to work until there are all-electric dealerships. Dealers don't like to sell EVs because they require much less service.


The Tesla Return Policy is detailed here: https://www.tesla.com/support/tesla-return-policy?redirect=n...

Notably:

> We will accept your vehicle for return if the vehicle: Has an odometer mileage of less than 500 miles at the time of return;

> ...Is in new condition, without damage or abnormal wear and tear...

> To return the vehicle, you will need to deliver the vehicle (including all original equipment and any parts and accessories that came with the vehicle, including the mobile connector kit) to us at a Tesla Sales or Delivery Location (or other location that we agree to), and complete a vehicle inspection...

...but these terms describe a 1-day process for test-driven vehicles and 3-day process for not-test-driven vehicles, so it looks like they haven't updated the page yet with their new return policy.

Regardless, it looks like they're planning to just eat any costs from returned vehicles. They're probably gambling that the people serious enough to complete a purchase for one of their cars aren't likely to return it full of grease stains, french fry smell, and 900 miles later.


That _is_ very generous but usually when people buy cars, they need to sell their old car, especially true now that people are rolling over loans from old cars into new cars.

So lets suppose, you sold or traded in your old car and then bought a Tesla that it turns out that you don't like. What will you do then?


I'm pretty sure third party licensed sales operations will pop up.

It's a classic silicon valley style move on their part: get out of the games you don't want to be in. In this case, the business of car dealerships not being the same as the business of car manufacturing.

Besides, the long play of Tesla is likely not in Tesla branded cars at all. They are slowly making the IBM move where they own and license the tech that other companies rely on.

The legal responsibility of autonomous vehicles and the long term warranty responsibilities of batteries as they decrease in capacity sounds like a terrible business to be in.

A, say, Ford "with Tesla tech" is likely worth substantially more in the mind of the consumer then one without. Pushing off the responsibility of the first point of contact is invaluable for a scaled business.

The bigger market than your own line of cars is to make the parts that all cars use.

It's the best powerplay they have access to in the market position they've formed.


I wouldn't be shocked if you eat the $1,200 delivery/doc fee as a "restocking fee" sort of situation.


I think that would be quite fair and also an effective way to prevent abuse.


That’s not very fair if the return process is the replacement for test drives, which cost nothing for every other car that exists.


Others say the delivery fee is refunded too.


Problem is Twitter is littered with reports from owners who can't be Tesla to take back their vehicles, so I am very skeptical this will be a successful policy.


This move seems a little short-sighted and perhaps reactionary. I think Tesla’s stores are (or ought to try to be) more like Apple’s retail stores than high-end car dealerships.

There’s a certain caché that having a brick-and-mortar retail presence adds to a luxury brand, that wouldn’t be possible otherwise. It gives people, especially prospective customers, something physical to connect with when dealing with the company, and it stands as a marketing piece on its own. For many people, an Apple retail store communicates Apple’s ethos and vision far better than their website does.


Makes me think of Rich Rebuilds on YouTube and his saga of trying to buy a Tesla online. Total nightmare.


A used Tesla. While it was indeed a nightmare that I hope Tesla figures out a way to solve, it's not quite the same as if he bought a new vehicle.


How is buying used vs new any different when Tesla has no third party dealers? I buy a used MacBook Pro from Apple is the same as a new one direct from Apple. It’s not like buying from eBay. He bought the car directly from Tesla using the same exact process as buying new.


The entire logistics process is different, the car has to go through repair, etc.


He purchased it from Tesla. Why should the experience be any different than buying a new car?


Ask anyone who ordered a new Tesla online, or visit https://teslamotorsclub.com/tmc/forums/ if you don't know anyone who did. There are plenty of detailed stories, almost of of them are extremely positive even though people with bad experiences usually complain more and louder than others.


Has someone an idea how the 7 day full refund policy will work out? Something like “only if all seat plastic covers were kept on”, or is there gonnna be a refurbished market? However there is usually a high decrease in value on “unsealing”, so this needs to be accounted for in the original price. Nonetheless it allows to effectively increase the KPI “number of cars sold”.


Most definitely sell them as used. Their used section on their site almost never has cars for very long.


In my obviously very biased opinion as a TM3 owner, I am both happy and sad for this news.

The Tesla store in the mall near my house is fun. My kids love going there and sitting in the different models, and my son knows how to trigger all the Easter eggs, like making the X falcon doors dance.

At the same time, I have zero use for the store now that I’m an owner, and I had zero use for the store in actually making my purchase. The test drive that I did finally do of the TM3 (after I had already put $3,500 down and was entirely certain I would be buying the car) was actually underwhelming because I didn’t get nearly enough time with the car to really appreciate it, nor get to drive it in any kind of interesting terrain.

Actually driving my own TM3 on the other hand blew me away from nearly the first moment and still does.

I wonder how many owners are like me in that with the massive quantity of YouTube videos and reviews, already knew with certainty a TM3 would be their next car without actually needing to drive it? BTW, I’ve never had that with another car, and never would have dreamed of buying a car without driving it, before Tesla.

At the TM3 base-range $35k starting price, I think the vast, vast majority of people who “trial” one will keep it. This is particularly true if you’ve already made any kind of actual arrangement to charge it at a decent kW rate.

I would add that they need to have a trial mode of the full auto-pilot functionality, and also perhaps the ability to pay monthly for auto-pilot software subscription rather than bumping up the sticker price. This would also help with reducing sales tax and excise taxes I think.

I just hope the car-buying public is ready for this. Tesla will rely heavily, extremely heavily on word of mouth without a way for people to easily get in and touch and test drive a model with no commitment. Luckily I give test drives to everyone I know who I can talk into it, and I’m guessing most owners act the same in an effort to evangelize.

But as they try to go more mass market and compete with the Accords and Camrys, as they have less of the evangelical early adopters, will that target market a) have the charging infrastructure readily available, and b) really be willing to buy purely online and sight unseen?

I want this to work, and fear that it won’t. They are pushing so damn hard to get to that $35k price point with any kind of margin left over. If they had another year of process improvements maybe they could do it even with the stores. Without a store they can pull forward a profitable $35k TM3 several months at least. So it makes perfect sense while still being a huge gamble. Wild ride.


There will be significant costs to closing the stores though. Many of them will take a big lifetime loss, because they haven't yet been active long enough to pay off the startup costs.


I'd guess this is a reaction to the huge backlog of orders - if that backlog starts to really go away, maybe a few showrooms or service centers open back up.


Store fit-out is expensive, as is hiring, retaining and training staff.

I doubt they would plan to yo-yo the stores closed and open again.


I like much of what Elon Musk is doing, and want this to work, but...

It reminds me of when he decided, "we can make a factory with so much automation that we don't need all that room for human workers...oh, sh*t, we can't produce enough, I guess I need to make second factory space with more room, so that we can have human workers involved more."




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