SW17LS

You don't understand Elon Musk. He's not a traditional businessman. He's not trying to get rich, he's already rich. He's trying to change the world, which is why Tesla has open patents.

Recession doesn't mean investors will dry up. In fact, investors typically invest more in a recession because they get more for their invested dollar.

Yet they're all selling.

Agreed, but its a big and ever growing niche.

peteharvey

We all have to invest billions into Research & Development.
We all have to invest billions into infrastructure like factories etc.
Despite all this, we still have to make a profit!

Even if we make a loss, it can't be a constant loss, decade after decade.
What makes Tesla unusual is the 16 years with mostly big losses and little in the way of profits.

Model 3 was supposed to reign in the profits.
Now Tesla is saying that the Model Y compact tall wagon will be required to reign in the profits.
Later, Tesla might as well say that the Model Z truck, or the Model Alpha boat, or the Model Beta helicopter - will be required to reign in the profits.

Tesla's sales are supposedly falling.
With only another four months of government tax credits remaining to make things even worse.

Tesla certainly has a headstart with the battery, electric motor, and Supercharger network - but nothing out of the ordinary that the major manufacturers cannot catch up to, or exceed over time.
On the contrary, Tesla does not have the experience in engineering nor producing the bodywork nor fittings - hence Tesla's poor design and build quality - but to Tesla's credit, nothing that Tesla couln't make up for over time, on their part.

The established marques will catch up in battery capacity, and Supercharger networks etc etc over time - yet the established marques already have their lead in designing and producing the bodywork of the motor vehicle.

Tesla stock down 33%, when the S&P is up 16% accoriding to Freds430.

It will be interesting to see how Tesla unfolds.

Apple, Google, Amazon or Alibaba purchasing Tesla is not a bad thing - as long as the money keeps coming in I guess....

LeX2K

Care to explain why? How does an independent dealership network mean more revenue for Tesla?

mmarshall

Simple math. Doesn't take a Genius to figure it out. In a private dealer franchise, the dealership's Owner and General Manager are responsible for paying all the bills......salaries/commissions, utility costs, insurance, maintenance, supplies, business and property taxes on the real estate itself....the list of bills is endless. Tesla, in contrast, because of company ownership, pays all of these bills themselves, out of their pocket, instead of allowing private franchises to do it. That may be the system that Elon Musk wants and has set up, but it is costing the company (and its investors) dearly.

EZZ

But they have to share the profits then. For a verticalization strategy, it just doesn't fit. It's not the right model for Tesla

peteharvey

Mike is basically trying to say that an "outsourced" specialized dealership network often operates more efficiently & effectively than an "in-house" Jack of All Trades operation.

mmarshall

Here'a a video that probably explains the benefits of private dealer-franchises better than I can.

https://www.nada.org/auto-franchising/

EZZ

That's their view. Their whole existence is based on franchising. Tesla will never franchise because it doesn't fit their model. Their valuation is based on a multi revenue source approach with higher margin auto business based on people ordering their cars through online presence vs retail. It's not for everybody. It's an approach not suited for everyone and they are okay with that. Their main customer base feels perfectly comfortable with this approach especially on the coasts.

peteharvey

There are obviously suspicions regarding Tesla, but nobody knows Tesla's future.
It could go one way or the other.
Only time will tell.

Due to suspicions etc, most won't buy in the present, but a minority will purchase & have already done so.

Whether a majority buy Teslas in future, only time will tell...

EZZ

I agree with this. The Model 3 outsold all of its ICE competitors combines (3 series, Lexus IS, A4, etc...). There is high demand but the market for a high end vehicle is limited. I doubt Tesla has intentions going downmarket to compete with Toyota. Tesla's forte is really inline with luxury performance vehicles. There has been no indication they plan to venture out of these markets.

SW17LS

Introducing middlemen into the supply chain rarely improves profitability lol

Of course NADA thinks dealers are great. Guess what NADA stands for? The North American DEALERS Association.

Teslas not going anywhere.

LeX2K

I'm not sure about this because in the auto sector we don't have anything to make the comparison auto makers almost exclusively operate using the dealership model. And even if it was cheaper for Tesla to outsource dealers I can't see it being a huge amount of money. Also the dealer won't have the traditional maintenance cash cows like oil and filter changes, exhaust repairs, CEL aka the money light fuel & emissions repairs that's all gone.
I can see Tesla going downmarket at some point. What Tesla did was very smart they started with a high dollar EV and are working their way down compare this with Nissan and GM that cut costs as much as possible and the result is an egg shaped limited range vehicle that has little appeal outside of it being an EV. Not the best way to stimulate a new sector.

EZZ

I think they were even smarter than that. They targeted a market known for enthusiasts and those that would evangelize their brand. These people bought the affordable model and now encourage all to buy it because it is so damn good. Now the word is getting around, they will target more mainstream luxury crossovers. They don't spend on marketing and their brand recognition is incredible. I have no clue why Nissan and GM decides to launch BEVs that were eyesores.

peteharvey

Yes, Model 3 is selling very well against traditional compact luxury, but these are still only early days: with backlogs, initial purchases, and government tax credits still available for a final 4 months big rush!
Long term, let's wait and see what happens with Model 3 sales.

Look at Model S.
The Tesla Model S previously averaged 20k-30k units/year in the last 3 years in 2016, 2017 & 2018.
Yet the first 7 months of this year, Tesla Model S sales plummeted to just 8,000+ units!

Ditto the Model X CUV/SUV tall wagon which sold 27k in 2018, but has plummeted to just 10k in the first 7 months of this year.

Presently, Tesla is in a very dodgy situation - purchased mostly by niche 0-60 early adopters who place less emphasis on the body of the motor car - so only time will tell what really happens to Tesla long term.
Right now, Tesla is neither a genuine success, nor is Tesla a genuine failure.
Right now, Tesla is merely in purgatory - for those who don't know, purgatory is an intermediate state - the final destination yet to be determined...
.

SW17LS

A lot of people who were buying the Model S are now buying the Model 3

Pretty clear that Tesla is in fact a success lol. They’ve had a huge impact on the automotive landscape. It’s like saying Uber isn’t a success because they aren’t profitable. Uber has revolutionized urban transport.

For instance, it took Amazon 7 years after their IPO before they ever showed a profit, and they’ve had years of big losses since then also.