Roadster sales - Tesla business model profitable?

[James]

The math just doesn't work for Tesla when the backlog of deposits are caught up. Unless Tesla is bringing in 30 new deposits per week, which I doubt in this economy, they will be caught up by the end of 2009.

Lamborghini has 100 dealer locations as a sales channel for their 2,000 cars per year.

Ferrari has 200+ dealer locations as a sales channel for their 6,000+ cars per year.

Tesla has 2 dealer locations and perhaps a handful of new locations planned for 2009. I think between 6 to 8 locations are in the works for Miami, New York, Chicago, Seattle, and the two existing locations in California. There will likely be a couple in Europe.

So my question is, how does Tesla maintain that momentum (30 to 40 per week) with such a limited sales channel of locations? Lamborghini has 100 dealers they can send cars to. Ferrari has 200 dealers to handle this. These dealers each have their own floor financing to buy cars and have on the showroom. So Lamborghini and Ferrari are already paid when the cars ship to their dealers. The dealers carry most of the risk of unsold inventory. The dealers have the carrying costs of financing their floor inventory.

Tesla is not building that model. Tesla owns the sales locations. Tesla could get buried in unsold inventory VERY quickly.

In Seattle (Sept 2008), Darryl Siry mentioned that a sales location won't make sense with only the Tesla Roadster. They also need the Model S to have enough volume for a showroom location to make sense financially. But that was before the Model S was delayed even further and before the $9 million in the bank crisis. Also they did not raise the $100 million they were expecting and the IPO market died.

So here is my question (Siry?). Have they even thought this far in advance? How does Tesla plan to handle this in late 2009 when the backlog is caught up? There is no dealer sales channel to share the risk of inventory carrying costs. And there is no Model S that can justify the costs of Tesla going solo and building dealer showrooms.

I think Tesla will need partners to expand their sales channel quickly. I believe that Tesla will have to find local dealers in all of the major cities and allow them to sell the Roadster as part of their inventory.

You read it here first.

[graham]

You are not wrong... But I don't know that that is the whole picture either.

The Roadster is not where Tesla has its sights. The Model S will really be where it is at. They plan to sell around 10 times the number of Model S cars as the Roadster. That will justify their sales channel, when it comes to pass. However, you are very correct - the delay in the Model S means they have a lot of overhead to bridge until it comes out.

For the immediate term and possibly intermediate term, I believe they plan to have in-store "inventory" of the Roadsters be the VPs. Even after they get through their backlog, I expect the majority of their Roadster sales to be build to order. The Model S, they will need inventory, but before that is out, I expect the "sales" offices to not carry much inventory that is not either a not-for-sale VP, or an already-sold car.

I am assuming until the Model S comes out all of the "sales" offices will really be service centers which happen to showcase a few cars.

They will also be supplementing their revenue with the drive train business and the BlueStar eventually. Those will both be with partners where they do not need a sales office - but will, in effect, be able to help shore up the sales/service centers as showcases for their technology and brand.

[Kardax]

You're assuming that Tesla's current sales rate will remain flat as they work through their backlog and increase production rates.

That seems very unlikely to me. I think it's genuinely possible that demand will "snowball" as more and more rich Tesla owners are giving their rich friends rides.

I think the biggest thing holding Tesla back right now is the delay between order and delivery... 12 months is a very long time to wait for a product from a young company. Shortening that delay could lead to quite a boost in sales, especially as you get closer to an "impulse buy" time frame. After that, I agree that a lack of sales facilities is a limitation; they could sell a lot more if they could offer more test drives... but this is relatively easy to fix.

-Ryan

[WarpedOne]

Shortening that delay could lead to quite a boost in sales
But there is only one way of doing this and it tops out at 40 new cars produced per week. They are almost half way there. Delay will always be there, if not it would only mean there is no demand.

[Kardax]

But there is only one way of doing this and it tops out at 40 new cars produced per week. They are almost half way there.
Reaching the limit of Lotus's production capability would be a nice problem to have :)

-Ryan

[doug]

From this weekend's Chronicle:

Electric car startup downshifts for rough road - SFGate.com (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/27/BUA914SOEM.DTL)


And because the roadster costs $109,000, the company only has to sell about 1,000 per year to break even, Musk said.

[Cobos]

And I'm pretty sure, when they get their European shops/service centers up and running selling 1000 a year shouldn't be that hard, how many Vipers are sold each year? And that from a producer with as uncertain a future as Tesla at least.

Cobos

[dpeilow]

The factory project wasn't abandoned, but Musk says it's no longer a done deal.


So they could possibly end up outsourcing the manufacturing of Model S, like Fisker did? That would be a way to get the car into production without having the access to capital needed for a factory.

[dpeilow]

O'Brien: Nine predictions for Silicon Valley in 2009 (http://www.mercurynews.com/vc/ci_11304174?nclick_check=1)


7 Tesla will turn off the lights. Here's the biggest exception to the green revolution trend. Tesla is a bold, ambitious idea that is going to get squashed by the economic tidal wave. Someone is going to figure out how to turn electric cars into a viable business, and it won't be anyone working in Detroit.
Unfortunately, it won't be Tesla, either, because the San Carlos company will get lost in the shuffle as the government bails out the old automakers.

[Cobos]

I'd hope not as I'm pretty sure there is money to be made in building the car. Money I'd rather see Tesla get than some external contractor. Especially since that kind of deal will make the margins smaller on the Model S, and I want it cheap when the competition hits. Not Tesla going belly up.

Cobos

[dpeilow]

Yes, but it may be a way to get market quicker (which they need to do). Then when things pick up again (and the product is a proven winner), they can raise the money to build the factory and move production in house.

[doug]

Yes, but it may be a way to get market quicker (which they need to do). Then when things pick up again (and the product is a proven winner), they can raise the money to build the factory and move production in house.
Perhaps then model #3 (which was announced to be built by a 3rd party) will arrive before model #2. I would like to see them go ahead with the central campus and factory in San Jose, at least when the time is right. If Tesla is ever to become more than a minor player, at some point they'll have to do their own manufacturing.

The success of model #3, however, is likely predicated on battery advances (including lower cost) expected in the next few years, and the establishment of Tesla as a brand (through the success of model #2 (Model S)).

[vfx]

how many Vipers are sold each year?

If anyone finds out, then post it here http://www.teslamotorsclub.com/tesla-motors/485-milestones-compared-other-car-startups.html

[TEG]

...how many Vipers are sold each year?

Dodge Viper's Dubious Honor: Most Expensive Car To Repair (http://www.theweeklydriver.com/blogs/56/Dodge-Vipers-Dubious-Honor-Most-Expensive-Car-To-Repair.html):


...a Dodge spokesperson said the brand makes only 1,500 Vipers per year with a starting price of $84,460...

[graham]

I hope Chris O'Brien is wrong in these predictions (personally, especially the Tesla and Apple ones).

Here is a different link if dpeilow's is not working properly for you:

http://www.mercurynews.com/vc/ci_11304174

[vfx]

Tool








!

[graham]

And because the roadster costs $109,000, the company only has to sell about 1,000 per year to break even, Musk said.

1000 a year is around 20/week (more assuming the line won't run every week) which is still slightly higher than they are producing today. In theory there would be a ramp up to their 30 or 40/week to get rid of the backlog, and then they would have to back off to 20/week if only that minimum goal were achieved.

[rsquared99]

Had the 1000 Roadsters a year figure to break even been mentioned before? I know there was some discussion a couple of days ago on one of these threads discussing the number.

[vfx]

From this weekend's Chronicle:

Electric car startup downshifts for rough road - SFGate.com (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/27/BUA914SOEM.DTL)

Some "expert" a long time ago said that Tesla would not sell more than 2000 cars a year. Now that seems like a very reasonable number.

[WarpedOne]

Unfortunately, it won't be Tesla, either, because the San Carlos company will get lost in the shuffle as the government bails out the old automakers.

I don't get this. Tesla needs bailout money just to survive? I don't think so.
Last I heard they only need to sell 1000 roadster per year to survive. Analytics ...

[graham]

I don't get this. Tesla needs bailout money just to survive? I don't think so.
Last I heard they only need to sell 1000 roadster per year to survive. Analytics ...

It is true that Tesla has not needed to be "bailed out" like the other manufacturers. And with current funding, I seriously doubt Tesla will go under in 2009. But 1000 Roadsters a year is still a large increase in sales from where they are right now. It may be difficult to increase sales 40% at a time everyone else is decreasing sales by 40%.

[WarpedOne]

Tesla needs to sell worldwide and there should not be any problem finding 1000 buyers per year. Make righthand drive version for UK, AUS and Japan and sell there also.

Don't forget everyone is not always really everyone. I doub't Ferrari is seeing 40% drop in sells.

[dpeilow]

Maybe they are...

Mama Mia! Ferrari Will Reportedly Cut Jobs as Global Economy Worsens | Automotive News Blog - Wide Open Throttle (http://wot.motortrend.com/6380563/auto-news/mama-mia-ferrari-will-reportedly-cut-jobs-as-global-economy-worsens/index.html)

[malcolm]

Ouch

Only 92 Ferraris sold worldwide back in November. But I can see the Roadster continuing to be the must-have "gadget" for 2009.

The slow ramp-up has helped in that Tesla are still able to sell everything they make. Do the orders currently stand at something like 1600? Any increase on this?

There was talk of a righthand version, but I would expect that this is now postponed. Likewise the redesign of the car's instrument panel and VDS.

[graham]

The slow ramp-up has helped in that Tesla are still able to sell everything they make. Do the orders currently stand at something like 1600? Any increase on this?
We have heard no official updates on this. However, the plan was to make 600 2008 and 600 2009, then start taking orders on 2010. I have not heard that they are taking 2010 orders yet. And as of a few weeks ago, you could still buy a 2008 slot. So my guess is they are still under 1200 total.

[James]

We have heard no official updates on this. However, the plan was to make 600 2008 and 600 2009, then start taking orders on 2010. I have not heard that they are taking 2010 orders yet. And as of a few weeks ago, you could still buy a 2008 slot. So my guess is they are still under 1200 total.

I think they have had a few requests for refunds of deposits. With the financial crisis, if someone needed $60,000 quickly to cover their margin calls or short term cash crunch for a business, cancelling the Tesla Roadster order would be very high on the list of cuts.

I am sure that Tesla is still selling Roadsters and taking deposits.
But are they selling at the rate of current production? 15 per week?
Or is the backlog shrinking?

If they are production 15 per week and scaling up to production of 30 per week, but at the same time they are only selling 10 per week, that works out to a big problem by early 2010.

[Cobos]

Not necissarily. They might se a pretty big boost in sales when the financial crisis settles down and you can get the car within a month or two instead of waiting an unknown amount of time. That's a scary risk to take,but I suppose they've got some projections. In Norway when you buy a car waiting 1-3 months is standard. Unless you are buying a discounted car that someone usually cancelled at the last minute.

Cobos

[doug]

Greentech Media | Should Tesla Motors Sell Out? (http://www.greentechmedia.com/articles/should-tesla-motors-sell-out-1084.html)

[graham]

From doug's linked article:

When the company tries to release a $30,000 economy car in four years, tradeoffs between price and performance will be front and center. Buyers will ask themselves questions like, “Do I really want to spend $30,000 on a car that can’t make it to L.A. without stopping for a few hours to charge?

This kind of work is not a million laughs. It involves installing project managers and sales reps in glamour spots like Chengdu or Taiyuan to negotiate over the price of synthetic floor mats or cup holders at 2 a.m. in a “gentlemen’s club” on a Tuesday night. It also means going to Detroit and Ohio to meticulously study the intricacies of batteries and drive trains.

This may be true, but it is also true that Tesla has publicly stated they intend to partner with a larger player to produce the BlueStar. The author is either unaware of this or is ignoring it.

It still may be true that Tesla should sell out to a bigger fish... but I think they have more options at their disposal than the author is considering. A partnership may work better for them than a buyout.

[vfx]

Also from Doug's link:
Didn’t Silicon Valley master mass manufacturing? Yes, but ...

..., chip makers were replacing vacuum tubes and have had decades to build up their manufacturing footprint.

... three, most importantly, most of those companies – except for heavyweights like Intel and Samsung – don’t manufacture anymore. They go to foundries like TSMC.

I don't understand why Tesla can't capitalize on these shifts just like the rest of SV.

[Tim]

From doug's linked article:


This may be true, but it is also true that Tesla has publicly stated they intend to partner with a larger player to produce the BlueStar. The author is either unaware of this or is ignoring it.

It still may be true that Tesla should sell out to a bigger fish... but I think they have more options at their disposal than the author is considering. A partnership may work better for them than a buyout.

Also, I think it isn't appropriate to make statements about an average buyer making a decision regarding tradeoffs for that person. Any BEV marketed in the next ten years will be a niche vehicle. Arguments that state that a bev must satisfy all requirements of all buyers to be successful misses the point entirely. There are plenty of buyers for whom the range and price limitations are not important. These authors just don't get how technology adoption works.

I wonder what Tesla's margin is on the roadster now that the pound has crashed vis a vis the dollar and commodity price deflation has set in with force. I have to think that they are making a tidy profit per roadster.

Plus, with no real competitors in the BEV space for the next couple of years they should continue to have pricing power. I remain skeptical of legacy car companies efforts to sell BEVs as loss leaders in this environment and their capacity to engineer them. FWIW, I'll be quite surprised to see Fisker actually make a production vehicle too. They simply don't have the funds. Musk was right in saying that it is an engineering problem not a styling one. We know from Tesla's history that $70 million isn't enough. If Dodge ever tried to sell the Circuit, I think it would actually benefit Roadster sales since the Roadster will beat on almost every metric.

[James]

I wonder what Tesla's margin is on the roadster now that the pound has crashed vis a vis the dollar and commodity price deflation has set in with force. I have to think that they are making a tidy profit per roadster.


I had not considered that aspect, but you are likely correct. If the contract is set in pounds, the cost of the glider has become MUCH more affordable in the past few months.



Plus, with no real competitors in the BEV space for the next couple of years they should continue to have pricing power. I remain skeptical of legacy car companies efforts to sell BEVs as loss leaders in this environment and their capacity to engineer them. FWIW, I'll be quite surprised to see Fisker actually make a production vehicle too. They simply don't have the funds. Musk was right in saying that it is an engineering problem not a styling one. We know from Tesla's history that $70 million isn't enough. If Dodge ever tried to sell the Circuit, I think it would actually benefit Roadster sales since the Roadster will beat on almost every metric.

I believe that most of the EVs announced this week will never reach production. I have my doubts about the GM Volt ever being produced. GM is in big trouble and $15 billion in new debt doesn't really help. They still have to pay interest on that new debt.

Chrysler is even worse. Their December sales were down over 50% year over year. How on earth do they even begin to survive that?

The Fisker plug-in hybrid does not appeal to me at all. They are aiming for 15,000 per year at $87,900. To build that kind of volume requires a manufacturing volume 10x larger than the Tesla Roadster. Yet they are trying to raise capital in this market? And Tesla took a major shortcut by getting their glider from Lotus.

I will be impressed if Fisker survives. Has anyone heard what their order backlog is?

[siry]

James - an article I read today quoted Fisker saying he had 1300 orders.

[j-g]

I think you have to temper the reports of 1300 orders since it only took a $1000 deposit to create an order. When it comes down to paying the balance on delivery, the 1300 claim could change radically.

[graham]

I believe that most of the EVs announced this week will never reach production.

I agree!


I have my doubts about the GM Volt ever being produced. GM is in big trouble and $15 billion in new debt doesn't really help. They still have to pay interest on that new debt.

I think the Volt will be produced. GM has bet their company PR on that vehicle. If GM does not completely go out of business (and I don't think it will) there will be a "Volt". Now to do it they may just rebrand a Chevy Cruze as Volt, and forget the batteries or plug... but they will come out with something called a Volt.


The Fisker plug-in hybrid does not appeal to me at all. They are aiming for 15,000 per year at $87,900. To build that kind of volume requires a manufacturing volume 10x larger than the Tesla Roadster. Yet they are trying to raise capital in this market? And Tesla took a major shortcut by getting their glider from Lotus.

Well, Fisker took some shortcuts too. I believe the drive train from Quantum was originally developed for the military, and they have gotten the ICE and other pieces from GM. And of course the manufacturing from Valmet. It isn't to say that they don't have an enormous amount of work still... but I think in many ways they did less work than Tesla. And if they can avoid some of the mistakes Tesla made, they should be able to save some money that way.


I will be impressed if Fisker survives. Has anyone heard what their order backlog is?
Only that they are sold out through "mid-2010"... Last June they announced that they had received over 800 orders in Europe. http://www.topspeed.com/cars/car-news/fisker-received-800-orders-for-karma-in-europe-ar59337.html But I have no idea what their total orders are today.

ETA: Ah... took so long writing this, siry replied with real numbers!

[siry]

@j-g it cuts both ways. While I agree that a $1000 deposit amount is relatively small so you can't necessarily count on it for a sure sale, it is also the case that there are many people who will only buy this car when it is sitting at a dealer and they can take immediate delivery. It makes it hard to project actual demand with great accuracy.

@james - of course GM will deliver the Volt! They are way too far down this path to not deliver it. The only real question is whether they hit their timeline and how many they ultimately produce or sell.

[James]

@j-g it cuts both ways. While I agree that a $1000 deposit amount is relatively small so you can't necessarily count on it for a sure sale, it is also the case that there are many people who will only buy this car when it is sitting at a dealer and they can take immediate delivery. It makes it hard to project actual demand with great accuracy.


I think Tesla has a much more reliable deposit base in that they required a serious deposit of $60,000. I understand it was even higher for earlier orders.

I think the Aptera order backlog of 4,500 is extremely soft because it is only $500 and it is in escrow and it is full refundable.

The Fisker Karma backlog looks soft to me if it is only $1,000. In addition, based on our experience watching Tesla, does anyone really think that $70 million in capital is enough to produce that vehicle? A Plug-In Hybrid is much more complex than a pure EV.

[vfx]

I think you have to temper the reports of 1300 orders since it only took a $1000 deposit to create an order. When it comes down to paying the balance on delivery, the 1300 claim could change radically.

Exactly.

We put the 1K down and after the 2nd of 3 majoe price jumps we decided to pass on the car even though we love the look and like the Sunset features even more..

And here's the thing. they still have our money while we keep a wait-and-see attitude. There may be many more like us.

[DDB]

Nothing really said about all the cancellations. By my count 6 to 40 (depending on criteria)

That's one question I had; why not sell new vehicles at the higher prices, or look to Europeans to raise the cash (sorry to those that trade in the Euro and Pound)? I mean we all know that GM is planning on losing money on the Volt for the first year or so, so why not expect the same from the Roadster? And yes, I'm aware of the theory regarding government loans.*



*I believe if a company is truly profitable there isn't a dire need for the government loan. Nice, but not required.

[graham]

That's one question I had; why not sell new vehicles at the higher prices, or look to Europeans to raise the cash (sorry to those that trade in the Euro and Pound)? I mean we all know that GM is planning on losing money on the Volt for the first year or so, so why not expect the same from the Roadster?

This got covered at the Town Hall meeting. It had been the plan to sell the 2008s at a loss, then raise the price above the break even point for the 2009s and European markets. Unfortunately, they could not continue to get anyone to finance them with a business plan of selling the cars at a loss. They needed that last round of financing (the $40 million reported last Fall) to fund the company until the Roadsters were profitable, and the government loans came available to make the Model S. To finish that last round of financing -- which negotiations went up until Christmas Eve -- they had to agree to stop losing money on the 2008s. If they had not done so, they would have had to shut down the company after Christmas.

[doug]

Green Fuels Forecast (http://greenfuelsforecast.com/ArticleDetails.php?articleID=724)


Tesla has brought down the cost of building the Roadster to $80,000 from a high of $140,000 prior to production launch in 2008. Unfortunately, Sales of the Roadster seem to be lagging. When production started in 2008 the company had approximately 1,300 orders for the electric sports car. Earlier in June 2009, Tesla delivered Roadster #500 to a customer, and is generating revenue with every delivery. However, when asked during today's call, Musk acknowledged that the order backlog for the Roadster currently stands at about 700-800 units which puts total sales at about 1,200-1,300 units.

In spite of launching sales in Canada and Europe over the last year, the pace of new orders does not appear to be exceeding the cancellations. When Musk spoke to Green Fuels Forecast in January, he acknowledged that the global recession had caused some customers affected by the financial meltdown to cancel orders as they approached the build date (http://www.greenfuelsforecast.com/ArticleDetails.php?articleID=683). That situation does not appear to have changed in the past six months.

Musk did say the company expects to maintain a sales pace of approximately 1,000 Roadsters annually for the next several years. Unless the economy turns around soon, that could be a difficult goal to achieve.

[dpeilow]

O'Brien: A Look At My '09 Predictions At Mid-Year (http://www.mercurynews.com/ci_12784748?nclick_check=1)


Tesla will turn off the lights. Wrong. I worried that "the San Carlos company will get lost in the shuffle as the government bails out the old automakers." In fact, late last month, Tesla announced it was getting a $465 million loan to help manufacture its new sedan. So it's a no-brainer this company will make it through the year, and let's hope, well beyond.

[johnr]

O'Brien: A Look At My '09 Predictions At Mid-Year (http://www.mercurynews.com/ci_12784748?nclick_check=1)

For some strange reason that link doesn't work for me - a quick Google search brought me to this link, which does work:

O'Brien: A Look At My '09 Predictions At Mid-Year - San Jose Mercury News (http://www.mercurynews.com/ci_12784748?source=rss)

Thanks

[Alpine Driver]

Hmm. There is a Problem.
The problem is: What is Tesla staff doing in a few month?

I dont want to make a dissertation out of it, but lets overview the data:


last reports, a while ago, were "total of 1300 roadsters sold". This reports were going up at some Tesla Rep comments up to 1400. But lets assume 1300 was reported.
last reports say that 130 european roadsters are sold. Lets assume this 130 europeans are included in that overall amount of 1300.
Deliveries in the US are now at about 600 cars delivered (excluding FS), so at about VIN 600 (+/-)
They delivered about 109 cars in July. This corresponds with the reported maximum output of 30 cars a week from Hethel.
Lotus Factory is closed for the first 3 weeks in August. This was the same last year, and so it is this year. I dont have the exact dates, but it should be from 03.Aug to 21.Aug.
None of the european cars are delivered (and/or built?)
I ordered one US Roadster in February 2008 (this 5k deposit orders). At this time, there were press releases out that "more than 1000 roadsters are ordered" (order was cancelled later and new order of EU signature was placed)
I drove with Darryl in Monaco (April 2008), and at this times the "number sold" was 1150. I think I remember having read this statement from Zeev also sometimes.
bolosky ordered his car mid April 2009, and was confirmed and told that his car is in Hethel final stage at the production line end of July. 4 weeks later, end of august, is his sheduled delivery.
ChadS placed his order on July 15th 2009
Lets assume, that both bolosky and ChadS are not High-Style-Grade-A-Celebrities, which means at the time placing their order, they were at the end of the order line. (sorry guys) :wink:


Now lets analyse this data:

a)
Lets begin with ChadS: the start-of-production-Date given to ChadS cant be correct, because in one week on estimated production begin (17.August), no one from Lotus is at the factory. Lets assume, that ChadS´s Tesla Rep did not know that the factory is on holiday. This would still implement, that they wanted to START ChadS roadster AFTER 4 WEEKS he has finalised the order!
About 3 weeks for the built in Hethel, shipping, and about 2 weeks finishing the car in the US. This would make an about 2,5 month wait for a new order.

b)
bolosky ordered Mid April - end of July his car is in final stage at Hethel. (I keep my fingers crossed for you that they could ship it before their holidays). This would implement that it was started at about 3 weeks before, maybe at about July 13th (Mid July) - this means 12 weeks from order date to start of production.

c)
but one thing is for sure: both guys with ordering dates Mid April 2009 and Mid July 2009 should have numbers far north the 1000. But they dont.
When the official number in April 2008 was 1150, this guys ordering a minimum of one year later should be far beyond that numbers.

d)
now see what is reality in the US: VIN600 (+/-) was delivered a few days ago. See beakmeister´s VIN596 delivered on 31.07.2009, while rsquared´s VIN562 delivered on 06.08.2009. Lets assume that they have gone a few numbers over 600, while a few numbers under 600 are still not delivered. So 600 (+/-) is a good value.

e)
how much can they deliver per month? July was the record with 109 roadsters.
There were reports that they did not meet their goals in June (no wonder, with transition problems to Roadster 2.0), and some reports that customers were asked to have their invoice dated 31.07.2009 prior to "real" delivery of their car.
But lets hope the best for Tesla: assume they can deliver 100 cars in August, which would mean that we are near VIN700 at the end of August.
I see this as a very positive assumption, I would more vote for 680 or something.

f)
in September in the US, they can deliver nearly nothing. Because when Hethel has no output in the first three weeks of august, there is nothing to ship and nothing to deliver.

g)
and then, end of september, beginning of october, ChadS might get his car. This nice guy ChadS, who has placed his order a few weeks ago, on July 15th!

Conclusio:


They are nearly completely through their US Roadster backlog orders! Maybe only a few less weeks puffer, but not much more than two!
There is a gap of 400 Roadsters "missing". I am sorry for Tesla. With 600 cars deliverd now, 700 cars if possible delivered at the end of August, and very less possible deliveries in the US in September due to Lotus factory holidays, would result in a VIN smaller than 800 for the guy ChadS ordered his car on July 15th 2009.
So we have to face the fact that US Roadster orders might be about 800 (+/-), and not 1150, 1200 or something similar.
Together with the 130 unfulfilled european orders, overall Roadster orders may be at 900 to 950.


How will it likely go on:


The US Roadster Backlog is near empty. Due to hot having ready the homologation for the european Roadster, they pushed out the US versions nearly to their end.
At all, Lotus holidays were not so bad for Tesla. Bad for me as an european customer, but ok for tesla and their shedule.
After Lotus holiday, in the forth week of august, they will massively focus on EU deliveries. This corresponds with Rachel Konrads statement that they will "significantly increase EU deliveries" (which is not so complicated when you a) have only one car delivered in the EU till now and b) have not so many other cars waiting in your order line).
With the factory capable of an output of 30 cars/week, they will need about 5 weeks of fullfill all the european orders. But then, at the middle of october, they are through all the backlog they have.
One indication for this plan is that while my car was ordered in May 2008, sheduled now for "mid to end of september 2009" is only a few weeks ready before RGB´s car, ordered in June 2009 (?, I forgot the exact date), is still sheduled for the end of september, maybe a little bit later. So only a few weeks difference in delivery, while over ONE YEAR difference in order date!
I am not into that kind of manufacturing business. I dont know how difficult it is to switch an assembly line from 30cars/week to 10 cars/week, or if it is better to keep the 30cars/week throughput, and then make 2 weeks holidays :wink:
But sooner or later, Tesla has to significantly slow down their production. I hope they can keep their speed up till all the orders (especially mine :wink:) are fullfilled, but surely this also is a contract thing with Lotus.

End Statements:


The gap of 400 lost Roadster "orders" indicates that from this typical 5k deposit orders, which were created shortly before real economic crisis was there, a lot of customers did not go their way with tesla and canceled their orders en masse.
From a few aspects, this "strange" tesla programs "stay with us, get your deposit back now when you need it, but accept delivery after november 2009" maks sense in the way that they seek for something to deliver in the US after November 2009.
Tesla (Elon) did not tell anything wrong. In the last time, it was always said that the Roadster is sold out till November. This is true. Lotus is on holiday now. In september to mid october, they may build the majority of the EU cars. So new orders from the US may not start before the middle of october - which means that they are ready in Hethel at the end of october/beginning of november, and therefore DELIVERED in the US not much before the end of november.
Tesla PR is working fine. All the poitive news now (109 roadsters delivered, turned a profit in July 2009), may be good for the upcoming period, and in september, there are less US deliveries but events (Chicago store opening), and you should expect a lot of PR from european deliveries and store openings.
I really hope that when cars are out on the streets, more and more people get convinced and orders are coming in. But for Europe, with all the snow and cold time, this is not a good timing.

Hmm, this really got a long posting. And I think it was not necessary, as it contains no new information. You all knew this, as its just a summary of the data being out there ...

[vfx]

...
I dont want to make a dissertation out of it ...

Too late! :rolleyes:

_________________

Seriously. I hope you get your car soon.

[bolosky]

The gap of 400 lost Roadster "orders" indicates that from this typical 5k deposit orders, which were created shortly before real economic crisis was there, a lot of customers did not go their way with tesla and canceled their orders en masse.


My guess as to what's happened is that a bunch of these people are just hanging on, neither cancelling nor locking in, either because they're indecisive or else because they're having trouble coming up with the cash (or the will to part with it). Some of the mail that I got from Tesla around lock-in/pay-up time led me to believe that this was a common issue.

Maybe the BofA financing program will get some of these orders moving again.

[Vger]

One thing that Alpine Driver has not considered are Canadian orders. These began in March (I was one of the first, I am told) and have been accumulating at some (slow?) rate since then. Nothing can be delivered to Canada until homologation is complete, which may now drag out until December, I heard recently. I have no idea how many CDN Roadster orders there are, but I would guess somewhere between 25 and 50, or one to two weeks worth of production. This is not a major factor, therefore, but I thought I would add it to the mix.

[James]

I have heard that there are 300 or so people at the old Roadster $5,000 deposit level that have simply never moved beyond that. That has to be very frustrating for Tesla Motors if that is accurate. I was also told that the sales staff is focused 100% on the Tesla Roadster sales. The Model S deposits are on autopilot with minimal effort now that they have the government loan. This would make sense with maintaining production at reasonable levels of their only current product.

Also, it seems that Tesla Motors is definitely increasing their USA marketing efforts. We have the $500 referral program.

I also received an email today from Tesla asking me to fill out an online market study survey. It was a bunch of questions about what lead me to buy a Tesla Roadster, what magazines I buy, where do I vacation, etc.

Most of the questions were multiple choice, but one of them that I recall was a fill in the box asking why I bought a Tesla Roadster. My response was something like, "Temporary insanity and a lack of financial common sense."

They are clearly getting ready for some advertising and marketing plans. They are just trying to figure out where to aim those efforts.

Frankly, I think the things that I am doing with putting up real 1/4 mile numbers for the Tesla Roadster Sport are helpful for Tesla Motors. They should get out there and prove the performance. Having customers do this for them should be a top priority and validation of their product.

[vfx]

As I go out and about, some of the old rumors still exist. One woman ( a real potential buyer) was told by one of her students that the company had gone bankrupt or had been sued into oblivion. The TTAC site stuff seems to have gone away with no single entity as Tesla's foil except for that old writer guy who should not be a problem soon.

Still though, the Top Gear piece is my biggest adversary. Even to those who are clearly excited by the car they aways bring that segment up. I squelch it best I can but I'm just throwing buckets at a forest fire.

Maybe this is a Marketing thread.

[James]

That's OK. I just checked my celebrity ranking; apparently I am Grade Q. When my Roadster arrives, I will ask if I can move to Grade P.


Your car will be a higher grade celebrity ranking. You will still be a complete unknown. My car is somewhat famous and recognized. I am still the same nobody I have always been.




Originally Posted by Alpine Driver
There is a gap of 400 Roadsters "missing". I am sorry for Tesla. With 600 cars deliverd now, 700 cars if possible delivered at the end of August, and very less possible deliveries in the US in September due to Lotus factory holidays, would result in a VIN smaller than 800 for the guy ChadS ordered his car on July 15th 2009.


I was given VIN 690.

--ChadS

That is really bad news if this is accurate. Tesla is likely only selling a fraction of their production capability. Clearly the sales are not 100 per month. They really need some of these $5,000 depositors to convert to real production orders.

Does anyone think that at some minimum sales level it no longer makes sense to produce them? 10 per month? 20 per month?

I don't think Tesla can afford (reputation/image) to stop production completely. They need to have a product being produced during the next two years while the Model S production ramps up.

Perhaps Tesla just reduces their Roadster production staff to bare minimum for one car per day (or whatever the sales justify) and maintains that until the Model S rolls out.

[dpeilow]

That is really bad news if this is accurate. Tesla is likely only selling a fraction of their production capability.

Perhaps Tesla just reduces their Roadster production staff to bare minimum for one car per day (or whatever the sales justify) and maintains that until the Model S rolls out.

It's not just Tesla. From what I hear, Lotus must be really grateful for the Tesla work right now too. So let's say they clear the EU backlog and orders slow to a trickle. Lotus don't have the DOE loan and they don't have large perennial problem case factories in Labour (government) heartlands, so then what?

[vfx]

It's not just Tesla. From what I hear, Lotus must be really grateful for the Tesla work right now too. ... so then what?

They have a few VP Evoras out right now and will ramp up production pretty soon.

[Tdave]

As somebody else noted, the holiday was apparently only 2 weeks long this year. I have been told that production on my car has indeed started. If there had been no holiday, it seems they would have started production just two weeks after I finalized my order.

I was given VIN 690.

I finalized my order a full year before ChadS and have VIN 618. Does this mean Tesla fully sold (finalized order) only 72 Roadsters in the past 12 months?

[BBHighway]

So, when they were losing money on each car, they were selling pretty well. Now that they are making a profit on the cars, they aren't selling.

The car business is brutal!

[stopcrazypp]

Perhaps Tesla just reduces their Roadster production staff to bare minimum for one car per day (or whatever the sales justify) and maintains that until the Model S rolls out.

Hopefully things pick up as the economy slowly recovers. I also feel Tesla needs to keep Roadster production running before the Model S is out. If they stop production then there's going to be little confidence they can get the Model S produced.

[doug]

... I was given VIN 690.
I finalized my order a full year before ChadS and have VIN 618. Does this mean Tesla fully sold (finalized order) only 72 Roadsters in the past 12 months?
Something like that, but you're missing the EU spec cars that have a separate VIN sequence. There are around 100 or more of those, but certainly less than the 200 set aside as a EU Signature series.

Clearly new sales have not kept pace with incomplete sales or refunds. July was possibly the first month in a while that there were more new sales than cancellations. With fall and winter approaching, I don't expect Roadster sales to get much better. Outside of Cali, people think about getting a sporty convertible in the spring.

The good news is that Lotus is flexible. They can change Roadster production rates at Tesla's request (within limits of contract), an advantage of being on the same production line as the Elise. (Though, Lotus certainly appreciates having Roadsters to build.) Also with the gov't loans, Daimler investment, and Model S deposits, the company should be able to weather soft Roadster sales for a bit while it shifts its emphasis to development and production of the sedan.

However, I'm sure Roadster sales, especially in the European market, are a high priority. That's a source of actual income for the company. The lost of Michael van der Sande was bad timing.

[Alpine Driver]

Seems to be really bad with the US sales numbers in the past year. This is one reason I do not understand why the focused on on getting the EU cars out there much earlier. By law (low production vehicle exeption on some rules), it would have been possible starting with may. But they were simply not ready with there homologation. And therefore, had to complete this before starting production. A big mistake in my eyes; as if the about 100+ EU cars will go out now somewhere in september and october (note: first planned: EU signature edition of 250 cars, then reduced to "we think about 200", last reported about 130 cars sold, but always be careful on the numbers); its the same as outside of california: winter is coming. And even if there will be a lot of early adoptors under the first EU customers, giving rides to friends and maybe other "interested" ones - with all the snow and salt on the streets, you may wait till march/april till you really want to purchase.
So that in the US there is (was) a timeframe from less than two weeks from order date to start of car production is nice, but does not help Tesla the same way as if they would already have cars out in several european countries in the summer. (Therefore, I am not so "sure" about the "timing" of MvdS dissappear, to say it carefully).

But lets hope that everything recovers soon. For canadian sales, we dont have confirmed numbers. But I dont believe the high ones. They are now selling more than one year in europe, and got 100+ orders. So for a few month sales in canada, I dont believe the "up to 50" number; I would suggest below 20 as a careful approach.

[malcolm]

Tesla is likely only selling a fraction of their production capability. Clearly the sales are not 100 per month. They really need some of these $5,000 depositors to convert to real production orders.


With reports of Germany starting to climb out of the recession it might be a good idea for Tesla to focus marketing efforts in and around the Munich store.

But I don't think anywhere is going to be strong sales territory.

[Serge]

Also with the gov't loans, Daimler investment, and Model S deposits, the company should be able to weather soft Roadster sales for a bit while it shifts its emphasis to development and production of the sedan.

An additional opportunity provided by said resources is Tesla's ability to finance production and delivery of Roadsters into actual showrooms. We may be seeing a plateau of patient buyers, but there should always be some walk in business. They can also run an analysis of which colors/combos sell best and "stock up" showrooms for an influx of buyers for spring/summer season in Winter country.
They also need to look at expediting the opening of dealerships in Florida/Texas/Arizona.

[vfx]

They also need to look at expediting the opening of dealerships in Florida/Texas/Arizona.

What does each store add to the overhead? How many cars does each dealership need to move each month to break even with rent/payrol/utilities/etc.?

[BBHighway]

I wonder if they've considered placing a few cars at select Mercedes Dealers?

I still get a lot of: "What kind of car is that? I've never heard of it before." and "How did you get that, I thought they weren't delivering yet?" and "I thought they were only available in California".

Clearly, they are not getting marketing penetration to an awful lot of potential car buyers.

So, now that Daimler owns a stake in Tesla, why not place a few cars at a few dealers and see what happens? Especially in places where Tesla doesn't yet have a store and may not for quite a while.

Worse case is Tesla gets a lot more exposure, the dealerships get a lot of traffic with people just coming to gawk (and possible driving off with a new Merc). Best case is they pick up a few impulse purchasers, who would never have the patience to place and order and wait several months. There are probably lots of those folks out there, I bet they could move 500 cars a year at least.

[Serge]

What does each store add to the overhead? How many cars does each dealership need to move each month to break even with rent/payrol/utilities/etc.?

I'm working from an assumption that if TM's cost-benefit analysis lead to opening of new stores in markets that are heading into non-Roadster season soon (Chicago, Seattle, Toronto, Munich), there should be some business sense to pushing stores in markets where it's always Roadster season, i.e. Miami, Dallas, Phoenix, etc.

Pushing into Mercedes dealerships, as noted by BBH, is a very good thought as well.

[James]

I finalized my order a full year before ChadS and have VIN 618. Does this mean Tesla fully sold (finalized order) only 72 Roadsters in the past 12 months?

Net of cancellations, that is +72 Roadsters in a year. There were quite a few cancelled for financial reasons and because of the mess last Jan/Feb with the price increase.

[vfx]

Pushing into Mercedes dealerships, as noted by BBH, is a very good thought as well.

The more I think about the Mercedes dealer idea the more complicated it becomes. First they need to give up valuable floor space for a car and charger, and one in the back on a charger then train at least one employee to answer a million EV questions. Does the person work for Tesla? That sales person also has to tell the prospective buyer that repairs are done somewhere else possibly 100s of miles away. It just seems hard.

[malcolm]

Yes. They would have to rely on a traditional dealership network, something that Tesla have long been adamant they would avoid. Tesla Motors - Marketing (http://www.teslamotors.com/blog3/?p=58)

I just hope people don't schedule a tesla purchase in line their next house.

[Arnold Panz]

The stores are the lynchpin, it seems to me, of TM's grand strategy. People being able to physically walk in someplace and literally kick the tires is a necessary component of expanding the customer base. As stores open around the country and the world, sales of the Roadster should increase. I agree with vfx that the MB idea is unworkable, and totally contrary to TM's plans.

The idea of using company-owned stores is a big a gamble as anything TM has done. It's almost totally unprecedented in the auto industry, and particularly for a start-up with relatively finite funding, it's a huge gamble. Now, in addition to building brilliant cars, you need to be managing real estate, employees, security, maintenance, local advertising etc., most of which are handled for every other automaker by franchise dealerships. Coke and Pepsi don't know how to handle bottling and distribution, and GM wouldn't be very good at running a dealership. It's ballsy, to say the least, that TM thinks it can do all of this well. But if it does, and the company store concept works, it sets them up to be MUCH more profitable than the average carmaker, because they aren't splitting profits with a dealer, and allows them to have MUCH better quality control with respect to the customer experience.

Assuming they can get the Model S up and running close to on time (2011-12), this whole company store strategy will be the biggest X factor in determining whether TM fails or suceeds.

[siry]

re: mercedes dealerships

It isn't as straightforward as it sounds. Mercedes doesn't own the dealerships - they are independent businesses with franchise agreements. Tesla is an independent manufacturer, so even if they wanted to distribute through dealerships (which they don't) they would need to develop separate franchise agreements with the dealers. The dealers would want a pretty significant "cut" of the sale, which would eat into the marginal profit of each roadster, which is already slim. Once tesla signed franchise agreements, they could not compete by selling direct, so its a pretty significant decision to go that route.

[vfx]

Fisker has chosen the Dealership route. (http://www.autoblog.com/2009/03/24/fisker-automotive-signs-up-32-dealers-in-17-states/)

[BBHighway]

re: mercedes dealerships

It isn't as straightforward as it sounds. Mercedes doesn't own the dealerships - they are independent businesses with franchise agreements. Tesla is an independent manufacturer, so even if they wanted to distribute through dealerships (which they don't) they would need to develop separate franchise agreements with the dealers. The dealers would want a pretty significant "cut" of the sale, which would eat into the marginal profit of each roadster, which is already slim. Once tesla signed franchise agreements, they could not compete by selling direct, so its a pretty significant decision to go that route.

I totally agree, it isn't a simple, easy thing. But that doesn't mean it's not doable.
I'm talking about only a very few cars, and the incentive for the dealership is mostly just attracting traffic. More of those visitors are going to drive away in a Merc because let's face it, there's a lot of people who like to see a rare, $100,000 electric sports car, but not that many who people who actually want to buy one.

So, Tesla would have to establish special "limited agreements" with the dealers to do this. I would expect the Roadsters to have a premium price, since the buyers don't have to wait months to get a car. That allows for the dealer to even take a cut. The connection with Daimler owning part of Tesla doesn't mean much to the dealers, but just makes it so Daimler wouldn't complain about the practice as they would if those dealers wanted to sell something like a Lexus.

[ChrisC]

Fisker has chosen the Dealership route. (http://www.autoblog.com/2009/03/24/fisker-automotive-signs-up-32-dealers-in-17-states/)

Right, and a lot of those luxury car dealers are Mercedes dealerships. Which throws another wrench in the idea of Tesla models being offered by Mercedes dealerships.

Edit: didn't see BBhighway's comment. Interesting.

[James]

Fisker is taking a shortcut to distribution channels, but is giving up a lot of revenue to the dealers they are working with.
I wonder which one will win. Tesla definitely has deeper pockets now with the low interest govt loan. Tesla also likely has access to more investment money since they have the Daimler investment and the govt loan.

I am not really worried about Tesla Motors anymore, which is what inspired this topic a few months ago.
The sales of the Model S appear to be strong and the financing is in place to get there in 2-3 years.

The immediate concern of Tesla Motors is that the Roadster remains viable. Are there enough sales to keep the Roadster production flowing for the next two years at a minimum level?

[tomsax]

I'm working from an assumption that if TM's cost-benefit analysis lead to opening of new stores in markets that are heading into non-Roadster season soon (Chicago, Seattle, Toronto, Munich), there should be some business sense to pushing stores in markets where it's always Roadster season, i.e. Miami, Dallas, Phoenix, etc.

It's always Roadster season in Seattle. There's not a single month without good open-top days. The winters are rainy but not that cold, and there are plenty of breaks from the rain if you're in a car that only takes a minute to remove the top. In fact, I've heard it argued that that are more convertible-friendly days in Seattle than in Southern California if you don't like being roasted alive on really hot days. Heresy, I know, but it may well be a factor to the level of sales in the Seattle area that caught Tesla by surprise.


Coke and Pepsi don't know how to handle bottling and distribution, and GM wouldn't be very good at running a dealership.

Pepsi is in the process of fully acquiring its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS), making them responsible for about 80% of beverage distribution in North America. (Data obtained from the May 1, 2009 ValueLine report on Pepsi.)

[dpeilow]

It's always Roadster season in Seattle. There's not a single month without good open-top days. The winters are rainy but not that cold, and there are plenty of breaks from the rain if you're in a car that only takes a minute to remove the top. In fact, I've heard it argued that that are more convertible-friendly days in Seattle than in Southern California if you don't like being roasted alive on really hot days. Heresy, I know, but it may well be a factor to the level of sales in the Seattle area that caught Tesla by surprise.


Sounds like the UK - which is Europe's biggest convertible market.

[James]

Newest Tesla Motors store opens in Münich today — Autoblog Green (http://green.autoblog.com/2009/09/10/newest-tesla-motors-store-opens-in-munich-today/)

Seeing another Tesla store open in Munich raises this question in my mind.

Does it really make sense to be opening these stores when they only have the Roadster to sell?

A certain amount of overhead is involved with rent, utilities, employees, etc.
Are they really selling enough Tesla Roadsters right now to justify these stores existing?

If the Model S were being produced and 10,000 to 20,000 cars per year were being sold through the distribution network, then I would say that it does make sense.

But right now?

I think there are around 35+ Tesla Roadsters within range of the Seattle Tesla store (which is still not open, they are still renovating) and 100% of those cars were sold and delivered without the store even being there. The service has been handled by the local service manager out of his existing garage repair shop (non Tesla). So the actual high profile store is completely unneeded for the purposes of servicing the Tesla Roadsters in the Pacific Northwest.

I question whether it makes sense to have the overhead for Tesla when they clearly don't have the Roadster sales to justify this distribution network. Their production of 100 per month is about to hit a wall when the backlog expires in October/November. They seem to be stuck at this 1,200 to 1,300 number. And several hundred of those appear to be $5,000 deposits that never put up enough money for a production number. So are they really even valid?

We are hearing reports of people getting a Roadster production slot immediately upon contacting Tesla for a new order. So the waiting list is caught up. If they are producing 100 per month, they are producing them on spec to have inventory in stores with the most common colors and options. That sort of "stuffing the sales channel" can only go on for a short period of time.

The stores seem about two years too early to me. I do the paper napkin math for the costs per store and it gets REALLY expensive per month to maintain this network for only a limited number of Tesla Roadster sales.

[James]

Is Tesla able to use the government loan for general corporate purposes such as supporting this store network that also helps the Tesla Roadster?
Or does the money have to be dedicated to the Model S and drivetrain business? I wonder how much of it bleeds over into indirect subsidies for the Tesla Roadster.

[Arnold Panz]

Newest Tesla Motors store opens in Münich today — Autoblog Green (http://green.autoblog.com/2009/09/10/newest-tesla-motors-store-opens-in-munich-today/)

Seeing another Tesla store open in Munich raises this question in my mind.

Does it really make sense to be opening these stores when they only have the Roadster to sell?

A certain amount of overhead is involved with rent, utilities, employees, etc.
Are they really selling enough Tesla Roadsters right now to justify these stores existing?

If the Model S were being produced and 10,000 to 20,000 cars per year were being sold through the distribution network, then I would say that it does make sense.

But right now?

....

The stores seem about two years too early to me. I do the paper napkin math for the costs per store and it gets REALLY expensive per month to maintain this network for only a limited number of Tesla Roadster sales.

It's definitely a huge gamble by Tesla, but one that will pay huge dividends as long as they don't run out of money. There's no doubt that opening the stores as they have is going to cause them to burn through cash a lot faster than they otherwise would for all of the reasons you mention. But, if they want to be seen as a viable, mass market car company, they really need to have a physical brick and mortar presence in as many places as possible.

There's probably a little bit of chicken and egg here in determining the "right" time to open the stores, but assuming that they can float themselves until they're selling lots of Model S', they stand to reap enormous benefit from not using a dealer network or otherwise sharing those profits with local franchises.

The loans are earmarked for their specific purpose (development of the S and the battery technology), but obviously to the extent that Tesla doesn't have to burn its own cash on those projects, it leaves more of their investors' money, and profits from the Roadsters sold, to get and keep the retail stores open.

[James]

There's probably a little bit of chicken and egg here in determining the "right" time to open the stores, but assuming that they can float themselves until they're selling lots of Model S', they stand to reap enormous benefit from not using a dealer network or otherwise sharing those profits with local franchises.


We can do the math ourselves. What is the rent and the cost of two employees (sales and service)? The Seattle store is at least 5,000 sq ft and in downtown Seattle near Lake Union. I am used to paying for warehouse space, so I am not sure what a high end location goes for these days.

I am sure the employees are making $5,000 per month or more. The local service manager is excellent and VERY qualified. So I would guess that we are talking $20,000 to $30,000 per month just for the Seattle store and two or three local employees to be hired. So at least $250,000 to $350,000 per year. Multiply that by 10 to 12 stores around the world, some areas are likely much more expensive than Seattle. That is an expense of likely $5+ million per year for the dealer network.

I suppose if it is only 3 years until production of the Model S, they might think that $15 million, to support a limited high profile dealer network, might make sense.

Someone correct me if my wild ass guess is way off, which is likely.

[vfx]

Chicken and egg continued.

Many will see a local store as confirmation that the company is real and that they can get their car repaired if they buy a Roadster and/or are considering an S.

Washington state buyers bought without a store and that's exactly why they should not be used as an example. The fact that they are the 3rd biggest market is not surprising now, but back then when orders came in it sure caught everyone off guard.

Soon there will be a Model S prototype in every store. Very important for future sales. I don't know if they will be drivable but I would bet if the cars work that they will never let customers drive them.

So James, EV Components does not have a storefront?

[James]

So James, EV Components does not have a storefront?

Heck no. We are a warehouse and factory operation. We pay very little for our space buried in a business park with no visibility from the street. UPS and Fedex had a hard time finding us at first. Almost everything we do is shipped via pallets (lifepo4 batteries) on fedex ground freight. Local customers from Portland to Seattle do often drive to pickup their orders and avoid ground shipping expenses. But that is less than 2% of our customers. We are shipping to just about every continent on the planet except Antarctica.

On the production side, we are doing Zilla controllers, BMS production and Tesla MC upgrades. Business is booming. We cannot keep up with it. I am worried if the recession ends. We won't be able to handle it.

[vfx]

... I am worried if the recession ends. We won't be able to handle it.Ha!

What do you have against a brick and mortar store with walk in customers? You could sell t-shirts and refridgerator magnets.

[rolosrevenge]

I am sure the employees are making $5,000 per month or more. The local service manager is excellent and VERY qualified. So I would guess that we are talking $20,000 to $30,000 per month just for the Seattle store and two or three local employees to be hired. So at least $250,000 to $350,000 per year.

But you need to factor in how many extra Roadsters they will sell because of their store. If they can sell an additional 2 to 3 per month at each location (it is a lot easier to sell when you have an experianced salesman on the floor) then they about break even every year. Then by the time the Model S comes out they are firmly established and can start to make profits off their locations.

[Cobos]

Yes I see your point James, but as VFX said for something as strange as a pure EV you need local stores. I believe that might be even more true for the Model S which will also try to sell to non early-adopters. They need to see it and drive in it to really want to put down money for this. Considering how long time it does take to create a store I think they want the basis for the store network already well established when they start producing the Model S. And as has been said they don't need that many extra Roadster sales or Model S deposits before the shop almost pays for itself.

Cobos

[TEG]

If they can sell an additional 2 to 3 per month at each location then they about break even every year...

Huh? I thought the profit margins on Roadster sales were rather slim.
(And reportedly negative on the 2008s).

You think selling 15 Roadsters per year will pay for all the expensses of running a sales/support office? Personally I don't think they will make financial sense until Model S is selling in volume.

[Arnold Panz]

Huh? I thought the profit margins on Roadster sales were rather slim.
(And reportedly negative on the 2008s).

You think selling 15 Roadsters per year will pay for all the expensses of running a sales/support office? Personally I don't think they will make financial sense until Model S is selling in volume.

I'm pretty sure they said they had the cost of each Roadster down to $80k or so now. Without including other expenses (corporate overhead, marketing etc.), you could give Tesla a top range of around $40k per Roadster "profit" (assuming around a $120k average sales price), so it would take at least 125 extra Roadster sales per year to cover the extra $5mm nut. And I don't think Tesla can claim anything close to a "true" $40k profit per Roadster sale, so the number should really be higher than that for the stores to pay for themselves now.

That said, $15mm total for 3 years to have all of these stores in place now seems like a pretty good investment to me, especially if, once the S gets off the ground, each store is at least paying for itself, and Tesla is not forced to dilute its own profits by sharing with any franchisees. The optics of having real live stores in place, especially if they are enjoyable to visit and well run, should pay big dividends for Tesla in the future, so assuming they can get the float, it's a very smart investment.

[James]

That said, $15mm total for 3 years to have all of these stores in place now seems like a pretty good investment to me, especially if, once the S gets off the ground, each store is at least paying for itself, and Tesla is not forced to dilute its own profits by sharing with any franchisees. The optics of having real live stores in place, especially if they are enjoyable to visit and well run, should pay big dividends for Tesla in the future, so assuming they can get the float, it's a very smart investment.

I am gradually starting to think that $5 million per year ($15 million till Model S arrives) might be worth it also. That assumes that our wild ass guessimate is close to accurate for the cost per store. The visibility of the stores in a limited number of major cities is a good message to send.

If they get an extra 3,000 Model S reservations in the next 2 years, that might justify the store expenses also. Just having the Model S test mules in the stores could make those reservations happen.

[doug]

To the Moon: Elon Musk's High-Powered Visions - BusinessWeek (http://www.businessweek.com/bwdaily/dnflash/content/sep2009/db20090910_452749.htm)

Tesla is profitable—at least this quarter—but will soon plunge into the red, he [Musk] says, when it ramps up production and fills out a dealer network that will have outlets in New York, Los Angeles, and other cities.

[vfx]

DO NOT underestiamate what Tesla is making on on all the afterbits for the Roadster. Doubling the price on paint and floormats really has got to make a difference in the bottom line.
I don't begrudge them though, after all if you have a car that needs no maintenance, you have to make money somewhere.

It's nice to see Tom is back in form. I how we get to see the article he was misquoted in.

To the Moon: Elon Musk's High-Powered Visions - BusinessWeek


and fills out a dealer network that will have outlets in New York, Los Angeles, and other cities.

"Will be in LA and NY?" I guess I have been traveling through time...

[tomsax]

My more verbose commentary on the BusinessWeek article got moved to a more appropriate thread here (http://www.teslamotorsclub.com/showthread.php?p=35776#post35772). (vfx: I'll post something on the San Juan Journal article if they ever get it online.)

What does "ramp up production" mean? Are they going to start making a ton of Roadsters on spec? Or is that referring to building the production facility for Model S? The former seems unlikely and that's a weird way to describe the latter.

The real question is: does Tesla have sufficient Roadster orders to remain profitable without the Model S design and production facility costs? Obviously, Grover didn't think to ask that question. To bad he hasn't been reading this thread.

[James]

Speaking of lousy reporters with bad info, Dan Davids (Plug In America President) and I did a joint aritcle for the Seattle PI a few weeks ago. That one got mangled also. We decided to start insisting on the right to review for accuracy before agreeing to any more interviews. The reporters are just sloppy, stupid or both. A horribly inaccurate acticle is worse than nothing at all.

[TEG]

The Dan Rather HDnet show was fairly accurate, but I recall at one point they said the Model S was "in production"...

[ChrisC]

We can do the math ourselves. What is the rent and the cost of two employees (sales and service)? ... I would guess that we are talking $20,000 to $30,000 per month just for the Seattle store and two or three local employees to be hired. So at least $250,000 to $350,000 per year. Multiply that by 10 to 12 stores around the world, some areas are likely much more expensive than Seattle.

Just a data point for you, my family in Munich says that the going rate for storefront space in the central district where the store is 100-300 Euros per square meter per month. Someone else can do the math on how that works out for the whole store.

Luxusobjekte in der Münchner Innenstadt - 7,8 Millionen Euro für eine Wohnung - München - sueddeutsche.de (http://www.sueddeutsche.de/muenchen/991/445728/text/) (in German)

[bolosky]

That is really bad news if this is accurate. Tesla is likely only selling a fraction of their production capability. Clearly the sales are not 100 per month. They really need some of these $5,000 depositors to convert to real production orders.

Does anyone think that at some minimum sales level it no longer makes sense to produce them? 10 per month? 20 per month?


I just talked with someone from Tesla (whose name I won't mention because I didn't ask him if I could quote him). He said that they're selling about 30 cars per week. The fact that people are getting pushed to lock in within hours of signing up is because Tesla switched the sales force to commission, and they get paid when you send in your payment after lock in. It's not that they're having trouble filling the queue.

He said that people from Tesla have been having to go to England to work on the Lotus line, because their business is up, too, and they don't have enough capacity to get all the cars out fast enough.

One additional nugget was that they're getting way more orders than they expected for the carbon fiber package, and the company that's producing the parts can only do 1/day. So, if you order carbon fiber highlights you might get a later production slot than if you don't.

The person who got a car 65 days after lock-in might have hit the best time to order. It was probably right before they switched to commission sales but at the tail-end of the early adopter queue.

This all makes me feel better than when I thought that no one else was buying.

[James]

If they are selling 30 per week, that is plenty. Over 1,500 per year would be more than enough to justify the Tesla Roadster continuing production.

But the evidence so far does not seem to point to 30 per week in new sales over a long sustained period.

Perhaps one week they did that after a new store opened. If they were selling 120 Tesla Roadster per month I think it would have shown up in other areas. More new owners announcing themselves here on this website would be a good indication of new sales.

You know how sales go. It can spike and decline based on any number of variables.

The evidence will be clear in about two months I think. If Roadster VIN #1,000 comes out with big press releases, then either new sales caused it to happen or they got a lot of those $5,000 deposits to finally pay in full.

[Tdave]

No way they're signing up 30 new buyers per week. I think that sales number represents the number of Bills of Sale they're writing per week currently. That's still only indicative of how many Roadsters they're delivering per week.

We know that someone that was assigned a production number in summer of 2009 got a number less than 200 away from someone that was assigned a production number in summer of 2008. That's less than 200 orders for that 12 month period. No way I'm believing new Roadster signups (deposits, sales, whatever you want to call it) have picked up to a pace of 30 per week now.

OK, let be back off a bit and say that the only way that could be explained that I could think of is that they're all European orders. Now that they're delivering in Europe, those orders are flooding in. Possible?

[Alpine Driver]

No TDave, not possible in my opinion. A CONTINUOUS pace af 30 orders per week (= 125 per month!) is not there and might never have been there.
I think it depends on a missinterpretion; surely they delivered 30 per week, maybe in a continous rate, over the last month(s).

btw, sent you mail in your inbox some time ago. Did you receive?

[raymond]

... the only way that could be explained that I could think of is that they're all European orders. Now that they're delivering in Europe, those orders are flooding in. Possible?

Small problem: AFAIK the 250 signature Roadsters have not all been sold yet.

[James]

I think they are right over 700+ right now and from what we know some of the recent USA deliveries ordered 65 days before their delivery.

I know one person in the Seattle area taking delivery this week. I will ask him for details and verify his VIN number.

At best they are within 1 or 2 months of their backlog being caught up. And it still takes at least 30-40 days for a customized order to start in England and get through Menlo Park and delivery.

Tesla has enough data to know the most common colors and option combinations. They might decide to stock 50 to 100 Roadster of the most common selections. They could have them in Menlo Park ready for immediate shipping to anywhere.

Then a customer could just make their selection. If it is available in Menlo Park, it would ship out right away. If they really want that option/color combo that is not on in inventory, then they can wait 5-6 weeks for delivery.

In the stores they could have 2 or 3 of the most common models also ready to go.

I think that is the strategy I would go with right now. So the factory could produce another 100+ Roadsters even beyond the current backlog.

[Roger Reid]

I am due to receive delivery of my Roadster hopefully this next week. The truck left Menlo Park on Friday (9-25-09). Delivery if this week would be at 65 days. The last 3 digits of my Vin # 704.

Sleepless in Seattle,,, OOps I'm near Boise.

[Lancelac]

I was just told that Tesla sold the entire marketing fleet over the last month. It'll be replaced by a new fleet of 2010s in a month or so. That probably makes for a serious profit since those cars were 100% written off as a cost.

[doug]

I was just told that Tesla sold the entire marketing fleet over the last month. It'll be replaced by a new fleet of 2010s in a month or so. That probably makes for a serious profit since those cars were 100% written off as a cost.

That is very interesting. I wonder if it matters that they had unique VINs (mostly labeled as VPs). I half expected them to do this in the future since VIN502 (red 2010 Roadster Sport with CF exterior accents) is being used as a marketing car, yet has a standard VIN.

Any word what price they were able to get for them?

[vfx]

...

Any word what price they were able to get for them?

Met a guy yesterday who bought the (a) NY Demo car. He said he got a "good" discount. The car is being shipped here to LA.

[bolosky]

That is very interesting. I wonder if it matters that they had unique VINs (mostly labeled as VPs). I half expected them to do this in the future since VIN502 (red 2010 Roadster Sport with CF exterior accents) is being used as a marketing car, yet has a standard VIN.

Any word what price they were able to get for them?

I talked about this in the same conversation that I mentioned before. The word was that they're marked down 20% from list price.

[James]

Any word what price they were able to get for them?

I know that the local service manager was trying to buy VP 31 for about $40,000. At least that is what he offered Elon for it.

Not sure if Elon accepted. It is a very "used" Tesla Roadster.
As of last week it was still here and was not yet sold. They drove it in our Seattle weekend drive.

[Lancelac]

I think the Chicago car went for about $75,000-80,000. Not really sure on that, though, nor do I know which Vp it was or what it was used for before it was here (about 6-8 months).

[TEG]

Where did VP11 end up?

[Serge]

Fleet sales is another possible market, by the way. I mean, EV Components have started a precedent, right :rolleyes: ?

Here is nice chunk of money available starting next year: FPL Group and Duke Energy Pledge 10-year, $600M+ Commitment to Transition Fleets to PHEVs and EVs (http://www.greencarcongress.com/2009/09/fpl-duke-20090927.html#more)

[doug]

Where did VP11 end up?
That would be interesting since I'm pretty sure VP11 was built before P1 even. Perhaps they're not reaching back that far.

[qwk]

I know that the local service manager was trying to buy VP 31 for about $40,000. At least that is what he offered Elon for it.

Not sure if Elon accepted. It is a very "used" Tesla Roadster.
As of last week it was still here and was not yet sold. They drove it in our Seattle weekend drive.
How beat up does vp31 have to be to be offered 40k? I assume it's in bad shape?

[James]

How beat up does vp31 have to be to be offered 40k? I assume it's in bad shape?

Let's just say that it has a few thousand miles of customers doing 0-60 mph testing and not much else.

That adds up to a lot of abuse and a lot of scuff marks.

[NEWDL]

An offer does not reflect value unless all offers are similar, this may reflect demand. If I offered 5k for a Roadster it does not mean it is worth 5k in the open market. VP31 sold...and for much more than 40k...

[vfx]

Let's just say that it has a few thousand miles of customers doing 0-60 mph testing and not much else.

That adds up to a lot of abuse and a lot of scuff marks.

How do you hurt an electric Motor? A new paint job and interior are in the 12K range.

[tomsax]

VP11 needed replacement brakes at 10,000 miles, but that's not a huge expense either.

I think VP11 took an exceptional amount of abuse, being the first customer drive car and taken for extended white-knuckle test drives. I don't envy Zak and the others who were in the passenger seat for those early test drives. VP11 rattled horribly when I took it for a second test drive in July of 2008.

I doubt they sold VP11 since it would need a lot of work to make it feel like a new car. When they started doing test drives in the newer VPs, they switched to auto-cross style customer drives. That sort of driving is hard on tires, but not really so rough on the car.

I do wonder what sort of battery pack warranty they give with the VPs they sold...

[mnx]

I think the Chicago car went for about $75,000-80,000. Not really sure on that, though, nor do I know which Vp it was or what it was used for before it was here (about 6-8 months).


man I'd love to snag a used roadster for under 80k...
- mnx

[Alfred]

According to the "Hamburger Abendblatt" Tesla in Germany is sold out and has about 100 orders there, pending delivery in ten weeks. The new Munich store is empty and new cars will come in from mid-October. Sales worldwide should pass the 1000 mark in 2009 and 2000 Roadsters are planned for 2010.
Auto: Erste deutsche Filiale in München eröffnet - Elektroflitzer Tesla ausverkauft - Wirtschaft - Hamburger Abendblatt (http://www.abendblatt.de/wirtschaft/article1208616/Elektroflitzer-Tesla-ausverkauft.html)

[jtibble]

Speaking of the guy (one page back) who bought the one in NYC... I was just there about four weeks ago and saw the Roadster for my very first time (in person, dark green, VIN 281), and the sales manager told me that it was incredibly difficult to get the car in the showroom with two forklifts and many hours maneuvering through the front door and glass walls. I'm surprised they were so willing to part with it, now that they have to get several more cars in to make up for the loss!

[Arnold Panz]

Speaking of the guy (one page back) who bought the one in NYC... I was just there about four weeks ago and saw the Roadster for my very first time (in person, dark green, VIN 281), and the sales manager told me that it was incredibly difficult to get the car in the showroom with two forklifts and many hours maneuvering through the front door and glass walls. I'm surprised they were so willing to part with it, now that they have to get several more cars in to make up for the loss!

The only "car" in the NY showroom now is the EP2, which doesn't even have the drivertrain in it. The woman there said they sold all of the 2008 floor models (which is a good thing), and they'll eventually get new demos for the NY store, but probably not until late fall when they finally finish building the thing. The architectural specs (which they have posted on the wall in the store) look really nice. Right now, it's kind of dumpy, with boxes and stuff laying around, but should be really nice once it's finished.

[jtibble]

The only "car" in the NY showroom now is the EP2, which doesn't even have the drivertrain in it.

Are we referring to the same car? Dark green exterior, light brown seats?
http://www.umich.edu/%7Ejtibble/08-26-09_1715.jpg

[TEG]

No, EP2 would be red.

[vfx]

... the sales manager told me that it was incredibly difficult to get the car in the showroom with two forklifts and many hours maneuvering through the front door and glass walls. I'm surprised they were so willing to part with it, now that they have to get several more cars in to make up for the loss!

It's what they do.


Move cars.

[Arnold Panz]

No, EP2 would be red.

Correct!

[doug]

Tesla Q12010 sales flat, but down over 50% in US - Darryl Siry’s posterous
(http://ceo.newsbasis.com/tesla-q12010-sales-flat-but-down-over-50-in-u)


If you combine US and international sales, but exclude the powertrain sales, I estimate unit sales of roughly 131 cars worldwide for 1Q2010, for an annualized rate of 524 cars...

[dpeilow]

"estimate", "roughly"... 131 (!)

Seems a bit precise.

[GSP]

It looks like Daryl is making some reasonable assumptions, like $140,000 per US sale. With $8.8M gross income reported by Tesla that works out to 62.8 cars sold. Daryl rounds up to 63, then does the same exercise for International sales. This gives him a precise looking 131 cars. However, he acknowledges it is an estimate because it depends on assumptions as well as reported facts.

GSP