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Model E buyers

I suspect the Model E will attract a different kind of buyer for Tesla. Specifically, a NEED-BASED buyer. I'm imaging a working couple in their 30s to 40s with a couple of children and some urgent situation: car with unexpected health issue, or recently totaled, or a company car yanked, or a lease expiring etc. They have very little time to deal with a car purchase. Here's what they'd like to do:

Go to a dealership, pick out a car, trade the old car, get the tax benefit of the trade, get financed via the dealership (maybe even at zero percent), let the dealer pay off the current loan and chase the title, etc., and take delivery of the new car ASAP, preferably the same day.

Will Tesla be able to make this happen by the time the Model E is available? I sure hope so.

Robert Fahey
TSLA long
15 years on Toyota sales floor
rfahey@wobfm.com

Thanks for your thoughts, Robert.

Here's how I see it:

Case 1: production-constrained, long waits, no problem. If demand is high enough for Tesla to be unable to hold inventory in stock, then that will be fine, and the short-term-needs-driven customers will be out of luck.

Case 2: demand-constrained, sales from inventory, probably no problem. If you are right and Tesla jut can't sell around 300,000 models per year of Model E without reaching short-term-needs-driven customers, then they will be able to produce inventory for those customers to access.

It's not like they need those customers now, since they are production-constrained with Model S.

In case 1, the urgent buyer is out of luck, and good riddance. I agree.
In case 2, the urgent buyer does not have to weigh a long wait, but still has to jump through the extra hoops I mentioned. Here's where Tesla could lose some volume by lacking the means to un-horse an impulsive or urgent buyer.

Go to dealership -> go to website.

Rest goes like selling your old car. I see no extra hassle with Tesla way of business, I think it is easier that way. You just want to defend dealership-model, right?

Remember, I'm long TSLA. I'm just concerned about Tesla's inability to finance the customer and get him out of his car on the spot. If Tesla can create retracting door handles, surely it can create a solution for the urgent Model E buyer before he lands elsewhere due to convenience.

Most people in the market for a car can get financing done on their own and walk into a Tesla store ready to write a check for any locally available loaner/display car. Even if no local cars happen to be available that day, the choice will never come down to convenience as all other car choices will be the same as comparing apples to oranges.
Things happen, but there is warranty in case of a breakdown, insurance in case of an accident, and advance notice of an ending company car lease. These measures are in place to take care of most situations listed above.
Bottom line is if a buyer isn't willing to wait for their car for a couple of weeks while the stores find and transfer one, how willing do you think they will be to wait to fuel it up?

What OP is saying is that dealers, and apparently he is one, provide the ability for people to buy a car immediately- either on impulse, or because of an urgent need- because they have unsold inventory.

True.

Of course, everyone PAYS for that inventory in-

- inventory holding costs
- reduced selection (I have NEVER found a car dealer to have the exact car I want. Usually they order the ones they find most profitable).

@Robert Fahey

You were doing alright right up until the point where you said "go to a dealership..." because THAT isn't going to happen, period!

Tesla has a distribution plan and paradigm in place that they've no intent of deviating from and, inasmuch as literally EVERYTHING else that Tesla (and by proxy Elon Musk) has done has been spot on, there really is no incentive, rhyme nor reason, of altering it to suit the whims and fancies of some third party entity(s) looking to weasel a buck or two off of someone else's hard work.

No middle men equates to no overhead...Stealerships are nothing but middle men.

Agreed. No third-party dealer needed. But what about a similar model operated by Tesla itself? Something that offers financing and trades, for faster turnaround? That's all I'm suggesting.

Robert "Something that offers financing and trades, for faster turnaround?"

I don't see Tesla wanting to bring in any ICE for trades. What would they do with them? sell them? NOOOOOO.
Tesla already has a program to Trade older Teslas, but if you bring in an ICE, then Tesla is not interested, and I don't want them to be interested. (although I think they were partnered with someone who would handle the trade part of it)

Financing is a different thing altogether. Tesla offers a lease/buy item (or guaranteed buy-back if you use their financing). It may be different in other countries, but financing is available.

Although I think a vast majority already get financing done in preparation for the buy. (Because once you click "Order", then there is the list of "to-dos" for buyers to do so that the car can be made and delivered.)

I suspect people who will buy Model E:

1. People who want a Tesla but cannot afford an S or X.

2. People who bought an S and/or X that will pretty much support every release that Tesla comes up with (kind of like iPhone sales)

3. Someone that just wants an electric car, with range, that doesn't necessarily find value in any of the non Tesla offerings...

oh and

4. People who bought an S and/or X that may be enticed for certain features that may be on the E that isnt on the S or X.

5. People that want Tesla EV, but don't have any use for car as large as Model S.

It's really hard for most people to get the "demand-constrained, pumping sales" model out of their heads. While all new owners have some tendency to justify and "pump" their acquisitions for a while, TM owners are in a class by themselves, continuing to do so for (so far) 18 months after taking delivery. TM gets word-of-mouth and free publicity to die for. Their "marketing" expenditures are almost entirely value-adding initiatives to make their cars even more convenient and desireable (SvCs and SrCs).

It is yet to be proven that the same mode of selling will work for the X and E, but indications are that TM is going to assume so until proven wrong.

I think that Tesla change the game with Model E. If they are able to build a battery gigafactory and produce batteries 30-40% cheaper than the current $200/KW-hr, with improvements in energy density then a car with $35k is possible and it may do better than 200 miles per charge. With $5/fill up, "free" supercharger use option, there could be huge demand for Model E in this price segment.

The only folks who would be interested in a ICE are those who do a lot of long distance driving and can not afford the time to charge or they go to remote areas with no chargers... traveling, sales people, etc. With a trade off of $5 electric fill up that lasts 40 min, versus $50 gasoline fill up that lasts 5 minutes... it would be a tough choice in $/hour cost for most people in terms of their time worth.

There are enough investors who believe that Tesla will disrupt the ICE auto market. Enough to bid Tesla market cap to $23B,

@Bubba2000
"There are enough investors who believe that Tesla will disrupt the ICE auto market. Enough to bid Tesla market cap to $23B,"

And there're many who play the lotto daily too!

And the current market cap for TSLA is $24.3B

loren, having swallowed his foot, now finds it projecting from his posterior. Awkward, possibly fatal.

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I really hope that immulette is joking there.

I bought a Prius from a customer 3 years ago and haven't needed my tundra since. It's just paid for itself in gas savings, $11,000 50 mpg..With the rear seats down and the easy access thru the hatchback it's the perfect car for a contractor, telescoping ladders have made this possible...I'm hoping the model E has similar access and becomes, like my Prius, a dual use vehicle...

Bipolar, manic phase. Fer Shure.

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Spam. Flagged.

So, back to the original topic...

It has me wondering... do people really buy a brand new car "urgently" ? Seriously ?

If I were not a Tesla owner, and my car broke down, leaving me with no transport, and the new car I wanted had to be ordered and would take 3 months... I would see if friends had a car I could borrow, or I would buy some beat-up old used car for $1000 that would be able to last 3 months. The $1000 I spent would easily be worth the difference between getting an OK car, and the exact car I wanted.

Do people really not think this way, or do dealers just take advantage of the fact that someone "needs a car now" by raising the urgency in their minds ?

Most people I know just 'go get a car'. They do no research whatsoever. The most they would consider is perhaps keeping an eye out for what 'the in crowd', or 'The Joneses' are rolling. That's about it. Even the few who decide that they will buy a Mercedes when they can afford one, just go get... 'a Mercedes'. They know nothing about the engine, transmission, options, or competitors. They do not research fuel economy, durability, or reliability. They are just buying the badge, and by extension, the 'status'.

RS, while I can't speak for most people (everyone has a story) - I can say that many people end up buying at the dealers who they feel most comfortable doing business with. Sure, some feel intimidated and cannot say "no" and walk out - and they get stuck with what they deserve. But in other cases, buyers just want a new car because they "don't want other people's trouble" if they were to buy used. Buying used is perhaps the smartest buying decision most people should be making. They already get the depreciation out of the way. Many used-cars are half the price of new only three years after purchase. Look at the used EVs on the market now from off-lease situations. Half or less than the original MSRP. Great deals can be had even with today's new tech.

If a driver does less than 10K miles a year, there is really no reason to buy new at all. Except they get that new car smell and pricey satisfaction that comes with it.

It is most likely that the E will be in demand from all over the world and it will be hard to get one for years. No need for Tesla to get into financing or trade-ins. They could partner with banks.

One thing to think about is that lots of people can afford an S or X but would never buy a car that expensive. Lots of these people are going to line up for something they can live with and they will make cash deposits to get up front in line.

bonaire & carlgo: +1 UP!

I think that leasing will play a role in distribution of the Tesla Model ≡, though it may not be in the traditional sense. Tesla Motors will not need to 'pad out' quarterly sales figures with leases for years. I think that leasing will be offered specifically to meet the paradigm goal of Tesla Generation III as a whole: prove that electrical vehicles can be a viable, affordable, compelling transportation option for the mass market. In other words, if someone can acquire a Model ≡ 60 for $2500 down and $300 per month on a 24-to-36 month lease, that definitely qualifies as 'affordable'.

I have said for quite some time that many of the people who buy the Model ≡ will be current owners of the Model S. Some will be trading down, just to have a smaller car that fits their lifestyle a bit better as empty-nesters or city-goers. Some will be more frugal than ever, by getting a car that is closer to the price range they bought before the Model S was available. Some will be fleshing out their Tesla stable, buying something safe and reliable for use by other members of their Family. Some will be literaly sharing the wealth, making sure that as many people as possible drive a Tesla, right down to the company fleet of salesperson vehicles.

     SIGNS
     POINT
     TO YES

RS;
Such "cannibalization" of the S & X markets will be a trivial factor, I think. The interplay will be interesting to watch, though!


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