3 ms·

Why would they do this? It doesn't seem to make much business sense other than to be PR for the grocery company. They've given Musk $5k x 25 trucks ordered, o

Why would they do this? It doesn't seem to make much business sense other than to be PR for the grocery company. They've given Musk $5k x 25 trucks ordered, on promises of trucks delivered in a year or more, from a company that usually misses its deadlines. And oh by the way the truck doesn't have a price yet, so they're not committed to actually buying. Maybe they're just giving tesla an interest free loan for a few years for PR?

decasteve 9y ago
PR + a potentially reduced cost-per-mile advantage before their competitors catch on. The move is not without its risks but I personally like when companies adopt technology like this in the face of our climate change challenges.
paulgb 9y ago
Yeah, it's like an Airplane option [1] except without a price which is kinda the point. 1: https://en.m.wikipedia.org/wiki/Option_(aircraft_purchasing) https://en.m.wikipedia.org/wiki/Option_(aircraft_purchasing)
matt4077 9y ago
Corporations are (run by) people. Maybe their leadership believes in Tesla's mission and sees this as an easy way to support it without much risk? Or, yes, it's a smart PR move. The stories now are probably too small to have much reach. But being the first company to take delivery of the vehicles is a pretty sure way to get them into the evening news, with your logo on the side and a quote from your CEO about your company's pro-environment efforts.
TomMarius 9y ago
They could sell their place in the queue later if they find out it's not for them
quickConclusion 9y ago
This is BtoB, not everything is public info, everything can be negotiated. There must have been discussions between Tesla and Loblaw, where expected final price, or even guaranteed, has been agreed. possibly with penalties for late delivery. I imagine also reduced upfront payment in exchange for PR: it helps create momentum for Tesla.
mikeash 9y ago
Electric trucks have the potential to greatly reduce costs. This would provide a huge advantage for trucking companies that adopt them, and a huge disadvantage for those who stick with the old. $125,000 to save a spot in line so they can try it out ASAP and see if it lives up to its promise sounds quite cheap for a company of this size.
moltar 9y ago
Why not? If it can cut costs of transportation by 20 or more perfect. This would directly translate into cheaper product and thereby attract more customers. Also, Lablaws chain is pretty forward-thinking and they always had the newest stuff. They were one of the first, if not the first, to implement self checkouts. They have order online and pick up in store. They have had a partmership with online bank for points, also one of the first if I remember correctly. They embrace new things in other words.
IkmoIkmo 9y ago
A company pre-ordering is quite different from a consumer. They've probably put up a fraction of the regular $5k. But even if they hadn't, this story hit newspapers in pretty much every region they have consumers. At a WACC of 6%, a two-year 125k loan means they've got quite an effective PR move for $15k in interest payments. Remember this is a company with $46 billion in revenues, not a mom-n-pop store or small local chain. It's a good move without even going into whether the semi ends up worth buying a few years down the road.
barkingcat 9y ago
It's a drop in the bucket for a company the size of Loblaw. A good thing to have on their annual report, and the truck order probably costs orders of magnitude less than the food thrown away by their stores on a weekly basis. And if they were going to buy diesel trucks to update/maintain their fleet anyway, trying something different for a really very small part of their transportation and logistics budget is a smart thing to do.
anindha 9y ago
It’s like saying why do fans cheer at a sporting event. It makes it easier for Tesla to raise capital to pay for the production of the trucks. It also gives Loblaw a seat at the table when Tesla is deciding what features to include.
koblas 9y ago
Electricity prices in Quebec are lower than anywhere else, due to an over abundance of hydroelectric production. The local utility companies have long term low price contracts on the production. While gas prices are expensive and quite variable. So having a Quebec based grocery where a lot of miles are driven in the Montreal (read - large metropolitan area with traffic issues) having a bunch of electric semis makes huge sense.
macspoofing 9y ago
It's PR. With a simple announcement they've got global media mentions and attached themselves to a very exciting brand and product announcement. Clever.

decasteve 9y ago

PR + a potentially reduced cost-per-mile advantage before their competitors catch on. The move is not without its risks but I personally like when companies adopt technology like this in the face of our climate change challenges.

paulgb 9y ago

Yeah, it's like an Airplane option [1] except without a price which is kinda the point. 1: https://en.m.wikipedia.org/wiki/Option_(aircraft_purchasing) https://en.m.wikipedia.org/wiki/Option_(aircraft_purchasing)

matt4077 9y ago

Corporations are (run by) people. Maybe their leadership believes in Tesla's mission and sees this as an easy way to support it without much risk? Or, yes, it's a smart PR move. The stories now are probably too small to have much reach. But being the first company to take delivery of the vehicles is a pretty sure way to get them into the evening news, with your logo on the side and a quote from your CEO about your company's pro-environment efforts.

TomMarius 9y ago

They could sell their place in the queue later if they find out it's not for them

quickConclusion 9y ago

This is BtoB, not everything is public info, everything can be negotiated. There must have been discussions between Tesla and Loblaw, where expected final price, or even guaranteed, has been agreed. possibly with penalties for late delivery. I imagine also reduced upfront payment in exchange for PR: it helps create momentum for Tesla.

mikeash 9y ago

Electric trucks have the potential to greatly reduce costs. This would provide a huge advantage for trucking companies that adopt them, and a huge disadvantage for those who stick with the old. $125,000 to save a spot in line so they can try it out ASAP and see if it lives up to its promise sounds quite cheap for a company of this size.

moltar 9y ago

Why not? If it can cut costs of transportation by 20 or more perfect. This would directly translate into cheaper product and thereby attract more customers. Also, Lablaws chain is pretty forward-thinking and they always had the newest stuff. They were one of the first, if not the first, to implement self checkouts. They have order online and pick up in store. They have had a partmership with online bank for points, also one of the first if I remember correctly. They embrace new things in other words.

IkmoIkmo 9y ago

A company pre-ordering is quite different from a consumer. They've probably put up a fraction of the regular $5k. But even if they hadn't, this story hit newspapers in pretty much every region they have consumers. At a WACC of 6%, a two-year 125k loan means they've got quite an effective PR move for $15k in interest payments. Remember this is a company with $46 billion in revenues, not a mom-n-pop store or small local chain. It's a good move without even going into whether the semi ends up worth buying a few years down the road.

barkingcat 9y ago

It's a drop in the bucket for a company the size of Loblaw. A good thing to have on their annual report, and the truck order probably costs orders of magnitude less than the food thrown away by their stores on a weekly basis. And if they were going to buy diesel trucks to update/maintain their fleet anyway, trying something different for a really very small part of their transportation and logistics budget is a smart thing to do.

anindha 9y ago

It’s like saying why do fans cheer at a sporting event. It makes it easier for Tesla to raise capital to pay for the production of the trucks. It also gives Loblaw a seat at the table when Tesla is deciding what features to include.

koblas 9y ago

Electricity prices in Quebec are lower than anywhere else, due to an over abundance of hydroelectric production. The local utility companies have long term low price contracts on the production. While gas prices are expensive and quite variable. So having a Quebec based grocery where a lot of miles are driven in the Montreal (read - large metropolitan area with traffic issues) having a bunch of electric semis makes huge sense.

macspoofing 9y ago

It's PR. With a simple announcement they've got global media mentions and attached themselves to a very exciting brand and product announcement. Clever.