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Bob Lutz, car-guy-to-the-max, former VP of GM and Chrysler, with time at BMW before that, wrote this recent article --
http://www.roadandtrack.com/car-culture/a26859/bob-lutz-tesla/
The opening paragraph is gloomy:
Tesla's showing all the signs of a company in trouble: bleeding cash, securitized assets, and mounting inventory. It's the trifecta of doom for any automaker, and anyone paying attention probably saw this coming a mile away. Like most big puzzles, the company's woes don't have just one source.
and the prognosis goes downhill from there mentioning competition from Audi, the lack of enough dealers to attract more buyers and other problems.
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It's not reality that's important, but how you perceive things.
(Score: 4, Interesting) by jcross on Friday October 30 2015, @04:22PM
"I think Tesla CEO Elon Musk figured that if factory stores work for Apple, they'll work for Tesla. But the fixed costs for an Apple store are next to nothing compared with a car dealership's. Smartphones and laptops don't need anything beyond a mall storefront and a staff of kids. A car dealership is very different. It sits on multiple acres. You need a big building with service bays, chargers, and a trained sales force, plus all the necessary finance and accounting people. It ties up a staggering amount of capital, especially when you factor in inventory. Under a traditional franchise arrangement, the factory never has to carry that burden. Right now, Tesla does."
He doesn't even seem to know much about how Tesla works. Somebody correct me if I'm wrong, but I think Tesla dealerships are just basically showrooms and maybe they have some models you can test drive. Anyway, my impression is that it's a much lighter-weight operation than the kind of traditional dealership he's thinking of.
"A big, expensive vehicle with a compromised structure to accommodate gullwing doors can hardly be a sales knockout."
Compromised structure? I think Tesla has the least crushable frames in the industry. I don't know enough to comment on his financial analysis, but the guy seems to be writing off the cuff here without doing much research, and assuming Tesla's situation is similar to his past experience with failed auto makers.
(Score: 4, Insightful) by pe1rxq on Friday October 30 2015, @04:54PM
Even if he was right about the high costs of a dealership the burden still ends up at the consumer who pays for it all. It does not matter how you split the cost between dealer and manufacturer.
(Score: 1, Insightful) by Anonymous Coward on Friday October 30 2015, @05:54PM
He says the company is "losing $4000 per car" which, if true, means consumers aren't paying enough to cover the costs.
(Score: 3, Interesting) by frojack on Friday October 30 2015, @07:22PM
He says the company is "losing $4000 per car" which, if true, means consumers aren't paying enough to cover the costs.
Yeah, Chevy Volt lost money on every sale too. Except, Chevy was losing close to $40,000 per vehicle. [reuters.com] Lutz knows a thing or two about losing money.
The thing is, Lutz isn't taking into account the massive cost savings that Tesla expects to reap when its battery plant comes on line.
Musk will probably end up selling batteries to Chevy.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Friday October 30 2015, @08:07PM
Well until I see an actual source on that, he hasn't show himself to be spot on with the rest of his arguments.
(Score: 2) by mmcmonster on Friday October 30 2015, @08:48PM
Odd. That's probably taking into account the infrastructure Tesla is building in their supercharger network. Or just taking their losses and dividing it out over the number of cars they sell.
I was under the impression that the markup on the base model was around $10k and goes skyward from there. They justified the markup as they were building out the supercharger network.
The thing is, when you are building up infrastructure, profit/loss statements can be made to look as good or bad as you want. If you want it to look good, just slow down infrastructure investments for a quarter.
(Score: 2) by BasilBrush on Friday October 30 2015, @05:10PM
Even with his concept of a full sized dealership, the idea that that is more expensive than an Apple store is ignorant. Apple Stores have the best locations in the best malls in the centres of cities. That's a LOT more expensive. Car dealerships are not in city centres, they are where the land comes much cheaper.
The guy is a shill who's bullshitting. It ain't news.
Hurrah! Quoting works now!
(Score: 3, Touché) by McGruber on Friday October 30 2015, @08:30PM
Tesla's Atlanta showroom is a store inside the Lenox Square Mall. It is just a few steps away from Nieman Marcus and one floor below the Apple Store.
(Score: 2) by BasilBrush on Saturday October 31 2015, @02:22PM
That's an ACTUAL Tesla store. It's not the FANTASY Tesla store that Lutz assumes Tesla must have, because that's what traditional car companies have (through their dealers).
Hurrah! Quoting works now!
(Score: 5, Informative) by Phoenix666 on Friday October 30 2015, @05:10PM
You're correct, Tesla stores are showrooms. There are none of the other costs Lutz is talking about. The one in Long Island has a Model S you can sit in. When I went in last year I wanted to do a test drive but they said you had to schedule that through the website.
Lutz's mind is frozen in the auto business of 40 years ago. He doesn't begin to understand how different Tesla is. There is virtually no maintenance. Over the air software updates keep making the car better after you've bought it. What other car does that? They've also built out huge networks of superchargers, which means they're not only setting the standard for what cars are going to be but what the rest of the infrastructure to support them is gonna be. They're springboarding off the gigafactory into home energy storage, which means they're also helping homeowners hop off the grid into a sustainable energy future.
Nope, Lutz is a mental midget next to the strategic vision of Elon Musk.
Washington DC delenda est.
(Score: 1, Interesting) by Anonymous Coward on Friday October 30 2015, @06:00PM
Jeep, for one, has that capability:
(emphasis mine)
http://www.gizmag.com/vehicle-hacking-trends-def-con-23/38858/ [gizmag.com]
(Score: 2) by frojack on Friday October 30 2015, @07:15PM
There is virtually no maintenance.
Well, that's not entirely true. You still have to rotate tires every 5000-ish miles. And there are annual scheduled maintenance tasks.
Edmonds.com [edmunds.com] has a write up of maintenance issues on a 2013 Tesla after a cross-country road trip.
Some of these were teething issues for this particular car. (Drive unit replacement, etc).
But others are routine maintenance, wiper blades, cabin air filters, cooling system, brake pad checks, software updates, etc.
This Story [teslarati.com] explains some maintenance issues that another driver saw, as well as an actual Annual Maintenance bill [cloudfront.net]. Most of this bill seems like stuff you would have to bitch to the dealer to have it checked on any other car.
No, you are mistaken. I've always had this sig.
(Score: 3, Informative) by mmcmonster on Friday October 30 2015, @08:39PM
I've own a Tesla for about 19 months now (got it in 3/2014). Put 37k miles on it.
I had my first service at a year (~24k miles). They replaced the tires and suggested that I rotate the tires in the fall so they would last longer. They also replaced the wipers and changed out some bolts and fasteners.
My second service is in a couple weeks. They're going to rotate the tires. I also chipped the windshield so they're going to probably replace it (a truck kicked up a rock or something).
Software updates happen over-the-air and I've received 3 or 4 per year since I got the car. None of them had to be done at the service center. Typically I get a software update notification when I turn the car on and schedule it for 2am the following night (time is adjustable). Kind of like an OS update on my desktop computer or phone.
(Score: 2) by bob_super on Friday October 30 2015, @09:08PM
I work with a guy who's had a Model S since they became available. He says he spends more, per mile, on the tires than on everything else combined.
Looking at the picture in GP's post, someone likes their car enough to spend $600 on getting stuff lubed and fluids changed. I guess it comes with the "can afford a Tesla" territory, but it's hardly a do-it-or-walk expense for the owner.
(Score: 0) by Anonymous Coward on Friday October 30 2015, @09:33PM
$600 for that! holy crap, cost of ownership is high
(Score: 2) by mmcmonster on Friday October 30 2015, @08:44PM
Tesla test drives are hit-and-miss. I walked into a dealer in late 11/2013 in Manhattan and asked a few questions. No other customers in the store, so the salesperson offered me a test drive. It was a weekday at 3pm or so.
I went another time a month later at King of Prussia mall and because of how busy it was in the store, they asked that we schedule a test drive for my wife another day (the demo cars (they had three) were booked for the entire day).
Of course, like any auto dealer, the test drive is in their top-of-the-line model. Truly an awesome drive.