8 ms·

Tesla’s Troubles Mount: Shuttered Showrooms and Sinking Shares

33 points by Pharmakon 8y ago

deleted 8y ago
[deleted]
Proven 8y ago
The company and that fraud Musk are beyond help. One price cut per month so far in 2019 show demand for suicidal cars is collapsing
mdorazio 8y ago
“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.” 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.
- joekrill 8y ago
  Yes but Ferrari has no intention of making their product affordable for those that want it, even if they were able to. 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.
  - gamblor956 8y ago
    Companies make products affordable by lowering the unit cost of the product (generally through increased efficiencies, economies of scale, substituted inputs, etc), not by cutting non-COGS operating expenses. 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.
  - ams6110 8y ago
    I'd say that remains to be seen. There isn't a Tesla in the "affordable" segment yet, so we don't know what the demand is.
- CPLX 8y ago
  Indeed. It's worth noting that affordability is the inhibitor for nearly all non-worthless products.
kumarm 8y ago
>>The “flip-flop” on retail strategy, he added, “makes it seem like Musk is winging it and the board is letting him wing it.” That sounds like a founder who is not afraid to experiment and course correct when necessary to me.
- benj111 8y ago
  I can't make my mind up on the closures. 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?
  - setquk 8y ago
    Having watched people in the Tesla retail store at Westfield here in the UK, it was basically a playground for kids and adults alike. I reckon they sold very few cars if any through that outlet. 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.
    - benj111 8y ago
      You are with respect, a Hacker News reader, so closer to Tesla fan than the proverbial Mum and Dad. Plus I take it the Citroen was a petrol/diesel, so a known quantity. Did you have a test drive at all?
      - setquk 8y ago
        I’m a proverbial dad as well. No didn’t test drive it. Petrol.
        benj111 8y ago
        Ok fair enough. 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!
CPLX 8y ago
The new lack of a retail strategy just seems insane to me. 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?
- TheTruth321 8y ago
  Then go and buy another BMW 3-series, byotch, lol. Go figure.
- jiveturkey 8y ago
  you can. 1000 mile refund policy.
  - cloudsinthesky 8y ago
    Buying a car and returning it is not the same as going on a test drive. Pretending it is the same thing is just ridiculous and super out-of-touch with the target audience of the lower-cost cars.
    - twothamendment 8y ago
      Yes, this works with mattresses, but I don't know many people who'd be willing to do the buy and try thing with something as expensive as a car.
    - freehunter 8y ago
      My biggest fear would be any potential hit to my credit. I don't know if getting a car loan and then getting the money refunded would impact my credit score at all, but I'm unsure enough to not want to try it. Credit and loans aren't something I want to take a chance on.
- cloudsinthesky 8y ago
braythwayt 8y ago
When Tesla launched, it came across as a car company being run like a startup. They hired laptop people to work on battery tech, they disrupted legal impediments to direct sales (much as Uber and Lyft have disrupted taxi cartels), and they had the de rigueur charismatic but eccentric founder. 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.
- bordercases 8y ago
  Is that a tradeoff inherent to B2C models, or could they have done differently?
busterarm 8y ago
Very surprised to not see Ed N and his writing/commenting/voting ring on this one. Or Bertel.
threeseed 8y ago
The problem for Tesla is that they needed to sort these problems out years ago. Now we are approaching the mass-consumer part of the adoption curve where every car company will start offering electric cars: 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.
- fossuser 8y ago
  Those companies have largely failed to execute for the last ten years on EVs and their current offerings are still worse than Tesla in nearly every category. 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.
  - threeseed 8y ago
    Most of the reviews have them being roughly equal to Tesla when you compare all of the attributes. Tesla is definitely stronger on the battery side and far weaker on build quality, interior experience and the overall buying and servicing experience.
- leesec 8y ago
  In my mind, these big players need to sort out the fields where they're lacking years ago. I can think of about 4 off the top of my head. 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.
cynoclast 8y ago
Worth noting: >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.
- pkulak 8y ago
  82% of buyers, sure, but those were the most motivated buyers. People who have been on waitlists for years, or even (like myself) waiting since the Roadster was announced in 2007. It's a real stretch to assume that the next wave of possible owners are going to put up with buying a car that can't be test driven.
- gamblor956 8y ago
  Almost all of Tesla's Model 3 orders came from their pre-order queue, which had to be done online (even in store, they simply directed you to an kiosk of their website.) before they even had Model 3s to test-drive. This means that the 78%/82% comes overwhelmingly from the preorder Model 3 buyers, and that as time passed more of the buyers were doing so through the stores. 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.
cynoclast 8y ago
Straight from https://www.tesla.com/ https://www.tesla.com/: >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.
- deleted 8y ago
  [deleted]
- rad_gruchalski 8y ago
  Sure, while locking up $35k to $65k for up to six weeks. Pretty damn expensive test drive.
b_tterc_p 8y ago
I have always seen car advertising as the most wasteful of all commercials. Tesla doesn’t do this and I, as someone who couldn’t care less about cars, know more about Tesla cars than all competitor cars combined. I don’t think they need the stores. Were I to get a car, I would probably get a model 3 if I confirmed the charging situation was reasonable and risk of repairs was reasonable (at this point I think not). 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.
gopher2 8y ago
Tesla just reminds me so much of what I've read about the story of Enron. 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.
czr 8y ago
For context, "An Electric Carmaker Struggles as Its Production Lags" (https://dealbook.nytimes.com/2012/09/25/questions-about-electric-cars-as-a-manufacturer-struggles/ 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-the-ev-highway.html 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/tesla-seeks-a-stronger-foothold-in-china.html 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-model-s-suspension.html 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 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.html https://www.nytimes.com/2018/03/29/business/tesla-elon-musk....) - March 29, 2018
- gamblor956 8y ago
  ??? What's the context? That The NY Times has published factually accurate articles about Tesla over the past 7 years? 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.
  - czr 8y ago
    The context is that Tesla has had troubles in the past, and will continue to have troubles into the future, so this particular article is not indicative of any inflection point. It's the continuation of a long trend of mismanagement, shifting timelines, and questionable decisions that have nonetheless failed to take the company down.
marssaxman 8y ago
Seems like I've seen one variation of this headline or another every few months for as long as Tesla has existed, but they just keep on selling cars. The negativity seems disproportional.

33 points by Pharmakon 8y ago

deleted 8y ago

[deleted]

The company and that fraud Musk are beyond help. One price cut per month so far in 2019 show demand for suicidal cars is collapsing

mdorazio 8y ago

“The demand for Model 3 is insanely high. The inhibitor is affordability. It’s just that people literally don’t have the money to buy the car.” 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.

joekrill 8y ago
Yes but Ferrari has no intention of making their product affordable for those that want it, even if they were able to. 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.
- gamblor956 8y ago
  Companies make products affordable by lowering the unit cost of the product (generally through increased efficiencies, economies of scale, substituted inputs, etc), not by cutting non-COGS operating expenses. 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.
- ams6110 8y ago
  I'd say that remains to be seen. There isn't a Tesla in the "affordable" segment yet, so we don't know what the demand is.
CPLX 8y ago
Indeed. It's worth noting that affordability is the inhibitor for nearly all non-worthless products.

kumarm 8y ago

>>The “flip-flop” on retail strategy, he added, “makes it seem like Musk is winging it and the board is letting him wing it.” That sounds like a founder who is not afraid to experiment and course correct when necessary to me.

benj111 8y ago
I can't make my mind up on the closures. 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?
- setquk 8y ago
  Having watched people in the Tesla retail store at Westfield here in the UK, it was basically a playground for kids and adults alike. I reckon they sold very few cars if any through that outlet. 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.
  - benj111 8y ago
    You are with respect, a Hacker News reader, so closer to Tesla fan than the proverbial Mum and Dad. Plus I take it the Citroen was a petrol/diesel, so a known quantity. Did you have a test drive at all?
    - setquk 8y ago
      I’m a proverbial dad as well. No didn’t test drive it. Petrol.
      - benj111 8y ago
        Ok fair enough. 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!

CPLX 8y ago

The new lack of a retail strategy just seems insane to me. 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?

TheTruth321 8y ago
Then go and buy another BMW 3-series, byotch, lol. Go figure.
jiveturkey 8y ago
you can. 1000 mile refund policy.
- cloudsinthesky 8y ago
  Buying a car and returning it is not the same as going on a test drive. Pretending it is the same thing is just ridiculous and super out-of-touch with the target audience of the lower-cost cars.
  - twothamendment 8y ago
    Yes, this works with mattresses, but I don't know many people who'd be willing to do the buy and try thing with something as expensive as a car.
  - freehunter 8y ago
    My biggest fear would be any potential hit to my credit. I don't know if getting a car loan and then getting the money refunded would impact my credit score at all, but I'm unsure enough to not want to try it. Credit and loans aren't something I want to take a chance on.
cloudsinthesky 8y ago

braythwayt 8y ago

When Tesla launched, it came across as a car company being run like a startup. They hired laptop people to work on battery tech, they disrupted legal impediments to direct sales (much as Uber and Lyft have disrupted taxi cartels), and they had the de rigueur charismatic but eccentric founder. 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.

bordercases 8y ago
Is that a tradeoff inherent to B2C models, or could they have done differently?

busterarm 8y ago

Very surprised to not see Ed N and his writing/commenting/voting ring on this one. Or Bertel.

threeseed 8y ago

The problem for Tesla is that they needed to sort these problems out years ago. Now we are approaching the mass-consumer part of the adoption curve where every car company will start offering electric cars: 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.

fossuser 8y ago
Those companies have largely failed to execute for the last ten years on EVs and their current offerings are still worse than Tesla in nearly every category. 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.
- threeseed 8y ago
  Most of the reviews have them being roughly equal to Tesla when you compare all of the attributes. Tesla is definitely stronger on the battery side and far weaker on build quality, interior experience and the overall buying and servicing experience.
leesec 8y ago
In my mind, these big players need to sort out the fields where they're lacking years ago. I can think of about 4 off the top of my head. 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.

cynoclast 8y ago

Worth noting: >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.

pkulak 8y ago
82% of buyers, sure, but those were the most motivated buyers. People who have been on waitlists for years, or even (like myself) waiting since the Roadster was announced in 2007. It's a real stretch to assume that the next wave of possible owners are going to put up with buying a car that can't be test driven.
gamblor956 8y ago
Almost all of Tesla's Model 3 orders came from their pre-order queue, which had to be done online (even in store, they simply directed you to an kiosk of their website.) before they even had Model 3s to test-drive. This means that the 78%/82% comes overwhelmingly from the preorder Model 3 buyers, and that as time passed more of the buyers were doing so through the stores. 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.

cynoclast 8y ago

Straight from https://www.tesla.com/ https://www.tesla.com/: >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.

deleted 8y ago
[deleted]
rad_gruchalski 8y ago
Sure, while locking up $35k to $65k for up to six weeks. Pretty damn expensive test drive.

b_tterc_p 8y ago

I have always seen car advertising as the most wasteful of all commercials. Tesla doesn’t do this and I, as someone who couldn’t care less about cars, know more about Tesla cars than all competitor cars combined. I don’t think they need the stores. Were I to get a car, I would probably get a model 3 if I confirmed the charging situation was reasonable and risk of repairs was reasonable (at this point I think not). 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.

gopher2 8y ago

Tesla just reminds me so much of what I've read about the story of Enron. 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.

czr 8y ago

For context, "An Electric Carmaker Struggles as Its Production Lags" (https://dealbook.nytimes.com/2012/09/25/questions-about-electric-cars-as-a-manufacturer-struggles/ 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-the-ev-highway.html 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/tesla-seeks-a-stronger-foothold-in-china.html 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-model-s-suspension.html 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 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.html https://www.nytimes.com/2018/03/29/business/tesla-elon-musk....) - March 29, 2018

gamblor956 8y ago
??? What's the context? That The NY Times has published factually accurate articles about Tesla over the past 7 years? 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.
- czr 8y ago
  The context is that Tesla has had troubles in the past, and will continue to have troubles into the future, so this particular article is not indicative of any inflection point. It's the continuation of a long trend of mismanagement, shifting timelines, and questionable decisions that have nonetheless failed to take the company down.

marssaxman 8y ago

Seems like I've seen one variation of this headline or another every few months for as long as Tesla has existed, but they just keep on selling cars. The negativity seems disproportional.