• Is Tesla Motors too big for its britches?


    How many Model S electric cars will Tesla sell in 2013?

    No one needs an electric car.

    This is a fact that Tesla Motors would do well to remember.

    We have no doubt that millions of people may want an all electric car, but of course far fewer potential new car customers can actually afford to purchase a $58,570–$106,570 all electric Model S.

    We also suspect the new Model S is a huge leap forward and a technological tour de force but we can’t confirm it. You see no one at Tesla will return our emails or even bothers to send us a Model S press release.

    In fact, there’s never been a Tesla of any sort in our local Denver Automotive Press Fleet.

    Tesla has never invited us to review or even drive the new Model S….which is odd given the fact that our reviews now reach 2.5 million potential Tesla buyers each month.

    But this isn’t about us.

    It just strikes us as strange that a car company that barely sold 2000 Tesla roadsters over 5 years takes such a casual approach to marketing and PR.

    Is this the Silicon Valley approach to sales and  marketing? You know: build it and they will come (or in this case buy).

    Does Tesla Motors believe that just like Apple Computers people will see the intrinsic value of their new car and lineup at Tesla Mall dealership to pluck down $58,570–$106,570 for a new Model S?

    If that sales and marketing strategy didn’t work with the Tesla Roadster, why would it work for the Model S…is certainly a question that any smart car company might be asking right about now?

    Let’s just put this into perspective. Toyota sells more cars in a week than Tesla has ever sold. Period.

    Nissan recently shifted their marketing approach for the slow selling all electric Leaf according to Automotive News,

    “We were a little bit arrogant as a manufacturer when we went to the 50-state rollout, We had assumed that there were people just waiting for the vehicle who would raise their hand and say, ‘Give me a Leaf, give me a Leaf, give me a Leaf. We didn’t prepare our dealers properly. “We’ve pulled back a little bit and are telling our dealers, ‘You don’t market this car traditionally. You don’t put it in the newspaper. You need to go and find the electric car buyer in your market.”

    Automotive News goes on to report that, “To kick-start sales, Nissan plans to offer a lower-priced U.S.-built Leaf, reducing content slightly to cut the base model sticker price of $36,050, including shipping.”

    Unlike Apple, which has few rivals and track record of sales success, innovation and a deep and loyal customer following Tesla is directly competing with car companies like BMW, Mercedes and  Cadillac which all have a long track record of sales success, innovation and a deep and loyal customer following.

    It seems to us that in such a hyper competitive market place Tesla Motors would do well to be a bit more humble in their approach to sales, marketing and PR.

    But that’s not the Silicon Valley way. In fact many Silicon IT companies have been hugely successful by largely ignoring any direct customer (read user) contact.

    When’s the last time you were able to actually call (or even email) someone at Facebook about a problem?

    But Tesla Motors isn’t giving away their car and monetizing their customer base. They may have their headquarters in Northern California but they are selling a car to middle America.

    We just can’t help but wonder what will happen when the new Tesla Cali manufacturing plant ramps-up to full production and hundreds of new Tesla Model S cars are rolling out of the factory door each day.

    Will they start to stack up in the garage structure of your local mall dealerships, or will they all  find a new and happy home?

    How deep is the demand for the $58,570–$106,570 for the all electric Model S?

    And how many cars can Tesla sell by not having them featured or reviewed in local newspapers and simply ignoring much of the automotive press?

    “Time will tell” is certainly an old and well-worn cliche.

    But we can’t help but feel that unlike insurance, health care and even food many cars buyers want, but few if any actually need an all electric car….at least not today.


    Roman Mica
    Roman Mica
    Roman Mica is a publisher, columnist, journalist, and author, who spent his early years driving fast on the German autobahn. When he’s not reviewing cars or producing videos, you can find him training for triathlons and writing about endurance sports for EverymanTri.com as our sister blog’s publisher. Mica is a former broadcast reporter with his Master’s Degree in journalism from Northwestern University. He is also a presenter for TFLcar’s very popular video review channels on YouTube.

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    46 thoughts on “Is Tesla Motors too big for its britches?

    1. Not really seeing any analysis here, just some fence sitting. If you are offer a counterpoint, I need some more red meat than this.

      Joseph

        1. Doug’s post was a legitimate question, which did not require context. He was referring to the author posing supposedly rhetorical questions, as if interviewing himself, which is ok if you are a shock-jock like a Rush Limbaugh.
          I realize that this was in the “Opinions/Editorials” section of the site. Therefore, if the article was meant to provoke, then mission accomplished.

    2. I completely agree with “T” on this.
      The questions the author of this paper asks are rudimentary and would take minutes to find out the answers.
      First off let’s go with some corrections:
      Tesla can’t offer every single person or journalist a test drive in the car specifically when other, paying customers have not driven the car. Likewise, said car reviewer should have emailed Tesla and asked for a test drive. They were more than accommodating with my test drive.
      Second, the journalists criticizes the price and who will purchase said car and then says they have 2.5 million potential Model S buyers. One of those statements can’t be right- either you have a market or don’t.
      Third, the Roadster was a limited production vehicle,. they were making roughly 2,000 and they sold them without any advertising. I would call that a win. The Model S has over 15,000 reservations and over 2500 have already received their cars.
      Comparing Toyota (a company whose bulk sales are for vehicles less than $25,000) to a Tesla is not a good analogy. In all respects the Tesla Model S is comparable to an A7, BMW, or Porsche.
      to paraphrase the author “hundreds of Model S rolling off the line a day”. Wow, time to buy their stock, that’s 4 times their yearly projection. At most, they plan on making 20,000-30,000/year. That’s 1% of the luxury car market.
      The author misses the point that the “mall dealerships” are not dealerships, you can’t buy a car off the lot, you have to order it.
      I don’t think Tesla is ignoring the automotive press, it’s won Motortrend’s, Yahoo auto, automobile magazine, and popular science just to name a few. I also saw it in my local paper.

      1. Last Year when we spoke to Nissan they had over 100,000 reservations for the Leaf. As of November they sold exactly 8,330 in the U.S.

        1. And Tesla has sold over 2500, since it has started releasing the Model S in less than 6 months and for most of those months, they were scaling up- currently they are close to full production of around 300-400 cars/week, not day.
          There’s a big difference between putting down $99 for a Leaf reservation (less than 0.5% of the cost) and $5,000 for a Model S (5-8% of the cost)
          I think you may have heard Nissan incorrectly. Most other news articles report Nissan as having 20,000 reservations, not 100,000 reservations
          http://www.prnewswire.com/news-releases/nissan-reaches-20000-reservation-milestone-for-nissan-leaf-first-phase-of-customer-reservations-completed-103652089.html
          http://www.mnn.com/green-tech/transportation/blogs/the-nissan-leafs-delivery-issues-on-a-slow-boat-from-japan

        2. Tell me, what was the cost to reserve a Leaf? $100? It costs between $5k and $40k to reserve a Tesla. Mystery solved.

        3. Preston Tucker raised $170 billion (in 2012 dollars) through stock sales and $19 million (in 2012 dollars) in accessory sales to buyers who had reserved a Tucker ’48 and built a total of 51 cars.

      2. Roman’s correct. As long as electric cars are not economically viable, they won’t sell. Let’s not forget performance losses in winter temperatures and batteries loosing capacity over their lifetimes.

        $60,000+ for a “runabout” that is impossible to take on a trip is ridiculous especially when you can buy a BMW, Cadillac, Mercedes..plus enough gasoline at $5/gallon to travel 250,000 miles for as much or less and go 400 miles without stopping and when you do, it takes minutes to refuel..

        The worst thing about Tesla is taxpayers subsidizing $7,500 – $10,000 for each one sold to a wealthy person with more money than brains for use as a 4th car. They sure make a swell eco statement in front of the red carpet as the Oscars.

    3. So your thesis is that they need to market their car better because other car manufactures have failed to sell enough of their EVs?

      This is flawed logic. The Model S has a 1-year backlog and the incoming reservation rate as of this week is higher than their planned production for all of 2013. That means that even if they do manage to ramp up to the level they hope (which is going to be extremely hard), the reservation list will still be GROWING. And your advice is that tehy market more and increase demand???

      Tesla recently just raised prices to try to cool off demand. And your advice is that they need more marketing?

      I’m gonna let the pros run Tesla. They seem to think that build out production is job #1. I’m inclined to agree. When they get the wait down under 6 months, then we can start talking about where they can find more customers.

      1. Wow, “Tesla recently just raised prices to try to cool off demand.”
        It certainly seems like their marketing approach is working on you.
        So how much money do they make by not selling more cars?

        1. It was not to cool off demand, it was to offset front end costs, and they immediately followed this with an announcement of a drastically reduced replacement battery cost plan.

          Comparing the Rav 4 to the Model S is like like comparing the Rav 4 to a M5 which is the Model S’s direct competitor. Leaf’s Volts, Rav 4 ev’s… all fail to sell for 1 basic reason, a high price tag, for an econo beater.

          Tesla got it very right when they used a luxury platform, and justified the costs of the tech with status.

        2. Yes, to cool off demand. Not marketing, just good business. Of course they wouldn’t say that, but every good business major knows, “if your restaurant is always packed, your food is too cheap.”

        3. Roman, I watch you on YouTube and enjoy your shows. Two things: You mentioned you were not invited to test drive the Model S. There is no reason you cannot call up George Blankenship (Tesla VP of Sales) to test drive the car. They allowed a lot of media go through the in-deep review including Motor Trend which they won Car of the Year award. Secondly, the one and only reason IMO, Leaf is not selling is Leaf is so UGLY, EV or not. No one would want to spend the premium on leaf and feels they are driving an odd looking car. For some reason, many car companies didn’t never get it and they continue to design the odd looking EV and expect customers like it without doing any market research. You look at Tesla Model S, people turn head for the car, great looking. Performance is great and you feel special to drive and own Model S.

          1. Thanks for watching James. I certainly poked the hornets nest with this opinion. The irony of this entire story is that we actually like electric cars. In fact we just wrote a glowing story about Tesla http://www.tflcar.com/2012/12/tesla-teases-with-this-tasty-hatchback-concept/.

            But of course this story isn’t just about Tesla. It’s also about the need for electric cars and on many levels this quickly becomes political and personal. The video at the end of this story is a perfect example of this issue. We got a lot of hate after we published the video, just like now with viewers questioning our journalism and our motives.

            Honestly we don’t really care how many Tesla Model S cars the company sells, but to some of the commentators this seems to be some sort of litmus test of their personal beliefs.

            We appreciate all of our comments and we look forward to revisiting this issue a year from now. As to the merits of the Model S….we obviously have no first hand knowledge.

            1. It’s not a hornet’s nest. It’s that the opinion is based on incorrect data and analysis that most people could identify right away. The opinion piece is what what could be characterized as schizophrenic.
              1. One one end you ask whose going to purchase the car? and the next sentence there’s 2.5 million potential buyers
              2. First you compare it to Toyota in terms of volume and the you say that they are competing against Mercedes, and BMW, who sell less cars than Toyota.
              3. You cite that Nissan switched it’s marketing approach and then expect Tesla to make the same folly.

              There are points that should have been researched and Tesla enthusiast’s expect at least a small level of research when someone writes about their favorite car company. Most of the questions asked in this opinion piece could have been found either by going to Tesla’s website or looking at their SEC reports, or using common sense.

              Yes, they COULD spend loads of money marketing and COULD have a backlog of more than a year, but that’s a pitfall. Personally, if I see a slick superbowl commercial praising a car and then see my neighbor with the same car cursing it out everyday, no amount of marketing will change my opinion of that car.

            2. now you’re taking the “high road” and at the same time questioning the motives of your readers? A lot of people develop love affairs with certain cars…especially unique or groundbreaking ones….and especially when the car is sexy. The Tesla for many, like me, is all three of those. It is not a political thing….it’s more that many of us are in love with this car and the story behind it. We know about it inside and out…the way Stang or Vette enthusiasts know all about the apple of their eyes. I came across your article because i have a google news alert for anything Model S. People like me scoff at your article because of the comical lack of knowledge about your subject. Even the pictures you use in the article are of the prototype from over two years ago. Imagine someone talking trash about the Broncos and suggesting Manning is too old and soft to lead them to the superbowl. Anyone who follows the Broncos knows how ridiculous and uninformed the statement would be. You wrote a ridiculously uninformed article about something that has a lot of fans. We’re calling you out on it. That’s all. Go Steelers

            3. Roman,
              i just read the article you noted about the little tesla hatchback concept….and now i feel bad! Maybe i was too combative in my first post. Part of the problem is that if you follow Tesla articles they are rarely negative unless someone with bias or ulterior motives is the author. I doubt that is the case with you….and the little hatchback article is fascinating! Also i complained that you used photos of the Model S prototype but in fairness, of the 4 photos you posted, the first two are in fact of the production model. I still think the premise of your article is way off and poorly researched….but i apologize for being so rude about it!

        4. They are limited by production at the moment. They are not making any less money than they could already make, unless they were willing to take on a very large backlog of reservations. This is all in the news, you know…

    4. You can subscribe to their press releases via the RSS feed on the web site.

      It’s improper to compare all of Toyota’s sales to Tesla’s … what’s proper to do is to compare Tesla’s sales to other luxury car makers.

    5. This is such a poor piece of writing it’s unreal. As Billy Bobo said: not hard to see why you haven’t had the chance to test drive a Tesla!

      1. What’s unreal is that we actually allow anonymous comments from somebody who calls himself Billy Bobo. We have to change this ASAP.

    6. Sounds like you’re butt hurt you didn’t get an interview and now you got your troll suit on. Also find it interesting that you would right an op ed, then sit hear and and be combative with your readers. I would think your team would change that ASAP…It’s like a bad forum…First time reading something on your site, not coming back…

    7. Having grown up around Denver, it’s understandable why you might not understand the “Silicon Valley Approach”. I live in San Francisco now, and if you travel here, there is a big difference you will notice. In Denver (and it’s suburbs), people live in nice houses and drive Subaru’s. If you live in the Bay Area, you notice that people live in tiny crap apartments and drive BWM M5’s.

      They do this because housing is so expensive, there is no snow or ice, and status symbols are more important in California culture. Driving 5 miles into work I usually pass by a half dozen C-class’s, a couple of M’s, one or two 911’s, and not infrequently a Lotus or a Lambo.

      They are in Silicon Valley, and are marketing like a Silicon Valley company, precisely because the heart of their market is Silicon Valley businessmen. The businesses around here are already starting to deploy charging stations at the office as employee perks. Their efforts are calculated and concise, and it’s not surprising you aren’t seeing much traction in Denver – Tesla’s aren’t cold weather vehicles.

      1. People live in crap apartments and drive expensive cars in San Francisco for the same reason it happens in South Central Los Angeles. They’re stupid.

        At least the Escalades with 22s parked on Martin Luther King Blvd. don’t require 150 ft extension cords to reach third floor apartment power outlets.

    8. Isn’t it apparent that Tesla does not need much marketing at the moment? Look at all of us posting about a car that I suspect none of us have driven or perhaps even seen in person.

      The “raising prices to cool off demand” bit is marketing speak for “we can’t make them fast enough” which is a double-edge sword. Truth is Tesla is not quite there yet as far as production capacity, and they readily admit that.

      I believe that they are at the point where they would rather put more Tesla’s on the road than collect more reservations, so marketing can take care of itself (and it has indeed).

      The purpose of this article was nothing more than to generate clicks. Well, you got me.

      I never heard of TFLcar before. 2.5 million readers? Does that include spam?

    9. Bwah bwah bwah … I didn’t get all the attentioin I deserve … boo-hooh.

      Here’s a novel thought – go get a test drive the same way everyone else does.

    10. “Is this the Silicon Valley approach to sales and marketing? You know: build it and they will come (or in this case buy).

      Does Tesla Motors believe that just like Apple Computers people will see the intrinsic value of their new car and lineup at Tesla Mall dealership to pluck down $58,570–$106,570 for a new Model S?

      If that sales and marketing strategy didn’t work with the Tesla Roadster, why would it work for the Model S…is certainly a question that any smart car company might be asking right about now?”

      Um, yes. Why market when over 14,000 people have put a minimum of $5,000 down to get on the waitlist? Tesla would rather take the marketing money and spend it on Product Development, which is pretty smart considering the next 9 months of production is already sold.

      Once there’s no waiting list, THEN you consider spending money on advertising.

      This is a laughable opinion piece.

    11. As pointed out already, Tesla’s reservation rate is right at, and possibly exceeds their currently planned 2013 production rate.

      A point that hasn’t been made yet is that the vast bulk of those reservations are from the U.S. market, which is the only market where the car is currently available. However, the Model S is going to be sold worldwide, starting with Europe in the next few months.

      Europe alone represents a market as large as that in the U.S., and Tesla saw a huge spike in reservations there in the past month after sending just a few cars for customer test drives and holding some minor media events.

      If you are concerned that Tesla is not doing a good job of marketing here in the U.S., I can assure you that their efforts in the E.U. are just a pale shadow of what you see here, and their efforts globally are almost non-existent.

      The reason, of course, is the reason already identified. Tesla simply does not have the capacity yet to satisfy demand. As a small company that lacks the ability to wave a wand and magic new production lines into existence, it would be kinda boneheaded to invest limited resources into marketing (for which there is no need) instead of into iterative increases in their production capacity (which is exactly what they are doing).

      This should be obvious to anyone willing to invest a couple of hours in actual reporting on a topic.

    12. Roman,

      It’s not hard to test drive a Tesla. I just drove one today at the Tesla Store in the Oak Brook Center in Chicago. I had called them last week and made a reservation. Very easy.

      You MUST drive this car to believe it. The zero to 80 test pulled the skin back on the side of my face and caused pressure to build up in my ears. My buddy felt the same sensation, so I’m not making this up.

      I almost dropped the down payment on the spot. Gonna think about it for a couple of weeks.

      1. I know. I loved the acceleration of the Roadster. Just fantastic. Just curious. Why are you thinking about it? What’s giving you pause?

    13. Tesla is not selling cars to middle america it’s selling to the same demographic that buys high end BMW, Mercedes, and Lexus.

      They are going to have a much harder time matching the model S than many analysts realize…not for lack of technology or ability…because making a model S/X killer would mostly cannibalize their own traditional products sales and internal political pressures will drive them to avoid that until Tesla has grown into a much greater threat. Look at BMW’s response in the pipeline. A several hundred thousand dollar exotic supercar that’s still just a hybrid and an all electric expensive econobox…sort of a BMW Leaf. Both carefully designed not to compete with their regular product line (or Tesla).

      Look to see what happens with sales in Norway and Denmark in 2013-2014 for Tesla, to see an example of BMW’s nightmares with Tesla eating their market share like a Tasmanian Devil.

    14. Of course this isn’t about PR access– It’s all about controlling the message for right or wrong.

      There are lots of piitfalls in being first to market with new technology, so by controlling the message- call it sandbagging or avoiding or whatever you want to- Tesla has more to lose at this stage of the game than PR access. One snarky review and Tesla’s toast, not unlike what has happened to Fisker.

      Remember the old adage: “You only get ONE CHANCE to make a FIRST IMPRESSION!” Do what you have to to make sure it’s a good one.

      1. If you don’t want snarky reviews, don’t build electric cars with taxpayer money that are economically unfeasible.

        The Tesla is no more than a eco-weenie billionaire’s wet dream. ‘

    15. Hey Roman,

      Whose idea was it to use black text on a dark grey background for entering comments?

      The guilty party should be drawn and quartered.

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