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.
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.
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.
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?
Now maybe some younger folks will be happy ordering a car online and relying on a return policy, but that’s not going o be a population to support a company valued at what TSLA is. The Model 3 is more affordable than an S, but it’s still a big chunk of change for most people. Beyond that price range you’re selling a majority to older buyers who can afford it. Look at who is driving th average high end Mercedes, it’s usually someone who’s getting on in years. Are they really going to be Ok without even a test drive?
I’m in my 30’s, and no way in hell would I buy a car I’d never seen or driven, anymore than I’d buy a house without a walkthrough (at least). I think they’ve jus undercut their sales in a big way, and if it isn’t a desperation move, what is it?
This is Hacker News. We all are supposed to understand that friction reduces the market for a product that carries uncertainty in the mind of its market.
It's not a dichotomy, it's not like zero people will buy a Tesla without a local test drive, but it is a certainty that _fewer_ people will do so.
The question is, "how many fewer?"
Ok, so I returned. I was asked to reset the car, hand over my keys, and then told I was set to go. I had to ask, insistently, for proof that I had returned the car. They were just going to send me off with no letter, no email, nothing - just a literal IOU with no proof. I finally got a letter after some poking - it's one sentence that mentions my name and VIN but includes no financial details. I was then told the process will take six weeks.
So, while you can return, the process, in my opinion, is insane. Once you return, you're forced to wait for several weeks with no idea when, or if you will be refunded; even then you have no idea what they will actually send back to you. I am waiting for some undetermined period of time for ~$62,000 sent back to me ... I have no idea how they will actually send it to me.
Now, I really want to order another Model 3, but this whole process has been insane. I cannot see most people being comfortable with it. Ever.
Admittedly, you can throw a rock and bounce it off two or three Honda CR-Vs in my neighborhood.before it hits the ground, but I do know enough people with Teslas to try one if I wanted to.
On an unrelated note, does anyone know why this article fell off the front page so quickly? Did I do something wrong?
Tesla has done a pretty good job positioning itself as the car to buy even if you've never really wanted to own one before, imo -- assuming you can afford one.
People can still try it, just not for free and from Tesla. I test drove a Model S P90 in 2012 from the store in Toronto and it changed my life. I can't afford the car, but it was an incredible experience for me. The test drive storeperson told me at the end of the (safe) trip that I could not drive back into the car basement parking lot. The last person they let test drive it into the parking lot totalled the car. So now for test drives they limit it to street-level. Anecdote and maybe irrelevant.
But if I want to test drive one today, I'd just go to Turo and rent one for like $50 and then not have to worry about someone over my shoulder telling me I'm gonna be a bad driver.
I'm not suggesting Turo or whatever is a replacement for a test drive! But it's also not the case that interested buyers have to buy without trying first.
I don't know that it will work, but driving price down is often a very good move.
Or do you look at it from a perspective, I want a new car, have $40k to spend, let me test all the options, and being all-electric isn't a binary choice?
I think of it in 2 ways:
1) You have budget for a new car, shopping in the segment covered by Tesla offerings. You care not for its drive train and evaluating it purely on the car likeness. You go to different dealerships and educate yourself on different car features (as opposed to online) and test drive while you're there. Tesla not having retail presence hurts, for sure.
2) You do your research online, watching reviews on youtube, reading reviews in CR, etc. You are pretty certain you want car X, but want to test drive it to make sure. If that car is a Tesla, you have to buy it, knowing you can return it if something doesn't line up, getting your money back.
Not at all, it's ridiculous to pretend that's a reasonable replacement. Cars are subjective things, luxury or higher end cars even more so. I've gotten pretty excited about the prospect of buying this or that only to drive it and realize I have zero interest.
In fact, I always thought I might want a Tesla until I actually rode in one and realized they feel profoundly cheap, the fit and finish is embarrassing, not even remotely in the ballpark of a standard German luxury sedan.
Maybe that'll change for the newer models. I'll likely never know though, instead I'd just go to a BMW or Audi or Mercedes dealer and be treated like a functional adult and a consumer looking to make a major purchase.
And once those guys get real, competitive electric options in stock, with functional dealerships and repair departments and so on, how exactly is Tesla planning on retaining market share?
Of note, I am a big fan and want to order a new one, but ... seriously.
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.
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.
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.
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.
2. Tesla's self-driving is way ahead of the competition...in terms of dead drivers. The competition restricts the use of self-driving functionality because they would prefer to have living customers who will buy more cars from them in the future, but independent testing suggests their self-driving tech is on par with Tesla's.
3. Tesla's latest-generation charger announced this past month is slower than the latest-generation standard chargers announced 1-2 years ago. While Tesla does have more publicly accessible chargers, there are far more non-Tesla chargers available...and that's not including the charger network VW has to build as part of its emissions scandal settlement. The completed VW network is expected to dwarf the Supercharger network.
4. The rest of the OEMs choose not to send OTA updates for security and safety reasons. Case in point: the SF Tesla death may be related to Tesla changing the way Autopilot worked through an automatic OTA update the owner may not have even been aware of. (And note: Tesla didn't just "give" its cars 15 miles extra range for free--they adjusted the range estimator to be less conservative about mileage remaining.)
agile enough to compete with Tesla
Agility has proved just as much as an Achilles heel to Tesla as an advantage.
Tesla seems to get disproportionately negative press - they just announced the 35k model the media had been complaining about not existing for years and now they're on to something else.
The dealership model does the existing manufacturers a serious disservice along with lack of charging infrastructure.
Tesla could still fail, but I doubt it'll be from competition.
That sounds like a founder who is not afraid to experiment and course correct when necessary to me.
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?
I'd buy one off the Internet. I bought my current car, a Citroen, off the Internet unseen. It's pretty low risk if you pay deposit with credit card here in the UK.
No didn’t test drive it. Petrol.
Personally I wouldn't buy a car without a test drive, checking the boot fits a pram etc. Doubly so for an EV where things like how the accelerator and brake pedals work are still in flux.
So from our highly scientific study, we can conclude Tesla are cutting themselves off from 50% of the market!
Books just work. There are no moving parts and unless something has gone really wrong you won't have quality control issues. Also they cost like $20 so any losses are minimal.
Cars are highly complex, require regular servicing, are a once in every 5/10 year purchase and cost $40,000. And they are also highly personal as the driving and interior experience needs to work for just you. It's more akin to asking someone to buy a house online without ever looking inside.
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.
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.
In any business, management needs to "inspect and adapt." Agile businesses do so more frequently. But change is not necessarily inspection and adaptation. It can sometimes be throwing things at the wall and hoping they will stick, without properly evaluating each of the things thrown at the wall.
Inspection and adaptation also works best when done with discipline. Experiments should are conducted with explicit falsifiable conjectures to test.
It may very well be that this course correction is the result of an experiment, and the results have been inspected, and Musk is adapting. or it could be a knee-jerk reaction to cash-flow problems.
I am not disagreeing that this may be a founder courageous enough to try experiments and abandon those that invalidate his conjectures. But I want to point out that drastic changes in and of themselves do not necessarily indicate the presence of "inspect and adapt" management.
Tesla's time between debut and shutdown feels less like an experiment than a bold cost-cutting move. At least with Apple, they knew they had strong product sales before doing dedicated retail. Obviously, Tesla will sell plenty online, but how certain are they of the impact of online-only?
"An Electric Carmaker Struggles as Its Production Lags" (https://dealbook.nytimes.com/2012/09/25/questions-about-elec...) - September 25, 2012
"Stalled Out on Tesla’s Electric Highway" (https://www.nytimes.com/2013/02/10/automobiles/stalled-on-th...) - Feb. 8, 2013
"Lurching Start for Tesla in China" (https://www.nytimes.com/2015/02/11/business/international/te...) - 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...) - 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) - 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....) - March 29, 2018
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.
>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.
Consequently, they're not losing "at most 22%" of possible sales, they're losing at least 22% of possible sales, likely more, since they're trying to target mainstream buyers that heavily prefer to test-drive vehicles before purchasing.
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.
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.
>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.