Navigating Difficult Times: How Tesla is Taking Steps Towards Direct Sales and Leasing
Tesla direct sales feedback
Tesla has been making headlines recently due to reports of a 20% reduction in production, shift hours from 11 down to 9, and significant discounts in China for buying inventory vehicles. This suggests that Tesla has finer, faster insights and adjusts as needed for the new reality.
In the US, sales are declining due to a combined factor of incoming EV credits and the fact that sales in general usually slow down around the Dec/Jan/Feb timeframe. Most dealers start to discount their vehicles around those times to spur sales and Tesla’s price hikes the last year are due for reversal to continue sales going.
A visit to tesla.com reveals an abundance of Model 3's and Model Y's in inventory for immediate sale with $3750 discount. Despite this, the glut of cars remains. Possible explanations include tax credit anticipation, interest rates, customer service dissatisfaction, and more new EV choices available at lower prices than M3 and MY.
It appears that Tesla is still competing against ICE and with gas prices back down, people don't feel the pressure to switch to EV any more. The high cost of Model Y is also a deterrent. Tesla is still making ~$9k on every Model Y sold which is not a "problem" for them as long as they can keep selling the cars at these price points.
The forthcoming introduction of the new federal rebate may help move inventory before the end of the year but it remains to be seen if it will be enough. If Tesla had a marketing dept., they could reach out to anyone whose order was cancelled in past 90 days and offer them the $3750 deal.
Overall, the entire market has dropped over the past year including TSLA which has gone from $339.01 to $179.05 (47% drop). With 1177 total cars available within 200 miles of Bob Wilson, 50 MY's and 34 M3's, this is significantly higher than a week ago. Elon Musk has said he won't be selling any TSLA stock for at least 2 years so Bob Wilson is holding until it's at least $800/share expecting that margins on all cars will double by mid February.
Tesla has been making some changes to their sales process and it appears that they are trying to move away from the traditional dealership model. They have opened up a few Tesla stores in select locations and are offering direct sales of cars online. This could be a great way for them to cut costs and increase efficiency, but it remains to be seen if this will be successful.
Tesla has also recently announced that they will be introducing a new leasing program which could help spur sales. This could be a great way for people who don't want to commit to buying a car outright to get into an EV. It could also help Tesla move more inventory as people may be more likely to lease than buy.
Overall, Tesla is facing some difficult times right now with declining sales and high inventory levels. However, they appear to be taking steps to address these issues and hopefully they will be able to turn things around soon. With the introduction of new incentives, leasing programs, and direct sales, Tesla may be able to get back on track and continue their success in the EV market.
What reports have been seen regarding Tesla?
Reports include a 20% reduction in production, shift hours from 11 down to 9, and significant discounts in China for buying inventory vehicles.
Is this specific to Tesla or the US as well?
This is applicable to both Tesla and the US. In the US, sales are declining due to a combination of incoming EV credits and the fact that sales usually slow down around December, January, and February.
Why is there a glut of cars on the market?
Possible reasons for the glut include waiting for the tax credit in January, interest rates, past owners fed up with customer service declining to go forward with their next Tesla, and more new EV choices available at lower prices than the Model 3 and Model Y.
Is it a price problem?
It could be a price problem as Tesla is still competing against ICE vehicles and with gas prices back down, people don't feel the pressure to switch to EVs. The Model Y is priced too high compared to other SUVs with more luxury features.
How much profit does Tesla make on each Model Y sold?
Tesla makes approximately $9k on every Model Y sold.
What will help move inventory before the end of the year?
A $7500 tax credit will help move inventory before the end of the year. Additionally, if Tesla had a marketing department they could reach out to anyone whose order was cancelled in the past 90 days and offer them a $3750 discount to reinstate their order.
What is expected for TSLA stock by mid-February?
It is expected that TSLA stock will double by mid-February due to higher margins on all cars, EVs, PHEVs, and ICE vehicles, as well as transitioning factories from empty fields to higher production rate. The only risk is whether Elon decides to sell TSLA stock to subsidize his Twitter hobby.