EZZ

I don't understand the obsession with franchises dealerships. Tesla just has a different business model. They want to be like Apple and distribute their goods independently. They have the ability to do so now because of the ubiquity of the internet. The franchise dealerships solved a big issue when distribution and logistics were impossible for the auto manufacturers to do it alone. That was last century when that business model was established. Silly to adopt such an antiquated way of doing business.

Toys4RJill

Apple has company-owned stores, authorized reseller license stores, then there are all the regular retail stores that buy from Apple and then sell to the public. Costco wholesale also sells Apple stuff. I do not understand why Apple is always the comparison, they are nothing like Tesla.

EZZ

That is now. When Apple first launched the iPhone, it was the sole distributor of the phone. Then it partnered with AT&T, it allowed AT&T to sell the phone but AT&T took no profits and the majority of sales was through the Apple store. The comp is Apple in its early iPhone years. Elon wants to be Jobs

Toys4RJill

But that is just the iPhone, the first iphone was available at AT&T on opening day anyways. Many, many Apple products were sold through alternate vendors long before and after the iPhone.

Tesla's distribution methods should never be compared to Apple

I would rather have him try to be himself

EZZ

Well it's the closest comp because Apple having their own stores is unique in its industry. No one else really has this kind of leverage in the electronics industry. When Best Buy sells an iPhone, they make almost no margin. They do a lot better when they sell Samsung phones because Samsung doesn't have their own distribution channels so can't negotiate the same type of deals.

They are also similar in that they both pursue a verticalization strategy. They both want to own the entire value chain from components all the way to end user distribution.

Btw, the Apple comparison is used by many equity analysts that follow the stock. It's a well known comp.

mmarshall

From what I've seen, the same Apple products are less-expensive at the independent retail outlets. I bought my MacBook Air, for example, at a Best Buy store. You can't do that, though, with a Tesla...you usually buy direct from the company.

Toys4RJill

Apple products are available at many different places. My iPad, Mac, Apple Watch were all purchased (reluctantly) with price match from Best Buy. Apple does not manufacture, they use third party outsourcing. Apple, just like Tesla uses suppliers for many of their components. To get your stuff fixed, you do not have to go to an Apple store. So on and so forth.

What is comp about the two companies is that Tesla has and might have the unstoppable brand power in the future like Apple does.

Toys4RJill

You are correct. I agree with you.

situman

So in other words, the pool of buyers of Tesla products are not growing if you are saying Model 3 buyers are formerly Model S buyers. Secondly, I can't imagine why you would need a model 3 if you already have the Model S? I would tend to agree if someone have a Model X and want a smaller vehicle to runabout and get the Model 3 for that.

Ultimately, for any company to be successful it will have to eventually turn a profit, regardless of how revolutionary it is or how it changes the the industry. Investors will eventually want a return and will take their money elsewhere if they don't. No one, companies or investors, are in the business of losing money. Would you ever take a pay cut or pay to work because your company is "changing the industry."

situman

Ultimately, if a company wants to get their products out there, it will need some kind of dealer network. Apple vs Android is a perfect example. While the iPhone is big in the U.S., Android dominates as the mobile operating system in the entire world simply because Google allows other manufacturers to include the OS into their phones, spreading like roaches. Apple decided it wants to go at it alone and has less than 20% of the worldwide smartphone market. Apple could have been the dominant mobile OS platform if they let other manufacturers use their OS and simply charge a fee. But that's digressing from why Tesla is struggling and has no money to refresh its products.

EZZ

The comp is the verticalization strategy used by Apple and Tesla. They are the few companies on the planet that develop key components such as silicon, all the way to the actual build of their products. Apple and Foxconn co-develop the process to manufacture the iPhones (i'm in the industry). They both use suppliers for commoditized products but like to control key components to provide better user experience. They both own platforms (one in compute, the other EV) by offering the software, services, infrastructure, and ALL of the touchpoints related to the consumer. The only reason other products are sold in other outlets for Apple is for further reach but the vast majority of margins are kept by Apple. The other outlets barely make any money as Apple has immense pricing power. None of this matters as iPhone as iOS generate 90% of the value of the company so really, they are an iphone company. Tesla has modeled their business after Apple. Tesla's VP of design publicly stated that they mimic their stores after Apple.

They are not exactly the same as they sell different products but they take the same approach to monetization (and this is covered multiple times in analyst reports). I am not the genesis of this comparison...this is old and has been covered by the equity community for years. You may not think this is true, but there is a reason Tesla is valued as a tech company and not an auto company. Their very valuation is based on speculation that they can monetize an EV platform and not just cars (just like a tech company named....hmmm Apple)

https://www.investopedia.com/article...-different.asp

Toys4RJill

Toyota has vertical integration as well. So does many other manufacturers. Tesla uses third party suppliers just like everyone else.

For Apple, I remember them in the 70s, 80s and 90s and I remember them after they exploded. The very first Apple computers were made by Apple I believe. . Nothing special. Their products are OK, but their brand is very good.

I get everything you are saying. I like Tesla. Love the new 3 although they are way too expensive. My personal opinion is that consumers would be far better off with a traditional dealer models which would lead to lower and better prices and better services. I have been to the Tesla store, there is nothing about it that is better than a Mercedes or Lexus dealer. Just my thoughts. Competition is indeed coming which would put a significant strain on Tesla at some point

EZZ

The manufacturers in auto like Toyota don't have the most important touchpoint however....the consumer. The dealers interact with the customer and this BY FAR is the most important touchpoint to own. Tesla and Apple completely control the customer experience and this is why they are compared.

Apple is nothing especial except for their iPhone. That single product is more valuable than Toyota, VW, Ford, and GM put together. Most of Apples entire valuation is based on that one product but its a really good product and Apple makes sure they completely own that customer experience from retail to software to services. Tesla wants to be valued as a Tech company and not an auto company so they are chasing the Apple business model. The auto business is really really crappy and valuations stink in that world. Its not a surprise they are chasing EV as a platform vs. trying to just be an auto company.

LeX2K

Report to whom? Unless I have proof (video) what can be done? And even if there is video so what there have been many undercover stings nothing happens. If you're in Calgary I'll PM you the dealership(s) names.
You don't understand, the auto industry cannot have anything different. Unacceptable. Have to do everything the way it's been done for 100 years if not we must complain bitterly and predict doom and gloom from every angle. How dare Tesla try something new.

bitkahuna

iTrader: (20)

i've never bought apple products from anywhere other than apple's website. just like i can (and maybe one day will) buy a tesla.