Tesla: Go Fast and Break Things is Risky
I know Elon Must is a Silicon Valley type person, but is he being rational with distribution and price? Tesla announced in late February a plan to end all physical dealerships and move to an online-only distribution. Their justification: to reduce the price to the mythical $35,000. Is this smart?
Even if we ignore the likely legal ramifications related to empowered local dealerships and state-level legislation in the U.S., we have to ask if dealerships are useful in the first place. Without a salesperson to explain the vehicle, would you know what you are buying? Would you be as likely to buy? Tesla is saying “yes, customers are fine online only and no, dealerships aren’t needed any more”. (Ford, GM, Toyota, and Volkswagen US haven’t made that claim.) Do you believe Tesla is Right? Do you value seeing and touching a car before buying? Some don’t, but most do. How much market share do you think Tesla would forgo with this strategy? The shift may be coming, but you can’t force immediate cultural change as one company in a competitive marketplace.
And as for that mythical $35,000 price tag: is it researched that the market will suddenly accelerate purchases of a Tesla at that price over another? What was the incremental sales associated with the last two price cuts? Does a volume hurdle justify this choice?
I know “go fast and break things” is a known Silicon Valley mindset. But this mindset is also why Gov.com failed and Uber had to ditch a CEO. For Investors: Tesla is a $50 Billion bet on an unproven and unstable business. For Would-be Entrepreneurs: Elon demonstrates it doesn’t take a currently viable business to get investor’s money – only the promise of one in some distant future and a good set of friends. For Pricers: I believe you are watching a case study on the importance of pricing councils and researched/fact-based pricing decisions.
Learn more about Tim J. Smith, PhD and Wiglaf Pricing at wiglafpricing.com
I own a Model 3 long range AWD and it is way more than I expected. I thought I would be sacrificing something for using my wallet to vote for something besides polluting the air and water and pushing the true costs of fossil fuels off on the healthcare industry. Not only have I not had to sacrifice anything I have been pleasantly surprised by the engineering marvel this car really is. I is not flawless however it is the best quality, most fun to drive, easiest to maintain and most efficient and comfortable car I have ever driven by several levels of magnitude. It is light years beyond anything I have ever experienced. I am empowered by charging my car with the sun (I invested in a 7 K solar array before I purchased the car) and it is way easier and saves me more time than I imagined. I pull into my driveway take 3 seconds to plug it in then I wake up the next morning and it is fully charged to 320 miles if I so desire. I look for excuses to drive because it is so much fun.. I was in Seattle on location shooting recently and rented a brand new Subaru Outback and wow I forgot how badly an ICE engine performs and how much energy is wasted getting that power to the wheel and how long it takes to get it there. A total pig in comparison
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5 年Is brilliant but sloppy an option?