Is Tesla Going To RUIN Everything About The Car Business As We Know It?

Tesla has been a very interesting company to watch. From inception it seems that the founder, Elon Musk, is completely disrupting the automotive industry.

Literally, everything about this company is going against the grain of the old-school auto business.

From the company's public relations' efforts to the marketing moves to how the company has decided to sell products to the actual vehicles themselves, it is almost like a massive middle finger to the space. Here's the thing: That may not actually be a bad thing — in some cases it absolutely is.

Take, for example, how Tesla has crushed the dealership model. Musk has removed the middleman of franchises. Now you have retail stores and a fixed price. While that's good for folks who do not know how to negotiate, it certainly will make folks like Agent 001 a bit concerned. IF every auto manufacturer employed a similar model it would mean the end of deals as we know it.

And then there's the marketing of the cars. Forget about auto shows. Forget about teaser clips and high-energy — in some cases, low-energy — advertising. Product teasers can be found via the head honcho's Twitter feed and you have to hang in there for the scheduled preview dates.

Taking these two examples — there's more — into consideration, we're a bit curious: Do YOU think Tesla is going to RUIN everything in the car business as we know it? And, if so, is that necessarily a BAD thing?

Disruption tends to happen in places where things are archaic and ripe for chance. Remember that.

HenryN - 4/2/2016 5:28:15 PM

+3 Boost

Don't think it's going to ruin the current dealership model - not yet anyway.

But it's a huge middle finger to the establishment.

MrEE - 4/2/2016 5:34:54 PM

-1 Boost

I think most would welcome the elimination of haggling on price. Does not mean that promotions will also go. Tesla will have marketing, just has not needed it. You don't need to fear the reinvention of the industry.

Asimuth - 4/2/2016 6:34:43 PM

+1 Boost

The fact that one individual gets a good price for a vehicle does not change the economics of the supply chain. The cost of manufacture and delivery is real. All the haggling exists in the margin of profit. By eliminating one of the margins the consumer price should better approach the cost of manufacture/distribution. Musk was brave to do what he did, but he pretty much had to because he couldn't sell volume with another 20% premium on his already-high costs.

Vette71 - 4/2/2016 6:54:22 PM

+3 Boost

It is still a car, just with a different power-train. As long as Tesla is selling to early adopters and they are the only game in town their model works. However once they have to sell to the masses who have trade-ins, need local service, etc. and there are competitive alternatives that the masses are used to, it will be hard for Tesla to use this model. Further as a public company there will be pressure to meet quarterly goals, and "cash on the hood" type things start to happen. (see Saturn)

The real disrupt-er, autonomous vehicles that you pay for on a peruse basis and don't need to OWN a vehicle. Mary Barra gets this. Many of us on this site won't enjoy that scenario however.

MDarringer - 4/2/2016 7:50:57 PM

+1 Boost

Tesla will ruin itself. It now has three models when it is still trying to work the bugs on the first one. Adding a second and a third model only increases their headaches.

The EV market is still not big enough to be significant and sales of the Model S are to greenie, early adopter types and not indicative of mainstream buyers.

Once Audi gets their etrons going and if the Porsche Mission E can be brought to market near the Model S's range, Tesla will have a powerful foe in VWAG. BMW is already in with both feet as will Mercedes.

The Chevy Bolt is quite significant because it is a mainstream EV built by a manufacturer with 105 years of mainstream vehicle expertise.

Tesla's expertise was in dropping batteries into and Lotus and more recently it was the EV whore to the wealthy. They have no expertise in building mainstream cars.

The mainstream manufacturers will easily outdo Tesla, when a real business case exists.

HenryN - 4/3/2016 3:01:37 AM

-1 Boost

How many pre-order has GM received for its Bolt due out this year ? if Porsche/Audi has a strong case for its EV, why not open the pre-order line and see how many people put up a deposit ?

Tesla already opens the game with a big bet, who has the gut to raise ?

MDarringer - 4/3/2016 11:21:56 AM

+1 Boost

@HenryN That's irrelevant. A lot of people put deposits down on Deloreans and we all know how that ended.

The Model 3 is still EIGHTEEN MONTHS away from production, so ponying up for one--assuming yours is the first made--will net you a car that has been around for two model years.

Moreover, Teslas have NOT stood the test of time. At $35K I'd rather buy from GM, Ford, VW, Toyota, Honda, or Hyundai-Kia. For $100K BMW, Audi, or Mercedes.

PUGPROUD - 4/2/2016 8:22:28 PM

+4 Boost

It's still early, don't count out the big boys.It's not how you start its how you finish. I see Tesla selling out to Koreans or Chinese once the major established brands get rolling in electric cars. Tesla is the current "it car" but will it be in five years. I could be wrong but don't think so.

MrEE - 4/2/2016 8:59:31 PM

-4 Boost

I am bet auto executives around the world are going to have resulting tense meetings or this lauch. GM and BMW can't even meet their EV sales goal while Tesla is rolling in pre-orders, which could reach the combined worldwide plug EVs sales to date. The only threat to Tesla is fuel-cell technology from Honda and Toyota.

MBKing - 4/2/2016 10:14:06 PM

-1 Boost

The service experience alone and never having to pump fuel has changed the way I look at cars and the industry completely. Pumping gas and oil changes are archaic to me, as crazy as that sounds. I have a Model S 70 and a base 997.2 in the garage and obviously the smile I get every time the 911 passes 5500 rpm in second gear is something that the Tesla will never be able to accomplish, but for 95% of my driving needs I prefer driving the electric car. Who likes the current car buyer process of feeling like you've overpaid by $500-$1000? Or sitting in a service lobby every 5k miles getting a $250 oil change? I commend what these guys are doing and I agree it's not for everybody, but it doesn't have to be. 250,000+ pre-orders makes it pretty obvious that people are interested and want to be involved with what Tesla is doing. Excited times for us consumers nonetheless.

skytop - 4/3/2016 10:16:56 AM

+2 Boost

Simple solution. DON'T buy from Tesla.
Competition with many alternative electric cars will be a blow to the Tesla business model.

mre30 - 4/3/2016 2:20:50 PM

+1 Boost

Tesla is not long for this world. Smart money (i.e. Google or Ford) will let the stock goto "zero" at the time Tesla runs out of development money and then they will buy it for $0.30 on the $1.00 out of bankruptcy.

I thought Tesla would hold on to sell itself, but I think it will go bust first.

MDarringer - 4/3/2016 8:12:45 PM

+1 Boost

Introducing two new cars virtually back-to-back for a company learning its way into how to be a sustainable car company is troubling. Why is their a paucity of Tesla engineering prototypes? Answer: they are relying almost entirely on computer simulation--and that's fine for rough engineering--but...

Vette71 - 4/3/2016 2:23:16 PM

+2 Boost

The fact that in order to watch the introduction on line I had to "register" which had the reservation process built into (I didn't fill out that part) does that count in these numbers? The real indication will be how many of these people have actually paid the $1000.00. It should show up on Tesla's next balance sheet, as a cash asset along with a corresponding liability since it is refundable.

Having personally played the early S curve game with a "revolutionary" new product, as enthusiasm (which Tesla has plenty of) turns to firm commitment and later into firm delivery there is an attrition rate. Time delays and competitive counter attacks make it steeper.

MBguy - 4/3/2016 9:51:12 PM

-2 Boost

Keep in mind that Tesla gets to bank each of those $1,000 deposits and will draw interest on every one of them ... So, even if the customer ends up taking back their money, Tesla gets to pocket the interest.

Well-played, Tesla!

MDarringer - 4/3/2016 9:53:45 PM

+1 Boost

And if they go bankrupt--which they will--not one dime will be recoverable.

SanJoseDriver - 4/21/2016 9:22:17 PM

+1 Boost

They are far less likely to go bankrupt at this point than any of the other American manufacturers.