What do you think about when I say the word, Tesla? If you’re like me, the first thing that comes to mind is Elon Musk and his mission to disrupt the automotive industry by releasing cutting-edge electric vehicles, one after another. But have you noticed something weird lately? Tesla isn’t selling cars!
The company already sells fewer cars than its main competitors
General Motors, Ford, and Fiat Chrysler Automobiles. But even though GM sold a whopping 10 million cars in 2017, that’s actually more than Tesla has ever sold since it launched in 2003. In its early years, most of its sales were to technology enthusiasts and investors who wanted to support Musk’s vision for a future of clean transportation. Now that money is coming from major automakers and shareholders looking for profitability. Last month, Tesla posted an earnings report that showed that while sales are growing, their profit margins are shrinking—and that prompted Musk to announce big changes were coming for his company.
Musk didn’t give any details on how they will do that, but he has a few ideas in mind. For starters, he wants to produce more cars in high-volume factories and then sell them directly to customers instead of through dealerships. This would cut costs and offer better profit margins, allowing his company to remain profitable even when it isn’t producing millions of cars each year. In some ways, Musk’s vision is what set him apart from other automakers in the first place.
One of Musk’s boldest moves was setting up supercharger stations in convenient locations so that his customers could take long road trips without worrying about finding a place to charge their cars. Other automakers like Nissan, BMW, and General Motors have followed suit by launching their own fast-charging networks. These charging stations are critical to long-distance travel for all-electric car owners, whether they are made by Tesla or not. The chargers aren’t free for owners, but electric vehicles still cost less to fuel and maintain than conventional cars. There’s no secret why companies are racing to launch more charging stations: It reduces range anxiety and increases drivers’ desire to buy electric vehicles.
Once they expand production, they will have more supply than demand
One of our firm’s top analysts believes that once they expand production, they will have more supply than demand. In addition, they have already completed construction on their new factory in Nevada and will most likely move to a 3-shift operation from 2. This means that instead of producing 500,000 vehicles a year (or about 10 per hour), they could potentially produce 1 million units per year once everything is running smoothly. We anticipate that within three months, there will be much more inventory than actual consumer demand. If you are interested in buying a new Model S or X by April 2019, please contact your sales representative today for available configurations and to place an order so you can reserve one before it’s too late.
During peak seasons, it takes approximately one month to receive a new vehicle and that is during non-peak seasons. We are estimating it will take longer in 2019 due to increased production demands. If you would like to order a new Model S or X today, please contact your sales representative today. However, we highly recommend you wait until at least April 2019 before placing an order as we anticipate inventory will be low around that time frame.
Once Tesla stops selling new cars, it can start offering other products
If you can’t buy a Tesla at retail, where can you get one? The company would start selling cars through what is called Tesla Galleries. This is when a brand brings its products to retailers and customers can look at them and touch them, but they have to place their order online and wait for delivery. This is how furniture brands sell to people without stores; it’s also how Tesla will sell its vehicles. If you don’t have time to look for deals on your own or find a good car loan, there are services that can help. Just enter your zip code into our dealer comparison tool or use our price estimate tool to see what kind of money you might be able to borrow.
Now, let’s say you have a good idea of how much money you can borrow. You know what car loans are available and where to find them, but you don’t really like any of them. Maybe your credit score isn’t great and lenders won’t give you much. Or maybe they want to see more savings than you can manage right now. If that’s happening, it might be time to take a step back and consider your situation carefully before proceeding. Car prices go down over time — did you factor that into your budget when determining how much cash to save?
Look into leasing as an alternative. Leasing a car is similar to renting. It usually means you pay less in monthly payments, but you’re also paying for something you don’t own at the end of your lease term. Whether or not it’s right for you depends on a number of factors: your financial situation, how much money you want to spend and how long a vehicle typically lasts in your area. If it makes sense, though, leasing can be a smart choice that may even offer tax advantages over buying — most experts say it works best if done as long-term leases (three years or more).
Consumers don’t buy enough new cars anyway
Is Tesla Keeping Up With Demand? There’s no doubt that demand for electric vehicles is going to skyrocket in the coming years. But is that a good thing for anyone other than car manufacturers and, perhaps, oil companies? To prevent volatile and unpredictable pricing fluctuations from destroying competition in its industry, Tesla may have to go offline and stop selling new cars. The company will continue the production of existing models, but without releasing any new options, it will essentially be unable to increase total sales. This isn’t necessarily a bad thing—for either consumers or shareholders—but it does prove that we still have a long way to go before EVs become widespread.
That said, not everyone is convinced that EVs are a good thing. Some argue that even if they do contribute to fewer carbon emissions, they still have massive environmental impacts associated with their production. And while they cost less to maintain, consumers may end up spending more money on replacement batteries over time. By turning off new car sales, Tesla will never have to deal with these issues. Still, it’s hard to imagine a world where auto manufacturers can’t release new models in an effort to grow their businesses and keep customers interested.
In any case, we’re moving into an era where EV sales are only going to increase. We’re already starting to see less demand for gasoline vehicles—Tesla’s own showrooms have no gas-powered cars in them—and that trend will continue over time. Now is not a bad time to be an investor in electric vehicle companies, but it may soon become a good time to bet against these companies as well. It all depends on whether consumers are ready for what EVs can offer.
The change makes sense. As a relatively new company, Tesla will have to spend a lot of money on marketing and advertising if it wants to boost its brand and keep people interested in buying its products. The cars are already at dealerships, so why not make people come to them instead of waiting for customers to walk in? If you’re considering buying a Model S or Model X, don’t bother wasting your time and energy trying to find one for sale; instead, visit your local Tesla dealership. You might be surprised at how easy it is to find exactly what you want — especially if it’s sold out elsewhere. Have trouble deciding between an S or an X? Visit your nearest Tesla dealership; they can help you decide between these two fabulous vehicles.
As for resale value, if you have your heart set on a Model S or X, then it may be worth holding onto it. Although cars lose value as soon as they’re driven off of a dealership lot, Teslas tend to hold their value better than most. Even if you decide to sell yours after a year or two, you’ll likely get back what you paid and maybe even more. So maybe don’t sell now; buy instead! If you were looking forward to buying one of these iconic vehicles in 2018 but are disappointed by Tesla’s announcement, don’t be.
In fact, you should celebrate. If Elon Musk and Tesla truly believe in their products, they shouldn’t be afraid to sell them; if they aren’t afraid to sell them at full price, then maybe it’s worth putting your money down for one. After all, why would you want to wait around for a bargain when you could just buy a car now that someone else has paid for all of its R&D costs? For many people who wanted to purchase a Model S or X from 2018 onward, buying one today is only a good decision.
It’s a win-win. If you were looking forward to buying a new Model S or X in 2018 but were put off by all of its price markdowns, consider buying one today instead. You may pay more than Elon Musk originally asked for, but when you look at it that way, Tesla might be selling their cars below cost. When has that ever happened before? Whether you’re interested in finding out why Tesla will stop selling new cars or learning more about them, make sure to follow Teslarati and stay updated on everything happening with these revolutionary vehicles.
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