Tesla Fashion Island Grand Opening Weekend (2011-11-18)

[Norbert]

Tesla is wise to steer away from the "auto mile" strips that ring every U.S. city, but rather to position Tesla as a premium consumer brand like Apple or Bang & Olufsen. Rethinking the retail model for car purchases is a good thing.

Also, electric cars as such still need a lot of "informing the public" and reaching those who (almost) don't know about them and wouldn't look for them (even though there may be some level of curiosity).

[ckessel]

Also, electric cars as such still need a lot of "informing the public" and reaching those who (almost) don't know about them and wouldn't look for them (even though there may be some level of curiosity).

I think that's a great point. The other auto stores can exist on outskirts of the city and other areas with big lots for cars because the product brands and capabilities are well known and people seek them out. With Tesla, they need to generate name awareness and educate at the same time. Being very visible in high foot traffic areas helps achieve that goal.

[vfx]

... (I would assume they are paying well into mid 6 figures a month for any signifcantly sized space on 3rd st) Personally I would have rather seen Tesla put that money into R&D, it seems like all these flashy grand openings/locations are wasteful for a startup car company...

They have to start from scratch. Spend an hour in one of these new high traffic stores. The overtly young sales-kids answer the "howfardoesitgoHowlongdoesittaketochargeDoesyourelectrictybillgoup?" questions nonstop. Dozens per hour. Maybe they get a buyer nibble 3 times a day. For them the manager comes out and talks money and gives them the ride of their life.

If Tesla were in an Auto mall the only customers that would walk in would be someone already educated about electric cars and interested in hearing about them. Though an automall might get more traffic than the LA store does now. The Newport store (ex-Rolls Royce dealer) probably gets some one-stop Ferrari-Tesla shoppers.

[DaveD]

Tesla's avoidance of the traditional use of dealers is giving them the flexibility to evolve their marketing/sales strategy. If they had gone with dealers, they would've been stuck with the same old way that everyone else markets and sells cars. Owning the stores, they can change things relatively quickly, as needed.

[Mycroft]

Tesla's avoidance of the traditional use of dealers is giving them the flexibility to evolve their marketing/sales strategy. If they had gone with dealers, they would've been stuck with the same old way that everyone else markets and sells cars. Owning the stores, they can change things relatively quickly, as needed.

Yep, they've really taken the Apple model to heart. Own EVERYTHING!

[Lloyd]

Yep, they've really taken the Apple model to heart. Own EVERYTHING!

I think more appropriately would be "controll everything"!

[Mycroft]

You got it! I thought of that just as I was posting.

[VolkerP]

Elon stated that he had to own Tesla (=be CEO) in order to control everything. Basically the same here.

[Mycroft]

Elon stated that he had to own Tesla (=be CEO) in order to control everything. Basically the same here.

A very good thing IMHO.

[smoothoperator]

There's been some evolution in the strategy since Blankenship signed on. Tesla is splitting the point-of-sale from the service center, which should allow Tesla to get higher-end real estate for the point-of-sale (and lower-end real estate for service) with the same marketing budget.

Tesla is wise to steer away from the "auto mile" strips that ring every U.S. city, but rather to position Tesla as a premium consumer brand like Apple or Bang & Olufsen. Rethinking the retail model for car purchases is a good thing.

I do not think that the Newport Beach Store on West Coast hwy is lower end than Fashion Island, probably the opposite. It does not make much sense to acquire high visibility/expense real estate for service centers (like they did in Newport Beach). Its obvious they were in a rush and just took what they could get in this market.

I guess I cannot grasp the concept of purchasing a car the way I would purchase a TV or Computer. Most of the people who will be buying these cars are not the casual mall shopper but rather individuals who have done research and knows what they want. This may change over time, but right now there is no doubt in my mind that the vast majority of people who buy these cars, do a ton of research beforehand. If this is the type of consumer that are buying these cars, is it necessary to lease expensive shop space where 90% of the people who come through the doors are not your customer? Heck I think this strategy may help Chevy and Nissan, people will go into Tesla's showroom, learn about ev's, hop online and go and buy a cheaper electric car. Its good for the cause I guess, but when you are selling 60-100k cars instead of 2k computers or 400 dollar ipods I think the type of consumer that you are trying to attract is different than the ones that shop at malls. If Tesla was selling Tata Nano's or Vespa's this concept may work but at that price point I am not sure how much of an increase in sales this type of store concept will add over the traditional model. People tend to seek these cars out (like any other high end marque). This is why Rolls Royce moved from that space to over by the airport, they realized that visibility is not necessary, the individuals that want that particular car will go and seek it regardless of where the dealership is located. Some mighty risky moves Tesla is making! I could understand implementing this later on, they could have very easily kept their existing stores (and added new locations similar to what they have now in new markets), and just leased nearby warehouse space for the cars/service.