Maybe. Though Tesla’s strategy doesn’t fit neatly into that box. Detours into the Semi and the Roadster, and even their refresh of both the S and the X, don’t help them maximize EV’s sold in the near term - they’re still aiming to hold pieces of smaller segments.
But even apart from that, I don’t think Tesla can do what it claims to want to do by following that strategy. As I said, for Tesla to stick to its long-term growth projections (~1.9+ million sales this year, ~2.7+ million next year), I don’t think they can rely just on Model Y growth. No one’s ever sold ~2 million of the same car, no matter how good the car is. There’s only so large a market for any specific model. They still need Model 3 sales to grow, and grow big.
They can’t just move to the next model, because they’ve run out of model segments that are bigger than the ones they’ve already operated in. To keep growing at the rate they claim to want to grow at, they can’t let Model 3 sales level off. Which means (I think) they’ll have to start doing the things that automakers have historically done: advertised, offered consumers the convenience of buying off the lot, and probably have some locally-set pricing practices to capture price sensitive buyers in order to move inventory.
Suppose you make just one widget per day and you have one customer per day so demand is perfectly met. How do the two models differ? Why is model 2 more efficient than model 1?
Suppose you close down for one day, how is the day’s customer served better by 2 than by 1? Both have to wait a day.
Because you’re not making just one widget per day. Build to order makes sense for small volumes. If you’re only making a tiny number of widgets, you don’t need much of a distribution system at all. For really tiny volumes of production against super-high demand, you can assume away the matching process. If only one widget is coming out of the factory today, there’s no reason not to make people sign up in advance to be the recipient of that day’s widget.
That stops getting realistic when you’re making millions of widgets. At those volumes, your daily output isn’t necessarily constant. Your daily sales aren’t necessarily constant. Customers aren’t necessarily willing to wait for a distribution process that requires them to commit to a purchase and then wait two weeks for delivery - especially if there are competing widgets that can be purchased immediately.
That’s the point - Tesla’s growing out of the distribution model that worked when they produced small numbers of cars (relative to the majors) in a market segment where very few competitors produced at volume. Now that Tesla’s producing nearly two million cars, and competitors in China and Europe (two major markets) are also producing hundreds of thousands of BEV’s per year, that distribution model isn’t going to keep working for them.
It’s not Nasty Captain if you are laughing, although some people will take it that way.
The whole point is that people will claim that news about Tesla is terrible and when the Financials for the quarter comes out, it is amazing, because they didn’t do terrible at all. Then the next quarter comes, and the next quarter comes, and the next quarter comes, yet, the claims keep coming that Tesla is doing terrible.
Or the convenience of going to Home Depot then to Lowes then giving up and ordering it on line?
A model 3 is a model 3 is a model 3. If I want one, I will drive it, order it.
That is way better than visiting four GM dealership and being squeezed through a sales funnel, then if I have the unhappy situation where I buy a vehicle, then being pushed through the vacuum machine that works on emptying ever pocket.
Personally, I do not know where the nearest Tesla show room is. I just did a search. I am still not sure. I am pretty sure there is not a show room within 5 hours from here. So, if Tesla really needed to sell a car, it would be easy to pick up a lot of sales just by opening more show rooms.
Cheers
Qazulight (No stock in Tesla, Do not own a Tesla, no intention of buying any car of any sort before 2025. Might consider a Tesla then.)
…and wait about three weeks for you to be able to pick it up.
The “convenience” isn’t about whether it’s enjoyable to go through the haggling process at a dealership. It’s getting your car the day you bought it.
You can’t do that with Tesla. You have to wait until they deliver it. This isn’t necessarily an insurmountable problem for many customers. A lot of buyers have flexibility in when they take possession of a car they’ve purchased.
But some won’t. Some will be looking for a new car because their current car just got totaled in an accident. Or now needs a repair that isn’t worth spending the money on. Or because their employment or housing suddenly changed in a way that requires them to now have a car on very short notice. People that just don’t have the flexibility to wait three weeks for a new car - or who can’t risk the modest uncertainty around the delivery date because they can’t risk having two cars (or none) for even a few days.
That might not matter as much now - Tesla’s are expensive cars within their various segments (the ATP for the Model 3 is probably 50% higher than the typical midsize sedan’s $31K, for example). But if Tesla is going to move downmarket into cheaper cars with the “Model 2,” more of your potential customers won’t be in a position to manage the delay.
Seems to me that as the number of cars produced and the number of cars sold increases, so is the number of cars in transit between production and delivery … not exactly inventory.
Inventory but like all inventory, a necessary evil.
What some people don’t get is that the more they produce the more there will be in transit. They should check the relation between production and inventory taking into account the unwinding of the wave, the quarter end push to get cars to customers, an expensive way to meet the numbers.
You think this because you don’t pay much attention to what Tesla says. They’ve been completely clear on what the mission is, and that they intend to go full speed ahead. So no, none of the things you are imagining because you think Tesla will do what others have done. Tesla will relentlessly improve manufacturing efficiency and lower the prices of their cars accordingly. They’ll expand their market by offering more affordable cars and better value for money.
Did they say they’ll refuse to modify their sales and distribution channels in order to meet their customers’ needs? Or that they won’t also expand their market by informing potential customers about their offerings and the benefits of those offerings?
Tesla’s been operating in a market where all they needed to do was offer better value on the product for the money. They were the only ones that were offering volume production of BEV’s for a while - so they were operating both with little competition and an overwhelming brand identification with EV’s. All of their current product offerings were launched or announced in that environment.
But that’s changing. They now are in a more mature EV market - where competitors in Europe and China are making hundreds of thousands of EV’s per year and the airwaves are filled with manufacturers touting their electric offerings. Where it might be necessary to advertise that you’re offering a compact sedan (if that’s what the Model 2 ends up being), because you’re not in a world where a new EV product isn’t necessarily going to earn as much free media as the launch of the Model 3. Where it might be necessary to have inventory on hand for your Model Y purchasers, because they now have a dozen other BEV SUV’s to choose from and you don’t want your newer products to cannibalize your old lines as much so that you can expand your market. Where having the best product can be complemented by also eliminating the delays in purchasing it.
If Tesla’s going to become the biggest car manufacturer in the history of the world, they’re probably not going to be able to do it based on word-of-mouth and/or free media alone. They might want to take a page from Apple’s book and absolutely control their branding. And a page from Apple’s book and make it as easy as possible to buy their products, rather than making people order three weeks or more in advance of delivery.
The number of Tesla vehicles available “today” varies with place and time. But, depending on how picky you are, it’s generally not a problem. Do you ever do a reality check on your silly claims about Tesla?
Let’s give it a whirl. Entering my zip code, I find that there are exactly four new Model Y’s available in inventory within 200 miles of my zip code.
So, no. That’s trivially negligible inventory. Four Model Y, spread among seven showrooms, for about 5-6 million people that live in that 200 miles? It’s worth noting that all four have black interiors, which is incredibly undesirable in the South Florida climate. Poking around and using random zip codes from around the state, it looks like there’s about 12-18 Model Y cars in the entire state of Florida.
Tesla isn’t really offering a comparable experience to the standard new car dealership right now. Which is not surprising. I’m not claiming that Tesla has started to pivot towards having cars in inventory for immediate purchase as part of their sales channel. I’m merely stating that they probably will do so. It’s hard to sell 20 million cars if you’re not doing everything you can to make it convenient as possible for every person to easily obtain their preferred car. And having a 50/50 chance that a showroom might have a single Model Y in inventory isn’t that.
[Additional edit] Now, to be fair, while there are only four Model Y’s in inventory within 200 miles of my zip code, there are 58 Model X’s and 20 of the Model S. So if I wanted to buy one of those cars, I’m a little spoiled for choice. But as I noted upthread, customers for more expensive vehicles probably have more flexibility in when they take possession.
They do not need more inventory. At least not in south Florida. There is no show room within a 2 hour drive of Panama City. There is a zero chance that I will drive more than 2 hours just for the chance to sit in a Tesla. Now give me a couple of years when I actually need a car, maybe. Between where Tesla is and a dealership
model is a huge gulf. There may well be a 20 million car number between those two.
In the mean time, Tesla can sell mini vans, maxi vans, light trucks and heavy trucks. In reality, Tesla is still selling specialty cars, not mass merchandise and it will be another 24 to 36 months before they are.
Well, at least you’ve progressed to the point where you admit the possibility that your imaginings might be wrong.
Tesla, unlike everybody else in the business other than Ferrari, has a negative cash conversion cycle. It has benefited them immensely in their rapid growth. Perhaps, rather than speculating that if Tesla gets big it’ll surely get stupid too, like all the other guys, you should try to recognize that Tesla is already big. And as they get really, really big they aren’t suddenly going to decide that they’ve been doing things wrong all along.
So the thing to figure out is if things change in some way you believe is inevitable, how will Tesla come up with new ways of doing things so that they maintain a negative cash conversion cycle.
Based solely on anecdotal evidence, Florida appears to be the second biggest Tesla state after California. They are all over the place. And every two or three weeks it seems like another neighbor gets one. So it is to be expected that there aren’t many Teslas sitting around in FL.
The Tesla test drives I did were terrific, much MUCH better than any test drive at a dealer ever in 40+ years of driving and buying cars. I got on the Tesla website, scheduled a test drive, texted them a photo of my license, drove to a nearby mall at the scheduled time, texted the Tesla guy, he told me where the car was parked, unlocked it remotely, and told me I have about 30 minutes to drive around in it. I test drove a Y and a 3, and then a day or two later, my wife and daughter also test drove them.
Why would anybody? Rent one for a day from Hertz or Turo, either at home or when you’re traveling. That provides a long enough time to experience what you need in order to make a good decision. Me, back in 2017 I rented a Model X for a week’s vacation involving much driving around New England. Convinced me I didn’t want a Model X, which saved me from an expensive mistake.
Before that, watch (some of) Tesla’s tutorial videos in the comfort of your home to get an understanding of the available features and how they work. Then you won’t waste your time trying to figure out what to check out when you could be actually checking it out.
The way people have shopped for cars in the past is pretty much universally hated. Try something better.
Also doesn’t hurt to take a ride or two in a Tesla taxi (Uber, Lyft, whatever) and chat with the driver about what’s good and bad about the car. People who drive all day can tell you a lot about the comfort of the seats and whether the interior works for them.
Regardless of how you shop, there are a ton of superchargers in Florida, including the Panama City area.
And yes, I should have mentioned, try just scheduling a test drive from Tesla’s Find Us | Tesla page. See how convenient they are willing to make it.
What I love about Florida, sarcasm, is the number of cars from Florida sold as used in CT after a major Florida storm. That should be interesting with batteries on board.
