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Is Tesla A Game Changer?

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    Well Tesla doesn't sell very many cars. GM and Ford lose more cars in shipping than Tesla sells. Ferrari also pre-sells all their cars and they sell what?...3X as many? And unlike Tesla, they make a profit on each one. And yes, with dealers. In fact, Ferrari is quite interesting---they consciously cut production while raising overall profits. Neat hat trick.

    I think the franchise issue is too big a cookie for Tesla to bite into---the company has the money for a long dragged out battle but dealers are not going to lay down like newspapers did for Craigslist. Car dealers generate about 780 Billion dollars---and a lot of that is tax revenue for states.

    So fighting legal battles in all 50 states (well, except for NY and MASS, where they can sell direct)...that's a bloody uphill fight, and not likely to come out well for Tesla.

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  • hpmctorquehpmctorque Posts: 4,205

    By restricting supply Ferrari can keep prices high without discounting, thereby optimizing overall profits.

    Regarding direct distribution versus franchised dealers, one important difference between Ferrari and Tesla is that, from what I understand, Teslas require much less maintenance than Ferraris, and maybe fewer repairs too. If these assumptions are correct Ferrari owners derive more benefits (and expenses) from dealers than Tesla owners would.

    I think the jury is still out regarding whether Tesla will be able to continue bypassing the franchised dealer system in most states. Musk has said that he'll take this legal battle all the way to the Supreme Court, if necessary. Assuming that Supreme Court judges advocate for the consumer instead of dealership interests, and they can't be bought off, Tesla has a better chance of prevailing in court than through state politicians.

    Incidentally, I (unfortunately) don't own Tesla stock, so I have no skin in the game. Also, although I've never driven a EV, much less a Tesla, I'd choose a conventional luxury car over a Model S. However, I think it's really neat that an American car and car company can generate as much excitement and promise as Tesla does. Think of what EVs could do for our energy independence, our balance of trade, and our geopolitical position if Tesla and other EVs (such as mail delivery trucks, UPS trucks and other local delivery trucks, etc.) could use domestically produced battery power instead of gasoline or diesel fuel.

  • steverstever Viva Las CrucesPosts: 40,803

    "Sooner or later, almost every state will have to allow Tesla to sell cars directly” because consumers want that option, said Trip Chowdhry of Global Equities Research of Redwood Shores, Calif."

    Will NM law affect chances of getting Tesla battery factory? (abqjournal.com)

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    I don't think the Supreme Court will touch it--this is a states' rights issue. And besides, you were expecting a consumer-friendly verdict from a group of 9 madcaps who thought that corporations were people? Hah!

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  • hpmctorquehpmctorque Posts: 4,205

    I think Musk is on a mission to change the way cars may be sold, either directly or exclusively through the "it's the way it's always been done" authorized dealer system. being a billionaire he has the luxury of not yielding easily, and the resources to put up a good fight. Polls suggest that most people hope he'll prevail.

  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    That doesn't mean it's a good idea. The interesting thing about change is that it often changes things in ways you really didn't want.

    YAY--let's buy everything from Amazon......HEY, what happened to my local bookstore/coffee shop where I used to hang out and drink coffee and meet authors? HEY!

    YAY--let's buy all our tires at a great price from Costco-----HEY, where's Mike's tire shop--it's Saturday and I have a flat....

    The reason people think this is a good idea is probably because everybody hates car dealers. But then, most people don't like lawyers (present company excepted), and yet when you are sued, you need one.

    AH WELL....

    if Tesla goes belly up, you can always do THIS to it:

    http://www.detroitnews.com/article/20140114/AUTO04/301140110

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  • steverstever Viva Las CrucesPosts: 40,803

    lol, and for $200k, maybe Bob can throw in one of those electric bikes he was hawking a few years back. Probably has a few hundred stashed in an old Packard warehouse in Detroit somewhere. :D

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    I think Lutz's idea is kinda dumb from a business point of view (he's a great car guy but he has some very goofy beliefs about the world), but I am pleased that some Karmas will be preserved and not scrapped when their batteries go south. They are lovely cars I think.

    Hey, I had an electric bike and it was pretty cool---until the battery ran out (about 9 miles if you pedaled alot)--they you had to pedal home on a bike that felt like it had lead wheels.

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  • hpmctorquehpmctorque Posts: 4,205

    @MrShift@Edmunds said: That doesn't mean it's a good idea. The interesting thing about change is that it often changes things in ways you really didn't want.

    YAY--let's buy everything from Amazon......HEY, what happened to my local bookstore/coffee shop where I used to hang out and drink coffee and meet authors? HEY!

    YAY--let's buy all our tires at a great price from Costco-----HEY, where's Mike's tire shop--it's Saturday and I have a flat....

    The reason people think this is a good idea is probably because everybody hates car dealers. But then, most people don't like lawyers (present company excepted), and yet when you are sued, you need one.

    AH WELL....

    if Tesla goes belly up, you can always do THIS to it:

    http://www.detroitnews.com/article/20140114/AUTO04/301140110

    The idea isn't "let's all do this or that. It's about choice; letting companies, consumers and the marketplace decide which distribution system is best for their particular circumstance, rather than politically connected special interest groups.

  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    That presumes that the consumer makes the best decisions--which is a very heady presumption.

    Tesla is just as much a "special interest group" as any other you can name. They are not here to benefit mankind. They are here to make money. And they need to be watched and regulated just like anyone else.

    It's not a fair trade issue IMO. Tesla can compete with dealerships from any other car company in any other state. They have the money and a good product---so what's their beef?

    I mean, THEY decided to go into the car business. Is this all a suprise to Tesla? He didn't go into aerospace before checking if he could legally launch rockets, did he?

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  • fintailfintail Posts: 33,788

    I don't know if Musk's money can fight the combined money of several states worth of dealer groups - many of them ran by very rich men as well.

    Maybe the cause will be helped if/when he unveils a more mass market product. The S is still pretty much a rich man's toy, and that might not help gain public sympathy for 2%ers being forced to purchase through the same old middleman system.

  • steverstever Viva Las CrucesPosts: 40,803

    From the twitterverse:

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    Capture.JPG 35.8K
  • hpmctorquehpmctorque Posts: 4,205

    @MrShift@Edmunds said: That presumes that the consumer makes the best decisions--which is a very heady presumption.

    _Then who makes the best decisions? _

    Tesla is just as much a "special interest group" as any other you can name. They are not here to benefit mankind. They are here to make money. And they need to be watched and regulated just like anyone else.

    _I agree, but that's not the issue. The issue is whether a car company should have the right to choose whether it can distribute its vehicles directly or is compelled to go through an authorized franchised dealer system. Polls show that the majority of consumers (who also happen to be voters) favor the former. A company that wants to use some combination of direct sales and sales through authorized stores, as Dell Computer currently does, should be able to do that too. Wouldn't you agree that old laws that were legislated decades ago, under very different circumstances, shouldn't prohibit this flexibility? _

    It's not a fair trade issue IMO. Tesla can compete with dealerships from any other car company in any other state. They have the money and a good product---so what's their beef?

    **_Tesla can compete, but not in a way that it believes would give its customers a better value proposition than the established "this is the way it's always been done" system. Shouldn't innovation, whether in distribution, marketing or product be encouraged rather than suppressed?

    I mean, THEY decided to go into the car business. Is this all a surprise to Tesla? He didn't go into aerospace before checking if he could legally launch rockets, did he?

    _ I believe the issue is how the system can be improved, rather than preservation of the "take it or leave it" status quo._

    Finally, my responses may suggest that I'm not in favor of states' rights. I believe in states rights, but I think that in this case the Christie Administration, while acting legally, didn't act responsibly.

  • hpmctorquehpmctorque Posts: 4,205

    @Stever@Edmunds said: From the twitterverse:..

    It'll be interesting to evaluate Tesla sales before and after April 1.

    My guess is that some people in NJ who are on the fence regarding when to buy a new Tesla will buy this month. Others may be rattled enough to forgo buying a Tesla altogether.

  • steverstever Viva Las CrucesPosts: 40,803

    Wouldn't it be fun to look at some of Jersey's government computer purchases? What if they were sourced from Dell, direct. Now imagine you are a Dell reseller who got cut out of the loop. Time to sue. (My guess is that Dell throws their "value added resellers" a bone in cases like this but maybe not).

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018
    edited March 15

    I can't imagine "voters" would give a fat fig for how Tesla does business. You were expecting street demonstrations about how to "Save Our Billionaires"? :)

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  • steverstever Viva Las CrucesPosts: 40,803

    "The ability to repair a car via software is especially important when the vehicle itself consists of so much new technology that traditional mechanics don’t know how to fix. The flip side is that without an internal combustion engine, there’s not as much to fix. I’ve written before that a Tesla without its outer shell looks like a cell phone on wheels. It’s basically just a big battery. That means no spark plugs, no air filters, no fuel pumps, no timing belts. In short, Teslas don’t have any of the parts that force you to take your car in for “regularly scheduled maintenance” — services that can cost dearly at the dealer. But it’s hard to charge for an oil change when there’s no oil to be changed."

    Car Dealers Are Terrified of Tesla’s Plan to Eliminate Oil Changes (Wired)

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    more pixie dust, this time WIRED pixie dust, a most potent brand of PD...remember when they touted that a diesel car needs much less maintenance?...what they meant was, it needs DIFFERENT maintenance. So, too, with an EV. Perhaps it's true with a car like that, that there is less to "go wrong"...BUT...when it DOES go wrong, it's probably going to be catastrophic.

    Ever try to fix your flat screen TV, or dig down deep into your laptop? No, you go buy another one.

    Diagnostics are helpful but they have limitations. There's not a diagnostic tool in the world today that I'm aware of anyway, that will tell you with 100% assurance what the exact component failure is.

    I will say though that WIRED is right on about one thing---without oil changes, there's less opportunity to oversell you.

    Now, once you're out of warranty on your EV, instead of having had your credit card pecked away at during every 'service interval", you'll just go in and be hit with one monstrous bill.

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  • steverstever Viva Las CrucesPosts: 40,803
    edited March 16

    Well, yeah Joe. I replaced the hard drive on my other laptop by upgrading to an SSD. I've removed the keyboards on a few laptops to blow out the dust and to try to fix a sticky key.

    I replaced the "caps" on one of my cheapo monitors that died and it's still working two years later.

    All I do on my electric mower is sharpen or replace the blade now and then.

    And I'm not particularly handy. Certainly nowhere near as mechanically inclined as you.

    Take an easy example. A TPMS can tell you which tire is low, depending on the quality of the sensor system installed. It won't tell you where the leak is but you'd have to take the tire off to fix it anyway. More of that is coming.

    Lots of updates came with the recent software update on Edmunds' long term tester. "The key thing here is new ideas and feature improvements can be pushed out to existing cars as bright ideas are conceived and customer feedback makes its way back to Tesla."

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    Not the same thing. A laptop is not an entire car and you can either take it to a repair shop, or if that SSD drive cost more than your laptop, you just junk it and buy another one for $750 bucks.

    No way you, or I, or even the most clever DIY person, is going to remove the guts in his Tesla in his garage.

    When the electronics on an EV go south, the car stops and you have NO CHOICE but to fix it, no matter what it costs, because you're in the hole $80K.

    I remember reading a study, quite sobering, that calculated the time in business offices wasted to get fussy electronics to work, vs. the "time saved" by the device itself.

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  • steverstever Viva Las CrucesPosts: 40,803
    edited March 16

    If my transmission goes, I don't have any choice about fixing it either. Last I looked, transmissions were full of sensors - aka electrical gizmos.

    It'll be just like the laptop - get towed to the repair shop.

    Although, if I call OnStar or Tesla, they may be able to remotely reboot the system and at the least get me into limp mode.

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    Well maybe, but we knuckeheads are not going to be taking our Teslas apart to fix them.

    Telsas have plenty of parts that need service---brakes, suspension, lights, glass, wipers, tires, washing, waxing, upholstery cleaning, weatherstripping, bodywork, paintwork. It's hardly a care-free thing to own.

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  • isellhondasisellhondas Issaquah WashingtonPosts: 17,741
    edited March 16

    Saw THREE Teslas just yesterday in my neighborhood!

    I still don't get it!

    We may see the day when traditional brick and morter businesses go the way of the dinosaur.

    Consumers think that buying new cars direct is a "good thing". No greedy dealers that just might make some evil profit. Yep, they may someday just buy direct and pay full MSRP!

    Recently a landmark bookstore in my hometown closed it's doors after over 100 years. The oldest independent book store in the Los Angeles area.

    A kid I went to kindergarden and his 95 year old mother finally had to close unable to pay the rent.

    They somehow managed to survive Barnes and Noble, Borders, Amazon and others by providing PERSONAL SERVICE to their loyal clients. Finally the Kindles and Amazon spelled doom for them and Williams Book Store is no more.

    I guess it's true...All things must pass.

  • steverstever Viva Las CrucesPosts: 40,803
    edited March 17

    @MrShift@Edmunds said: Telsas have plenty of parts that need service---brakes, suspension, lights, glass, wipers, tires, washing, waxing, upholstery cleaning, weatherstripping, bodywork, paintwork.

    Yeah, but all cars need that stuff. But no oil changes or "tune-ups" (other than the automatic software updates) would be nice.

    @isellhondas, as the independent booksellers (and other stores go away), prices will go up. People are already complaining about the increase in book prices from Amazon and they also complain that they can't find the book they want to read for sale anywhere else.

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    I don't think 10,000 mile oil changes and 100,000 tune-ups are that much of a burden to the average driver.

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  • steverstever Viva Las CrucesPosts: 40,803

    Well, we bugged out of town at the last minute last week and my usual guy didn't have time to squeeze me in for an oil change (I was at 8k, just a bit overdue, but still wanted to do the oil before we left town so I wouldn't have to mess with it on the road).

    Okay I usually do them myself anyway. But not when my garage is around 14°F as it was the other day. Then the road salt and crud had welded the filter on tight and I had to mess with that flat on my back off and on for a good 30 minutes, since I lost my filter wrench. I think I've done my last one of those, whether I ever get an EV or not. Nasty job in a home garage.

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  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    I always said that an oil change is the one job where I am so happy to pay someone else to do it. Well, that and the Roto Rooter guy. I always feel I got my money's worth.

    synthetic oil, factory filter, new oil plug (mandatory) blow out air filter, computer scan, rotate the tires, check the oil, check the coolant, check the brake fluid, look around underneath, check the brake wear, wiggle the exhaust, fill the washer fluid, wash the car and vacuum---BOOM! $110 bucks out the door!

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  • fintailfintail Posts: 33,788

    Funny, I have no childhood memory of my dad ever taking a car in for an oil change. He always did it himself, even if it made a mess and could be annoying with difficult to reach parts. I think he got some kind of sense of accomplishment or maybe even relaxation out of it, like people get from gardening or cleaning a car.

    I have no desire to do it myself. No real place to do it, and the mess is a pain.

  • hpmctorquehpmctorque Posts: 4,205

    "Will Ford Sell Cars For Tesla?"

    A ****24/7 Wall St.**** blog suggests that this arrangement might make a good fit. The reasoning is that while the Lincoln brand is struggling to reestablish itself in the premium market, and sales are sluggish, Tesla is allegedly selling all the Model S cars it can make. If Tesla should succumb to distributing its cars through an authorized dealer network, it could make sense to team up with Ford through its Lincoln dealers. The two premium brands could share the expenses of the dealerships, thereby lowering costs for both. They models wouldn't compete directly because the target markets of the two vehicle lines are very different.

    This sounds a little crazy at first thought. Of course, there would be tradeoffs, but the net result might make sense for Ford and Tesla, at least for a few years. Each company would remain independent, other than for this dealer sharing arrangement.

    Your thoughts?

  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 45,018

    Tesla needs a dealer network or the buyer is screwed. Who is going to service these cars, or answer complaints and do warranty work? Would you really want to have to call General Motors to complain about something? Factory service centers? How many could Tesla afford to equip and man? What about the highly profitable used car market?

    The business model of direct sales makes no sense!

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