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Congratulations to everyone who held on and especially those that bought during the darkest days! This is a small victory for us, but Tesla still has work to do.
After looking at the Q3 update I realized they improved margins on service to from -22.8% to -21.7%, but still lost ~$119 million in that area, I'm trying to figure out why Tesla is losing so much in service, and what is stopping them from reversing that.
I thought in most dealerships service is a major profit driver. What is Tesla doing differently that is costing it so much money?
Is it simply the pricing of the parts? Tesla has the parts priced so low that they are losing money when you add everything else in?
Can they price the parts higher without some backlash if that is the issue? I assume there's some reason Tesla has elected not to increase parts pricing.
Cheers!
-Mike
The answer is really simple IMO: Tesla has an incredibly young fleet due to exponential growth, with average car age below 2 years.
Traditional carmakers have average fleet ages of 10-15 years. (!)
I'd guess that 50%+ of Tesla Service activities are still warranty work, which hurts margins. The current negative margins are basically investments into a future service profit stream.
Give it a few years, Tesla Service will be a gold mine.
The answer is really simple IMO: Tesla has an incredibly young fleet due to exponential growth, with average car age below 2 years.
Traditional carmakers have average fleet ages of 10-15 years. (!)
I'd guess that 50%+ of Tesla Service activities are still warranty work, which hurts margins. The current negative margins are basically investments into a future service profit stream.
Give it a few years, Tesla Service will be a gold mine.
Tesla Motors Inc (TSLA) Q3 2018 Earnings Conference Call Transcript | The Motley FoolElon R. Musk -- Co-Founder, Chairman, Chief Executive Officer & Product Architect
Yeah, long-term I'd expect service to be a significant revenue item and to be a positive margin contributor. And it's going to be a function of our fleet size and (multiple speakers), yeah exactly we're under warranty, it is like a lot of surplus on warranty. But as the warranty expires, so there is like non-warranty items then we expect service to positive gross margin.
In addition, the car companies will have to fight the oil industry - the teat that fuels them.The issue you failed to grasp is that there are significant baggage attached to those capital. Usually the old times heroes of those companies, the people who worked hard achieved great financial success for the company in the old way, they're the backbone of the management, for a good reason.
They're, unfortunately, the overwhelming force against big changes. Even very innovative companies such as Intel fell in this trap. How they missed the mobile train completely?
There are, throughout history, only two once successful companies ever turned around their ship, Apple and Microsoft. Both cases lots of head rolled from top level management team.
The car companies have a even bigger problem, not only they have to fight with their entire management team whose members have ICE background, they also have to fight with their distribution channel.
Try understand the case with Intel first before coming back here peddling the nonsense about "competition"
They are hoping to see the light at the end of the tunnel. They are hoping for proof of fraud. They are hoping that they will be able to realize profit and watch Tesla die the horrible death they feel it deserves.
Now that I have essentially filled my IRA with TSLA, I am only now fully realizing the amount of shares and $$ I have invested. Roth, regular IRA, and basic account are all filed with TSLA. My plan would be to sell some from my non-retirement account as I would use that $ to help with house down payment for next year.
Of course I would prefer to wait for the stock to be at say $400 before doing that. What are the chances we reach $400 in the next 6 months???
Don't all police officers carry a specialized tool to break automotive glass?
This is second best option when Fire Department and jaws-of-life is not available.
The answer is really simple IMO: Tesla has an incredibly young fleet due to exponential growth, with average car age below 2 years.
Traditional carmakers have average fleet ages of 10-15 years. (!)
I'd guess that 50%+ of Tesla Service activities are still warranty work, which hurts margins. The current negative margins are basically investments into a future service profit stream.
Give it a few years, Tesla Service will be a gold mine.
To make it realistic they need to allow control of the emissions control app. At max volume that should make some noise.I wish they could add the Model 3 to one of these games. I played with the S a bit, and it was weird not having exhaust...even though I'm used to not hearing my own exhaust on the track now.
Quite frankly everyone should have the tool in both the front and back of their cars.
Florida In particular:
with the abundance of canals, lakes and with water everywhere in Florida EVERYONE there should have the products that combine the ability to cut restraints plus break glass.
In my Xs, I have 6–two per row (driver and passenger sides).
The short sellers at this point remind of the guys trying to defend trump at this point.
In both cases, it's just like, ok now you are just being silly.
Wasn't expecting this:
Congrats, you won the Tesla bet, as the company just reported a positive net income quarter.
Please send me a link so I can donate $500 to your favorite charity.
Best regards,
Whitney