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Published on October 28th, 2018 |
by Loren McDonald
October 28th, 2018 by Loren McDonald
If you're a fan and supporter of Tesla, you probably believe that the least of the company is asking for its products. Rather, scaling up production is the main issue that you think of between the company and profitability.
If you are a Tesla hater or short seller, however, you believe that the dozens and dozens of issues and challenges are the most important issues for the Model 3, S, and X. You might cite declining Tesla sales in China, Norway, and some other European countries. Jaguar I-PACE is outselling both the Model X and Model S.
You would probably also raise the phase of the US tax credit that begins January 1, 2019, unless extended. And you'd certainly be sure that it's going to be in the world in the remainder of 2018 and in 2019, including the Hyundai Kona BEV, Kia Niro BEV, Jaguar I-PACE, and Audi e-tron.
And clearly, the phase of the federal tax credit Tesla has to be at the top of its game. But if your core argument against Tesla is declining demand for the Model 3, you would be both correct and completely off base, ignoring the obvious.
To date, Tesla has only sold its most expensive versions of the Model 3 and in only 2 countries, the US and Canada. The higher priced versions and limited availability$ 50,000-80,000 because it is not unlimited.
If we look at 2017 sales for Tesla 's German auto competitors, we' re looking at their size, pricing and sales volume. The smaller sedans (A4, 3 Series, and C-Class) cost roughly half the price of their larger sister sedans (A8, 7 Series, and S-Class), but sell at 5 to even 10+ times volume. And so, while not a perfect analogy, The Simple Fact for a Dual-Motor All-Wheel-Drive Model 3 Performance at a base price of $ 65,000 has a much smaller market than, say, the mid-range version at $ 46,000.
In other words, no one should be surprised or hit the panic button if Tesla starts making moves to increase sales of Model 3, including being creative with new versions and various incentives. I expect the Mid Range Model to be extremely successful, attracting both people who have been waiting for the $ 35,000 short range version.
Tesla's Structural and Organizational Advantages Enable It To Move Quickly
While Tesla can be tapped out of the market in the US and Canada for the Model 3, it has many applications to increase sales.
- The constant buzz and awareness of the company and the results of Elon Musk CEO Elon Musk.
- The apparent lower cost of Tesla's battery packs.
- It's vast Supercharger and Destination Charger networks.
- It is a direct sales approach rather than a complete process of delivery, which means that it has complete control and flexibility over all aspects of the customer, delivery, and service process. (Note: Obviously, this approach also has many disadvantages for the company, incurring additional costs and challenges in delivering vehicles to customers and fixing them. very quickly.)
- CEO Elon Musk. This centralized power and decision-making process is one of the most important things in the world.
- And that leads to the final point, which is the topic of this article – the ability of the company to pull on multiple levers when and how it sees fit.
Demand Levers: The Art of The Possible
As we have seen the new Mid Range Model 3 priced at $ 45,000 and with 260 miles of range, it seems that this model is coming out of this model. It is a perfect example of both the swiftness and magnitude of a change that can make to increase sales.
While Tesla shorts and haters will be responsible for the Model 3, it also proves that they do not like to admit. Because of the above factors, Tesla can almost certainly have a multitude of demands.
Now, depending on your bias, you may be interested in this issue, and you may also be interested in "playing games," as "the desperate signs of an unprofitable company," and "things that would not be easy". 't need to do. "You might argue that in some cases they are just some of the things that are important to you.
But the fact is, Tesla is not a 100 year old company with a fleet of ICE models to prop it up. It is in fact a 15 year old upstart that is in survival mode and trying to reach stability and profitability. Therefore, it should and should leverage various approaches to increasing demand as needed.
Let's look at several of these questions
Range / Energy-Limiting Software: Tesla has taken this approach twice, by limiting the power of battery packs via software. The Model S 40 and 60 actually had software-limited 60kWh and 75kWh battery packs, respectively, but those could be upgraded at any time. With the help of this software-limited approach, the Tesla can attract buyers who like the option of being able to add to the future if desired.
New Battery Pack Variations: Tesla has just been shown with the announcement of the Mid Range Model 3, it is able to bring this version to market by simply getting smaller cells in the battery pack. From a cost perspective, this seems to be a much better approach for testing software. Whether it is still in the future, but it is certainly an innovative approach.
Pricing / Packaging: The new Model 3 Mid Range is a perfect example of this, where it can create more unique features and options than certain buyer segments. They also get or keep Tesla in the news, in a positive way.
Geographic Expansion: While it can not happen overnight, Tesla has yet to enter markets like India that hold huge promise. In other more traditional markets, it can increase its supercharging network presence and showrooms to spur demand. Just one of many examples, Poland, the Czech Republic, Slovakia, and Hungary each have several Superchargers, have a long waitlist of Model 3 reservation holders, and yet none of them have a Tesla store or service center.
leasing: Currently, the Model is only available for purchase with cash or a bank loan. Most EVs are leased, however, as 80% of non-Tesla EVs are financed via leasing rather than a purchase. Once Tesla makes leasing available, it will open up to a huge market of buyers who will prefer to lease an EV versus buy. As you can see in the screenshots below, the S Model 75D monthly lease payment is roughly $ 120 less than the monthly loan payment.
Subscriptions: Tesla could offer a subscription service that includes the use of cost, insurance, registration fees, maintenance, charging, and access to other Tesla models. Someone opting for a Model 3 Standard Range could gain access to, for example, a Model X 100 with 335 miles of range to use a long road trip with the family.
While this approach could have a negative impact on the model, it could increase demand for the Model 3 as well as the model Y crossover. And while more complex, Tesla could also bundle in some combination of solar tiles and battery storage as part of the subscription.
Autopilot Pricing: Enhanced Autopilot or Full Self Driving Capability (not currently in the Design Studio) can be discounted for a limited period. Yes, this will make buyers who miss this window upset, and it will have a negative impact on margins. It is nonetheless an available sunrise.
Solar Roof Tiles / Powerwalls: Particularly in markets like California, Tesla could create compelling packages if a customer opts for both a car and Powerwall and / or solar panels / tiles.
Free / Discounted Wall Charger: The Tesla Wall Charger costs $ 500. Provided for free or highly discounted, it would certainly be a simple incentive to attract buyers,
Supercharger Pricing: Tesla has already used various pricing tactics around Supercharging, but it can not be easier to download Supercharger access as an enticement to new buyers.
Referral Programs: Tesla often tinkers with its referral program $ 100 Supercharger credits and innovative prizes, and then also offering five friends 6 months of free Supercharger access.
Maintenance / Extended Service Contracts: Tesla offers 3 and 4 year maintenance programs and 2 and 4 year extended service contracts that could be offered for sale and / or blended into the lease.
Fleet Sales: In 2017, Tesla launched its corporate fleet sales program, but it does not appear to be much more important. The company could, however, continue to take advantage of Model 3's aggressive approach with the strategy of gaining scale that can lead to better margins on higher-priced versions.
Federal EV Tax Credit "Matching": While the federal tax credit is just that – Tesla sale reps could be authorized to offer upgrades for free or at discounts to customers.
Now, many of you are saying that all of these approaches are simply taking place. True on the first part, but the higher scale of producing and selling more vehicles – especially the Model 3 – may ultimately help the company achieve profitability and make more profits in the long term.
Secondly, legacy automakers take similar approaches to discounts and incentives all the time. A quick Google search of "auto dealer incentives"Several sites that show the latest incentives from automakers. Peruse this US News & World Report's Best Car Deals Nissan LEAF. Here are just 4 examples:
BEV SUVs / crossovers coming to market, Tesla will have its work at the highest level – especially for its most expensive models. But the influx of new competitive BEVs could also increase overall demand for EVs, including that of Tesla. Only time will tell.
Demand for the new mid-range and eventual standard-range Model 3 should be very strong until Tesla launches the Model Y. But if demand is less than for its higher-priced models, Tesla has a number of available options which are more difficult or impossible for competitors to match.
About the Author
Loren McDonald writes about the factors driving the adoption of electric vehicles and the opportunities and challenges of the transition to EVs and companies in the auto, utility, energy, retail and other industries. His research and content are published on CleanTechnica, his own blog / site, www.EVAdoption.com, and in his upcoming book "Gas Station Zero" on the huge shifts and changes in multiple industries driven by the transition to battery electric, autonomous shared vehicles.
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