Bob Lutz On Tesla Online Sales: That’s Not Gonna Work – Video

MAR 6 2019 BY MARK KANE 190

“I don’t see how that’s gonna work.”

Bob Lutz, former GM Chairman, was interviewed a few days ago by CNBC about Tesla and he doesn’t believe that Tesla will be able to shift sales entirely online, by the way of the introduction of $35,000 Model 3 Standard battery option.

Lutz is a long-standing critic of basically everything many things, including the direct and now online sales network of the Californian manufacturer. The most recent announcement about the switch to primarily online sales didn’t bring much love from Lutz either.

Bob Lutz comment:

“I always said it was totally ridiculous to own your own dealership, you own the real estate, you own the people, you own the new car inventory, you own the used car inventory – a massive misallocation of company capital.

So now they’re getting out of that, they’re gonna close stores, they’re going to try to do all the sales online.

I don’t see how that’s gonna work.

Who’s gonna take the trade-in, who’s gonna take the used cars, who’s gonna provide service with no stores there.”

Bob Lutz doesn’t believe in Tesla’s planned volume of 500,000 sales per year, especially for a sedan type of car.

Video description:

Tesla is phasing out its physical dealerships across the country and trying to shift sales to online. The company also announced that they will sell the Model 3 at $35,000. Musk says he expects to sell half a million Model 3 cars worldwide. Former G.M. Vice Chairman Bob Lutz joins “Squawk Box” to give his take on the news.

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190 Comments on "Bob Lutz On Tesla Online Sales: That’s Not Gonna Work – Video"

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“Who’s gonna take the trade-in, who’s gonna take the used cars, who’s gonna provide service with no stores there.”
Once a captain of industry, now he is just embarrassing himself.

Still a good question. I guess the answer is that the Tesla service center will take delivery of the trade in and someone at that service center will give you a price for the trade in. That may not be a Tesla employee but someone from a Tesla partner company who specializes in used vehicle sales and buying.

It’s a car. Someone can pick it up and drive it away. Bob Lutz is confused about how something called an “automobile” is going to change hands without everyone going to the same building.

It’s like wondering how Uber works without stores. I mean who’s going to take your Uber to the next customer when you’re done with it?

Uber doesn’t pay the driver in between rides Tesla will. Duh! It’s inefficient to have people sit around waiting for a person to call and send a person out to make an estimate of the value and sit around and wait for the next appraisal and then wait to see if the client accepts the offer and send another person to pick it up (pay for the Uber ride?) and drop off and wait and take another Uber (because sending a flat bed or 2 people would be idiotically expensive) then have them wait for the next pick. That’s logistics hell.

If only there was a way to do better than what you are describing.

Gosh, it’s terrible that Tesla’s CPO employees have nothing to do in between calls for picking up a trade-in car. I guess they’re as lonely as the Maytag repairman!

/sarcasm

FYI Tesla doesn’t have a CPO program. Used – not certified.

They take it to the dealership when service is required.
Lutz is talking about Capitalization and Profitability – something he knows one or two things about.

Tesla is working on a unique business plan – but it is apparent even they are attempting to reign in Costs.

My Roadster’s travel expenses to TESLA CORPORATE I estimate to be in $20,000 range – not including the actual warranty work performed either at my Home, (with people coming from either Manhattan, Boston, or Green Bay),
and/or flat-bedding back and forth 8 times to Columbus, Ohio. Giving me ‘Gratis’ a $17,000 inverter module had to ‘hurt’ a bit – but that is an unintended bonus of becoming friendly with the Service Technicians.

Due to the high initial price of the car, they could adsorb all these relatively huge costs, but now making a $35,000 loss-leader – Tesla is obviously trying to minimize the sales cost. How they handle warranty issues with the typical buyer supposedly will happen at Tesla Service Centers, – but perhaps this will be modified by them slightly in the future as well.

Sure, Lutz knows about how he helped bankrupt gm. Part of the problem was the dealer network, and the rush to produce a lot of mediocre cars to feed it. Oops, maybe he forgot how he helped bankrupt the company. Maybe he forgot that he admitted that it was a mistake to kill the ev-1.

I have questions about test drives, but in texas where I bought mine, there are no tesla dealers. There is a repair facility and a show room where you can test drive the cars. These things need to grow. A tesla employee drove my car to my house and I bought it on the internet. This appears to be how most teslas are sold. The service centers can grow to include test drives etc. The trade ins can happen there as well.

Please elaborate on how Lutz bankrupted GM. Unless he is guilty because he only wanted to sell quality products.

As far as Mediocre Cars – Lutz’s Micromanaged VOLT is one of the safest – and if the volt population here has anything to say about it – one of the best cars these people say have ever purchased. From these eyes the first generation Volt was the safest car ever made. Supposedly only 1 family died in one but I was under the impression that was a Generation 2 Volt where that tragedy happened.

It was known initially that the GEN 1 Volt would be expensive, therefore the cost-reduced, higher performance, higher efficiency GEN 2 volt was developed. The car was designed to be profitable, and until recently was the best selling plug-in in North America. To me it was silly to discontinue it, especially in view of the $billions spent on Fuel Cell development with little to show for that huge chunk of change.

Lots of reasons, here is one editorial.
In 2008 in an interview he said no way would gm go bankrupt, then he left the taxpayers holding the bag.

https://www.thetruthaboutcars.com/2009/02/editorial-general-motors-death-watch-230-how-bob-lutz-helped-destroy-g/

Well ok, I admit I have heard Lutz ‘tell a fast one’ on one occasion, but it was only one. As far as ‘How Lutz Killed GM’ goes – that editorial has no meat in it. So he liked the GTO and it ultimately wasn’t profitable…

I think the $Billions they spent on Fuel Cells with precious little to show for it had much more to do with the initial Bankruptcy than anything Lutz did.

Of course, now you have Machete Mary closing US and Canadian plants right and left, and not even trying to make the claim that GM is not an American Car Company (any longer).

They don’t understand why their New Buicks aren’t selling in the states. All you have to do is look at the parts content and assy locations on the window sticker to see why people are walking away.

The poor reliability of the new Silverados, and the excessive complication of some of the new designs will force more people into ‘old-fashioned’ Toyota’s arms.

The Volt Lutzmobile never made it to profitability, and Lutz is criticizing Tesla? Hahaha.

Tesla could subcontract their entire used car operation to someone like CarMax. But one would think that would ultimately involve more cost than selling them yourself… especially for someone like an automaker, who already has auto mechanics on staff.

But maybe the entire concept of new car dealers accepting trade-ins is, itself, on the way out. I guess we’ll see!

If I remember correctly, there was an article not too long ago where Tesla is/will contract out service and sales for all their ICE trade-ins, since they do not have the means to perform all of the appropriate maintenance and checks, nor doe they have any interest in putting in the resources to storing and selling them.

It’s the only sensible approach for Tesla. What would Tesla say to prospective buyers? Can’t imagine the sales process for a sea of used ICE vehicles surrounding a Tesla dealership.

Unless Tesla gets really rich and starts a huge used-ICE deconstruction process on every trade in, no resales at all, just shred them. Or offering the deal “your car is worth $5000. We’ll give you $3000 just to keep it”.

>> Or offering the deal “your car is worth $5000. We’ll give you $3000 just to keep it”.

That strikes me as a very intriguing idea.
Tesla (a) sheds the entire used-ICE/resale part of its operation at presumably huge savings and
(b) doesn’t pollute its brand identity by reselling fossil burners.
(c) doesn’t waste already tight real estate on warehousing ICEs with varied/unknown resale potential.

Downside is that everybody with a car would claim the discount unless it were tied to the owner actually reselling it (more compliance paperwork for Tesla – not good).

Or maybe a better approach is: Don’t take tradeins – period!
Or maybe just take EV tradeins.
Or maybe stick to what they are doing now – problem solved !!

Or offering the deal “your car is worth $5000. We’ll give you $3000 just to keep it”.

“Hi Tesla, I’d like to trade in my 2016 BMW M5. Blue book is $55k.
Oh, you’ll give me $40k just to keep it? Well, if you put it that way…”

A not-insignificant number of Tesla buyers are trading in luxury sedans. How could your plan work?

So Tesla is going to stock/service/resell Leaf, i3, and Bolt, then? That doesn’t really make sense. If you’re going to subcontract used sales, then you might as well send off everything except your own cars – and maybe even those too!

Nope, Tesla will wholesale them all and be done with them.

Yup, I think that’s what they are doing. I don’t think Tesla’s CPO outlets handle non-Tesla cars.

The thing is, most cars traded in at a dealership are not sold to the public by the dealership. Probably around 95% of cars traded in go to one of the big car auctions, and almost all of the used cars on the dealership lots came from one of those auto auction sites. The person at the dealership “appraising” your trade in may tell you about how their mechanics are going to inspect your car and how they will have it detailed, but that’s a lie, its going to go on the back of an auto carrier and be brought to the auction yard. The auction yard will then inspect and detail the car prior to auction.

They used to use CarMax, actually. Probably returning to that model. I note having visited a store and a store+service center that they are reducing only in certain areas, not globally.

Given there are now services like vroom.com and carvana.com that seem to have blazed a trail in the online centric sales model, I think Tesla will do fine. In Texas they already have the gallery + on line orders + pick the car up at a service center model and this place is crawling with Teslas.

Originally, Tesla didn’t even accept trade-ins. They advised you to sell your old car yourself, on Craigslist or some other outlet.

Since Tesla is now accepting trade-ins in most States, I doubt they’ll go back to the old policy. But partnering with another company to handle trade-ins certainly seems like a workable plan.

GM has no skin the used car game. Its the dealership. Tesla is simply delinking the trade-in from the buying the next car. The same dealer who sells GM might accept a trade in even I dont buy from the dealer. If not there is someone else. You buy a new car. Then drive around and sell the used car. Big deal.

Tesla has its own CPO program, with its own employees. I don’t know how trade-ins for a customer’s old car is physically handled by Tesla, but it seems to me that could be handled just as easily at a Tesla Service Center as at a Tesla store, assuming the trade-in can’t be handled at the customer’s home or workplace.

Just applying common sense here; I don’t know just how Tesla is going to handle such things as trade-ins and test drives, but it seems at least possible that Tesla Service Centers could handle at least some of that.

Exactly, there are plenty of places that will come pick up the car. Lutz has had a great history, but it is that, history. He said Tesla wouldn’t work either. People today are much more likely to buy on the Internet, someone comes and picks up their trade at their house and drops off the Tesla. If you want a test drive could maybe go to a place or rent one on Turo, etc. It is a different world forming.

Im not a huge Bob fan but don’t discount his knowledge and that he was instrumental in getting GM somewhat back in the EV game with driving the Volt program. He’s far from being dumb on this topic and I have to agree with him that the percentage of people who will make this kind of purchasing worldwide is low compared to the traditional model. I for one would not ever think to have to rent a car to test drive it. That’s ridiculous. I’m tech savvy and have no issue myself with online ordering, but if I could not ever have the chance to test drive and see how it works for me and my family of drivers before completing the purchase, then it’s a show stopper. And I still believe that a vast majority feel the same including the younger generations. Obviously this comfort ratio will be different in the various global markets. It will be interesting to look back at this in a year or so to see Indy dramatic impacts on Tesla. This is were I don’t agree with Bob on. The market is still very small and all vendors can only really go up in… Read more »

82% of Model 3 buyers did not have a test drive. If Tesla can sell out of production capacity only selling online without giving test drives that is a much cheaper way to sell Tesla vehicles.

True, but that is a select group – pretty much all reservation holders and other early-adopters that weren’t willing to wait for test drives to become available.

82% isn’t a “select group”, it’s the vast majority of Tesla’s customers.

With Tesla’s demand so much greater than their supply, they can afford to lose 18% of their potential buyers this year, and most of next year too. Eventually Tesla will need to figure out a way to offer test drives, but that doesn’t have to be thru Tesla Stores or Tesla Galleries.

The Volt was never profitable, Lutz could have kept the Volt marketing going but didn’t and now the Volt along with all PHEVs are dead at GM…Via Motors also isn’t doing the greatest…The Spark EV, ELR and the Bolt EV weren’t selling well, GM seemed to have cancelled their Buick Bolt/Encore as it appears GM went back to the drawing board and won’t release another EV for a few years with their Cadillac crossover…

God/Bacardi

While I agree with a lot of what you said, Bob is retired from GM and just acts like he is still their spokesman.

Right. I rather suspect GM isn’t happy about Lutz acting as if he’s still a GM spokesman, especially since his remarks have appeared to drift further and further away from reality over the years since he left GM.

I would look at spending $100 or so for a Turo-type 24 hour rental to test the model of interest as money well spent to avoid wasting time with car salesman games. Especially if the rental cost was reimbursed as part of the purchase deal.

I bought a fully loaded Model 3 without a test drive, ordered it online, and took a home delivery. And I’ll do it again and again. Loved the process. It was better than getting my Amazon deliveries. And the car exceeded my expectations, and is getting better with software updates

Kenneth: I’m sure that there are lots of car buyers would would absolutely never buy a car without a test drive first. And yes, Tesla is certainly reducing their potential market if they don’t offer test drives. However, two points:

1. I don’t know if Tesla will do so, but it’s at least physically possible for them to offer a test drive at a Tesla Service Center, using a service loaner.

2. So long as Tesla is production constrained, and not demand constrained, then losing a minor portion of the potential market isn’t a problem. Assuming the majority of Tesla buyers don’t insist on a test drive, then this won’t be a problem in the short term.

I get your point in number 2 – however:
When you refer to Tesla buyers as either ‘insisting’ or ‘not insisting’ on a test drive, you are completely discounting that free (low barrier) test drives that unexpectedly overwhelm and impress get people to fall in love with the car. The goal is to attract ‘Tesla buyers’ that don’t know yet that they are Tesla buyers. That is the idea of offering free, easy, and convenient test drives.

Nobody that is casually interested in Tesla but not (yet) in love with a Tesla is going to pay $100 to $200 to rent one on Turo for the day, and they are certainly not going to arrange insurance and financing to actually purchase one on a 1000-mile ‘test’ basis. You cannot truly fall in love with a person (or a car) unless you meet first. It may be old-fashioned but the concept still works: Meeting precedes falling in love; falling in love precedes commitment. Tesla needs to play matchmaker and facilitate ‘meetings’ with their cars.

https://youtu.be/gmB1uemKeno

I’m glad Bob still roams the earth. He has entertainment value. So what if he is filming from his retirement home in a cardigan and orthotic shoes? He is a beloved curmudgeon just the same.

Entertainment?

Bahahahahahahahah

And you might need a pint of Milk of Magnesia by your side accordingly!

Renting one on Turo to test is not a realistic option for folks that are casually interested in Tesla – they simply won’t spend the $100 to $200 to do it. The idea behind free, easy, and convenient test drives is to attract potential buyers that are not (yet) Tesla enthusiasts. One test drive will impress and put a smile on their face at a minimum – and may get them to fall in love with Tesla. The cars are THAT good.

I sold my last car with Shift. SO much easier than messing with a dealer. I’ll never step foot in a dealership again.

They seem like reasonable questions to me… Most people purchasing cars have trade-ins that they would like to be part of the process.

Some sell their previous car on their own, but most find it convenient to be part of the process.

Mark, you degrade yourself by insulting someone who clearly has an impressive background and is asking reasonable questions.

I sure don’t get these silly attacks on Lutz: If he hadn’t had influence at GM it is more than likely GM would have next to no electric vehicles – which is where they are right now – having ONLY the BOLT ev, and I am waiting for who people on GM Authority are calling Machete Mary’s reaction when BOLT ev sales come to a dead stop due to competition – especially from those with a $7500 price advantage.

Lutz fought the notion of the engineering groups who stated that GM could not ever make an electrified product such as the VOLT. People should be thankful and grateful to him personally for that.

Why does anybody still listen to this guy. He is from LITERALLY a different era.

Horse and buggy era

Even if he’s from a different era, he’s allowed his opinion. Being open minded is a positive quality…

That’s exactly why he is on cnbc. Feeling at home!

Like a tape recorder. Useful 30 years ago – not any more.

Mmmm…. I am a little hazy but I do not think Lutz has ever got any Tesla prediction correct and he tends to rubbish Tesla when threatened by the upstart automaker?

He has only been accurate on being wrong about Tesla.

Could be all for show, hardly anyone covers him UNLESS he talks about Tesla…

I’m sure Lutz is a nice guy… but he gets everything wrong about Tesla. I bought my Model 3 without a test drive. A bit of a risk at the time, but it turned out well. Now with a no-hassle return policy, Tesla is taking away the risk. It’s like buying shoes on-line. You don’t worry about the shoe not fitting if the company takes away the risk by including a return ship label. Got a trade-in? There are options for selling your car, from immediate to take-your-time for a better price. The last thing a new car buyer wants to do is spend their Saturday visiting car lots and haggling with a sales guy. It’s a soul draining experience knowing you have to enter into an adversarial relationship to buy a car. Word’s I’ll never hear again, “Wait here while I take your offer to my sales manager. – let’s see what he can do”.

Lutz did say that it was a bad idea for Tesla to own and operate their own stores since it was a huge drain on capital and misallocation of capital. Now Elon is closing all Tesla stores in the name of cost cutting. So there’s that. But it didn’t have to be like this. I think that Tesla could have kept the stores open indefinitely if they hadn’t squandered $2.6 Billion to acquire Solar City to prevent it from going bankrupt, and Elon and his cousins from losing their investment. The promised synergies of the SC acquisition never materialized and solar side of the business is floundering and sales have plummeted. SC’s patent for more efficient solar panels was discarded in favor of Panasonic’s tech. The high-traffic sales channel in Home Depot stores was abandoned in favor sales at Tesla stores, which will now all be closed. Tesla doesn’t even own GigaFactory 2 in Buffalo, rather NY state built it and owns it. Tesla just has a 10-year lease on GF2 IIRC. So what exactly did Tesla get for their $2.6 Billion that it couldn’t have gotten for pennies on a dollar in a bankruptcy liquidation sale? A desperate NYS… Read more »

So, your argument is that Tesla would be in a better position to run Tesla Stores at a loss if they were making more money from the Tesla Energy division?

Good grief! 🙄 It’s a good thing that Tesla’s financial officers have a better grasp of running a business than you do.

Bet he’s got and old black and white telly at home and maybe one of those new fangled video cassette recorders.
Will someone get him a watch for his retirement.

One with „tiktak“, please.

I think it is about time for Lutz to work full time as a grandfather or …. he becomes president!

Bobboy, go to tesla.com. You will find a map. There you can select Tesla Stores. There you can select Tesla Service.
Does this tell you something?
And no, AFAIK Tesla never hoarded used ICE vehicles at Stores.

At this point, Lutz is the automotive equivalent of a Kardashian — famous solely for being famous.

I wish business outlets that want informed, interesting opinions about the car business, especially anything EV related, would work a bit harder to book guests that know what century it is and have something of value to add to the conversation.

I think your assessment is unfair. Lutz has an accomplished past – unlike the Kardashians who have accomplished nothing. The problem with Bob is that he is married to old paradigms and cannot fully recognize that they are being replaced.

I only seen a little of the Kardashians when my son’s girlfriend watched it. But I heard the youngest one who is now 21 is the youngest self made billionaire. All I can say is they are marketing geniuses they know there audience and if one of them ran for President they could win. If you think that’s crazy who would believe 3 years ago that Trump would win and survive all the scandals.
P.S. No I wouldn’t vote for them.

What do you mean “self-made”? She went into the family business of vacuous flesh peddling. She’s just another Kardashian.

Unfortunately, I think you’re on target regarding their presidential prospects. Time to watch Idiocracy again, lest we forget.

Tesla needs to get people to experience their cars – and they will sell themselves. Once people unfamiliar with electric cars in general, and Tesla cars in particular get to experience that smooth, quiet and unrelenting acceleration and performance, they will become converts. Too early for the online only model – too much ignorance about Tesla outside of Silicon Valley.

I disagree, Tesla Model 3 is one of those cars that has a high percentage of sales outside Silicon Valley and CA. Only 37% of the Model 3 sales were actually in CA last year (calculating how many they sold vs how many they sold in CA), and 63% were sold outside of CA. This is a much better (less CA only sales) rate than any other EV, even the 50 state available Bolt EV had more than half its sales in CA. People outside of Silicon Valley are not as ignorant of Tesla as you think, and the online model works better for many of us who don’t live near a Tesla dealer.

That may be because they don’t have much EV competition from the major ICE players. Starting late this year that will be changing, so will be interested to see how that affects Tesla sales.

I live in Atlanta and I see a minimum of 2 to 3 Teslas on each leg of my short commute every day. Sometimes more. But I only see a Bolt every week or so. Haven’t seen a new Leaf yet even though there are tons of older model Leafs from back when GA had the $5,000 state tax incentive. Once they got rid of that they stopped selling.

Most of the major automakers from Korea and Europe that are fielding new EVs later this year will be limited to 20,000 to 30,000 units worldwide which is practically nothing. There will likely be practically zero of any of those models available here and in many states in the US for years to come. Likely all allocation from those models shipped to the US will go straight to the West coast.

Same story here in Portland, OR (although not in an anti-EV state or town).
Just a couple of days ago, at an intersection near home, I ran into (figuratively speaking) two other Model 3’s while driving mine. Not only that – all 3 were blue.

Are you sure you didn’t just drive by an art installation of large outdoor mirrors? 😉

Bring it on that will just hurt ICE sales which is what we want anyway.

“People outside of Silicon Valley are not as ignorant of Tesla as you think…”

I respectfully disagree. I know many smart, college degreed professionals that are surprisingly clueless on electric cars, and are even more clueless on Tesla and its supercharger network. Tesla will find it impossible to gain the traction and sales momentum they deserve to have without this EV education gap closing.

Just because you know some professional college educated fools doesn’t support the Silicon Valley statement. Your contention that they are smart in the face of their supposed ignorance is a but suspect as well…..

Your numbers help make my point. Where consumers are most familiar with the car, there are 37% of sales in roughly 10% of the US population – while there is 63% in remaining 90% of population. That is a significant disparity. Comparisons to the Bolt sales numbers are irrelevant.

No Test Drive, No Problem!
https://www.tesla.com/support/tesla-return-policy

NPNS! SBF!
Volt#671 + BoltEV + Model 3

Nelson,
Sorry – it still is a problem. It’s much better to have the customer fall in love with a car first – especially one with a ‘wow factor’ that comes out in a test drive. Prospective car buyers don’t typically go to the trouble of arranging a large loan and obtaining insurance on a car purchase unless they are pretty darn sure they want the car. A test drive removes doubt and gets customers to commit to taking these big steps.

I don’t know. I live in Minnesota and have seen a number of Teslas around here. Granted, they’re not everywhere like Ford and Chevy. But that’s part of the allure. There’s nothing special about buying a Ford or Chevy. Buying a Tesla IS special because they are visible but rare. There’s the same kind of brand awareness and value as some of the European imports. Teslas are known and seen as high-end automobiles, and that alone will continue to push sales. Not to mention, the Model 3 is production-limited. Sales model matters less if demand continues to outpace supply.

With a two week waiting period for any Model 3 that you order today in the US – without a reservation – I’m not so sure they are THAT production limited. Why drop prices across the model lineup when demand is vastly outstripping supply? I suspect demand is getting soft. A $1000 refundable deposit made up to three years ago is hardly a commitment to buy.

I certainly hope that scarcity is not “part of the allure” of Tesla because they need to continue to grow exponentially in order to lead a true EV revolution.

Leading means others do the heavy lifting. They need bigger automakers to make a compelling Civic-like EV in the millions globally. As long as Musk is at the helm, he said that they won’t be able to go any lower market than the Model 3.

“With a two week waiting period for any Model 3 that you order today in the US – without a reservation – I’m not so sure they are THAT production limited.”

I find it very, very strange that so many EV enthusiasts cite Tesla being able to fully meet the U.S./Canada demand for the Model 3 as somehow indicating that they aren’t production constrained any longer. Do you think that the U.S. is the entire world? Are you unaware that there are countries in Europe where you still can’t even order a Model 3?

According to Wikipedia, ~56% of Model S sales are in the U.S. Even if we assume the Model 3 won’t sell even better overseas than the Model S, that’s still a pretty large market segment for the Model 3, which Tesla is only starting to sell to this year!

Here’s a hint: Tesla is building an auto assembly plant in Shanghai, one that initially will produce nothing but Model 3’s. Does that sound like demand for TM3 has plateaued?

PuPu: Thanks for the hint. I do not think that the US is the entire world. I don’t even like it when NFL , NBA, and MLB championship teams and their fans refer to themselves as ‘world champions’ when they compete solely in North America.

I’m fully aware of the facility in China. I’ve posted as much well before today. I stand by my statement that demand in the US is softening. The real growth will be outside the US.

BTW – I just bought Tesla stock in the face of an incredible FUD storm in the media this week, and believe in the same vision as you.

I do worry that living in Silicon Valley & LA may warp Elon’s view on this. You can’t leave your home in these places without seeing a Tesla so the lack of stores will be no big deal here.

But in most of the country, they are probably a bit rare. So they will probably need some way to expose the cars to people. Having an app that lets existing owners show their cars to prospective buyers is being investigated. Perhaps a travelling roadshow might help too?

Completely agree with everything you have written here. I too worry that Elon is in a bit of a bubble. It’s a big country, and most folks just don’t ‘get it’ yet regarding the phenomenonal Model 3 that is available right now. A traveling roadshow is one great idea. I have seen nobody yet that drives a Tesla for the first time that does not leave fully impressed – and smiling. Why would Tesla not do everything reasonable to make sure those ‘first drives’ occur for folks?

Bob? It’s time to retire. All the way. Go enjoy your millions and your grandkids.

It’s after watching critics like Lutz and other short sellers’ theses on why Tesla doesn’t work that I decided to buy Tesla shares. I buy my car online and I have done for the past 8 years. I hate dealerships they’re pushy and too expensive. How can he say online doesn’t work if Tesla already does over 80% online and when I get round to ordering my tewla, I already knew it would be online anyway. Stores are unnecessary. Trade in? did he never hear of autotrader or the car buying websites?

Considering Bob’s record so far when it comes to being right about Tesla…. I think I’m long past caring what he thinks.

Lutz makes some very valid points – but the real key to customer acceptance here could be Tesla’s 7-day return policy. Without that policy in effect, things may be quite different. For more information, the Washington Post also has a story: https://www.washingtonpost.com/business/technology/tesla-defies-convention-and-pays-for-it-as-shares-slide/2019/03/01/19dc8a8c-3c49-11e9-b10b-f05a22e75865_story.html?utm_term=.64bd02a4d9a4

No Test Drive, No Problem!
https://www.tesla.com/support/tesla-return-policy

NPNS! SBF!
Volt#671 + BoltEV + Model 3

That test drive requires you to take a loan from a bank, pay taxes, title, document fees, etc… Then if you don’t like the car reverse all of that. Try to go buy a different call from another manufacturer the day after your return and a bank might reject you because your Tesla purchase still appears as a debt on your credit report. And I have no idea if you’ll get back the filing cost from titles, loan initiation cost, etc…

I don’t know the full extent of Tesla’s return policy, but you do make a good point – it does appear to require a full purchase process.

Of course, you cannot return something you did not buy (legally). Almost qualifies for the old “No sh*t, Sherlock” response…….

But that is important, because it is not as simple as returning a toaster – it’s a hard credit check, there’s a variety of fees involved, some of which are paid to gov’t, not to Tesla. Details make a big difference in whether this “return” policy is, in practice, something that many people will accept.

Very good point Bruce.

“I don’t see how that’s gonna work.” -Bob Lutz

Why does the media continue to refer to this guy like he’s the oracle on the mountain??

I guess CNBC thinks regularly interviewing Dinosaur Bob improves their ratings. It must be the entertainment value, because the signal-to-noise ratio in Bob’s comments about Tesla is extremely low to nonexistent.

My shares are not doing well today, i’m gunna buy more soon and hurt the shorts. If the wagons are circled, we will do well. Bob is still pumping his old 12v batteries.

What a surprise…

Another Euro point of view
I would say: 1/ Jan. & Feb. sales in US (insideevs stats) and Europe (Tesla motors club stats) are far from terrific and that is with the full stores network, I do not see that improving without the stores network. 2/ competing charging being deployed and most fans yet having their Tesla it is now the mainstream buyers who need to be convinced, they are no Tesla experts, they will want to kick the tires. 3/ For the purchase price refund in case car is returned, one need to trust Tesla with its hard earned cash, I do not see the mainstream buyer giving that vote of confidence when Tesla track record of refunding smaller amounts is far from perfect & we have recurring questions in the news whether Tesla as a company will survive (Elon himself stating that Tesla was weeks from being insolvent back in 2018). 4/ Why mentioning in Feb. 2018 (10K) that improving the stores network is pivotal to Tesla growth then few days later saying exactly the contrary. It makes no sense. Tesla needs to partner with a much larger company and that is not going to happen when Elon is at the helm as… Read more »

You forgot: 5/ Folks like you are always gonna find the dark cloud in every silver lining when it comes to Tesla.

1) Tesla Europe cars are still in transit. 15 RORO ships have been to port in USSFO picking up cars since mid Jan. Minimum of 24,000 Model 3 cars, plus 12,000 US sales. Likely many cars in transit within US now, especially after opening up other models. Ignoring S and X as I don’t pay that much attention to those models. They are likely on those ships as well and in US. Probably slightly down sales from the last year.
2) After my experience at an Electrify America charging station, I would buy a Tesla (I will give them benefit of doubt they will improve their garbage of a system by next year).
3) I won’t comment here, but I can rent a Tesla on Turo and drive it for a full weekend for just a few hundred bucks. Much better than any test drive with a dealer sitting next to me.
4) Why are we quoting year old quotes? Plans changed maybe, have a quote?

I could see Tesla partnering with a car trade in company (CarMax, Carvana, etc), what kind of big company did you have in mind?

Another Euro point of view

1) it is indeed a common mistake to assess full quarter sales based on Jan. to Feb. sales, my sales estimations are based on : Jan. + Feb. = 1/3 of March sales. By doing that I think I am not that far off as car deliveries takes time and even if you stuff a store with 10’000 cars the Tesla staff can only deliver a certain amount to their clients every day. Anyway I agree with you that it is a “to be seen” situation.
2) I don’t know in the US but in Europe, mainly in countries where people buy lots of EVs the CCS charging network is becoming a robust proposition.
3) You will rend a Tesla for a weekend AFTER one made its shortlist of cars he really wants, for that you often first need to see the car from close (in a store).
4) Old quotes ? that was the 10k published Feb. 20, then few days later comlpete change of strategy.

3) I generate my list from the Internet. Ideally I sit in several as you say, but if they are cars I like I will figure out how to sit in them.
4) You said “Feb. 2018” which was last year, do you have a link to quote specifically so I know which you are referring to? Or just paste the quote? Thanks

Another Euro point of view

Yes I made a mistake. Meant Feb. 2019 not 2018. I am referring here to their financial reporting. Specifically the footnotes to their 12/31/2018 financial statements that were published on Feb. 20 2019. In there it is specifically mentioned that Tesla will continue to develop their stores network. Usually the wording of those statements is carefully crafted in the weeks before. It falls on line with the Dec. 2018 stores opening. This is erratic and thus costly management.

So, your argument is that since Tesla does change its plans from time to time, it is “erratic”. Tell me sir, is there any fast-growing company anywhere in the world which isn’t “erratic” by your definition?

What you’re calling “erratic” is what most industry watchers call “agile”.

Companies which don’t change their plans from year to year, or even month to month, are old companies with a stable market that’s not growing or changing.

“…most fans yet having their Tesla it is now the mainstream buyers who need to be convinced, they are no Tesla experts, they will want to kick the tires.”

I completely agree. Tesla needs to accommodate the next wave of prospective buyers – those that are not the early adopters. The next wave need to test drive the cars before they purchase.

Remind us again, “Another Euro Tesla Basher…” has any comment from your unending stream of Tesla bashing posts ever been right about anything??? 🙄

It’s unfortunate that CNBC has to wheel-out this senior citizen in diapers from his nursing home ….to get an ANTIQUATED OPINION…..about an OBSOLETE TECHNOLOGY (ICE)…….disingenuously applied to the FUTURE POWERTRAIN (ELECTRIC)….all wrapped up as expert analysis of the auto industry….whenever they want to spread FUD about Tesla!!

Oh, you said CNBC, of course they picked Lutz. They dig up every negative opinion they can find on Tesla.

As does almost every mainstream media outlet. We’ve learned very quickly that negative Tesla articles get an exorbitant amount of Google traffic. So much so, that it would help us pay our bills even easier. If we switched to sharing all the negative Tesla headlines, our site would grow by double in a few months. But, we refuse to go down that road unless it’s truly warranted. And in some cases, it’s warranted for sure. But in most cases, it’s completely unsubstantiated.

I hadn’t thought of it that way before. These media sources like traffic and conflict helps create that. Why Fox news is so popular I suspect.

Precisely. The $35,000 Model 3 media call proved this to us fully. At the end of the call they opened the line to questions. A few EV sites, including ours, asked pertinent questions about the car itself. Reporters from The New York Times and other mainstream media outlets immediately started questioning Musk about profit margins, potential layoffs, production concerns, and just about every other negative things that they could come up with. Those publications then proceeded to publish articles, not with the title $35,000 Model 3 arrives, but instead, with negative, skeptical, speculative articles about how bad things are going to be for Tesla, while mentioning something in the story about the Model 3. They were clearly fishing for whatever possible negatives they could get, or for Musk to misspeak or stutter so that they could throw him to the lions once again. It reminded me of listening to a court trial in which Musk was being cross-examined by an expert lawyer in hopes that he’d screw up. It was evident that most of the reporters were bullying him and poking fun with their questions hoping that he might say something on the record that he’d later regret. None of… Read more »

I upvoted because I appreciated your insight and candor. I wanted to down-vote because I vehemently disapprove of media outlets doing what you describe.

Yes sir!

I gave you an upvote too, Steven. I appreciate the insight.

But at the same time, I think you’re presenting a rather one-sided view of mainstream media coverage of Tesla. I watch both the CBS Nightly News and the PBS News Hour almost every night, and their coverage of both Tesla and Elon have been largely positive.

Real reporters from real news sources ask everybody tough questions. Sometimes I get irritated at reporters for focusing mainly on negative questions during interviews, but it’s their job to get info that’s not in the press release. Their job isn’t to stick to softball questions.

Another Euro point of view

The reason for that is maybe the huge footprint Tesla has in the media in the last 6 years. People do like such a thing as a good old greek drama where stars raise then fall. I believe there is a bit of that with Tesla and Musk. Nemesis sort of situation.

Very likely.

Nemesis? Um, wrong mythological reference I am afraid.

Thanks Steven.. keep up the good work!

That may be the case, Steven, but CNBC shows a pronounced anti-Tesla bias, including at times publishing articles with what IMHO qualifies as outright FÜD. We don’t see that from other TV news channels. I don’t watch Fox News much, but I think even that channel isn’t as biased against Tesla as CNBC is. At the very least, I have occasionally seen some positive coverage of Tesla on Fox News.

Isn’t Lutz behind the Volt? The Volt is a great car, but I will use it as an example as why Lutz is wrong on EVs and Tesla on many levels. When you go to buy a Volt at a dealer… wait, can’t do that anymore, but when you could, I would go ask about a Volt. They would respond, why don’t you look at this Chevy Cruze we have here, why are you looking at a Volt, why, why, why…

The dealer model didn’t work for Volt because [most of] the dealers didn’t understand how to sell it, GM didn’t give them incentive to sell more than a few, and it just didn’t work. This model is repeating with the Honda Clarity PHEV. There is no reason to assume the dealer model would work for Tesla either. Not a traditional dealer, anyway.

Basically a self-fulfilling prophecy. Of course it wasn’t going to work.

“I don’t see how that’s gonna work.” that’s okay Bob, you’re old and a little washed up so it’s perfectly fine that you don’t understand modern technology like email, Facebook and how Tesla work. Rather than get on YouTube to embarrass yourself, maybe put on your fluffly slippers, sit in front of a cosy fireplace and sip some hot chocolate while reading a good story book.

Lutz is at that age where he probably doesn’t understand how anything works. We all will experience it.
I think FOX is making a clown of him which I think is disgraceful.
I can just imagine how many times he calls a family member with questions like:
How do I clean out my emails again?
How does UBER work?
What is Google?
How do I buy something on Amazon.com?

NPNS! SBF!
Volt#671 + BoltEV + Model 3

“I think FOX is making a clown of him which I think is disgraceful.”

Sorry I meant CNBC in this instance.

NPNS! SBF!
Volt#671 + BoltEV + Model 3

I bought my last 4 cars mostly online. Two used, one leased, and one new purchase. I researched them online. I searched inventory online. I had searches running for the one I wanted. I emailed dealer internet departments (not just one, multiple ones). I got an appointment online. I scheduled test drives online. The only thing I didn’t do online was sign paperwork.

I only went to the dealership because that was the only way to get the transaction done. I can totally live without dealerships.

BTW. I live in Texas. There are zero Tesla stores here. There are a crap-load of Teslas.

Bob “who’s gonna provide service with no stores there?”

Uhhhh, Bob, they have “Service Centers!’

They are closing them

No, they are expanding their service centers! They are closing all stores and many galleries. They are NOT the same as service centers.

100% wrong. Tesla Service Centers are not Tesla Stores, altho some are co-located with them.

Whatever grandpa. Time for your pills.

Its hilarious. Over the years he have spread a lot of negativity regarding Tesla..
*like they are burning cash to run the company- im sure he missed that Tesla builds factories like crazy..
*there is to many employees at the factory so they will collapse.. im sure he missed that Tesla is ramping, and quite heavily verticaly integrated..
*they have no technological advantage… bet thats why e.g GM buys their BEV drivetrain from others

Guess CNBC do whatever they can to feed the fudsters

in 2017 i bought my first car, used carvana, they delivered the car to my apartment, gave me a 15 minute test drive, the transaction paper work took about 20 minutes in the lobby of my apartment building, that simple. dealerships will be remembered like sears and video stores, but probably not with as much fondness, i’ve heard alot of people don’t like car salesman.

That is fascinating – never heard of that type of service before.

The thing he forgot to take into account is Tesla stores, are not where service takes place it’s a separate operation at Tesla service centers. When I bought a Model X, I took care of the paperwork, and even dropped off my trade in at my local Tesla store. I’m sure a service center could take care of the paperwork, and the trade in, but my state only has four service centers. Doing the paperwork at my local store saved me a one hour, and fourty five minute drive to the closest service center. I’ll miss the Tesla stores especially because they were the only store that was purely about electric cars, it was also purely Tesla, but it was still something.

Has Bob actually been correct about anything he has said about Tesla?

(For the record, I do agree that closing the stores is maybe not the best idea, but so far Bob doesn’t exactly have the best track record about being right).

“Has Bob actually been correct about anything he has said about Tesla?”

All snarkiness aside, I was honestly wondering the exact same thing. Offhand I can’t think of any prediction or criticism of Tesla he’s ever made being right, but perhaps he has been right on a few minor points.

Bob was certainly wrong in predicting Tesla would be forced to move to a traditional dealership business model! Instead, Tesla is moving even farther away from that by closing its Tesla Stores, leaving only Tesla Galleries and Service Centers.

It’s an old man talking old fashioned thinking. I’m sure many “veteran” market analysts said that online sales of goods and services were doomed at one point.

He’s correct, dealerships are a bad allocation of capital. That is true for manufacturers and anybody else. It explains why dealerships are a bad consumer experience. Someone has to pay without receiving value, usually the consumer.
The possibilities are endless once you remove the most glaring inefficiency from the car buying experience.

Welcom to Tesla’s nemesis…TROLLS…..LIES….& HACKS!!

Not everything maximum Bob has to say these days can be taken too seriously but selling cars with no stores does raise some questions. Mostly that people are robbed from a low treshold way to experience and test drive the car before handing over any money. Even many of the 82% of (early adopter!) Model 3 buyers that bought online probably at least visited a store before deciding and I would be curious what percentage of more mature products like S and X were ordered without even checking one out at a store.

This just shows people never realized there was a difference between Tesla Stores and Tesla Service and Delivery Centers. People should visit a Tesla Service and Delivery Center before they comment about the closing of Tesla Stores.

NPNS! SBF!
Volt#671 + BoltEV + Model 3

Are the service centers going to have a showroom and test drive vehicles?

The two I’ve been to near me in NJ do.

NPNS! SBF!
Volt#671 + BoltEV + Model 3

I think you’re talking about locations where a Tesla Store is co-located with a Tesla Service Center. That’s the case here in Kansas City, too.

I do wonder if Tesla Service Centers will start offering test drives. Since they do keep service loaners around, that should be physically possible, altho I don’t know if Tesla will start doing that.

Given that Tesla is reversing course on having physical stores, Lutz deserves to have a certain level of “I told you so” here.

And he does have a valid point regarding trade-ins with online-only sales. Are trade-ins going to be evaluated at the point of new car delivery? Where are they going to be delivered… to Tesla service centers? Who is going to resell them? These are some of the major reasons why the dealership model came into existence in the first place.

If Tesla was willing to build and operate its own “dealer” network, then fine… but as we can see, that didn’t turn out to be financially viable. So either the shuttering of these stores is a temporary move (which would be questionable itself), or Tesla is going to have a pretty serious obstacle on its hands when it comes to used car inventory.

Their own stores were not a failure. They turned two straight quarters of profits. Pay attention.

What they ARE doing is trying to offset the promise of a $35k 215mi+ EV before their epic automation juggernaut failure forced them to accept higher costs than anticipated. It appears that they were not able to cut costs in the manufacturing far enough in other ways to make up the difference, so they decided to drop the brick-and-mortar retail plan.

Were you “paying attention” to the fact that Tesla has had stores open since at least 2011? I’m not sure what “They were profitable for two quarters IN A ROW!” is supposed to tell us. (And how are you determining that the stores ran a profit? It’s entirely possible that Tesla was profitable DESPITE the stores – or, for that matter, in previous unprofitable quarters, that the stores themselves were generating profit.)

In any case, your quarrel seems to be with Tesla, not me. After all, it was Tesla that decided – at the very launch of the promised Model 3 pricepoint that drove over 400k pre-orders – that closing stores would be more profitable than, say, opening dozens more.

The very fact that Tesla’s response to an expected tidal wave of new orders is to close all their storefronts tells you more than anything I can say about the viability of the Tesla Store business model. It clearly wasn’t working.

Actually, what it tells me is something I already knew — that demand for Tesla’s cars far exceeds the supply. So long as that continues to be the case, Tesla Stores are an unnecessary expense. That doesn’t mean that in two or four years, when Tesla’s production has grown to meet demand or nearly so, that it won’t make sense for the company to start using Tesla Stores again.

What I’m saying is, is that with increased sales, their business model was profitable. They dropped the stores to make up for their $35k Model 3 that they could not deliver based on manufacturing efficiencies alone. The changes were made at the same time for very straightforward, obvious reasons. You are picking and choosing what you are looking at.

Musk admitted a year ago that their plan for automation of the Model 3 assembly line failed, requiring significantly more humans than they were hoping for, back when they first promised the $35k Model 3.

So, they had a choice to make: A) admit defeat, and hope that, maybe a few years down the road, they can offer a $35k trim; or B) offer the $35k trim and cut costs elsewhere. They chose B.

They were fine before they offered the $35k trim. That’s the point.

The point I’m making is that the very fact that Tesla Stores are considered something that costs more money than they bring in when Tesla is just now ramping up for what should be the biggest sales surge in their history is, itself, a condemnation of Tesla’s factory store business model. Stores are supposed to be profit generators, not loss leaders.

Closing stores is a logical response to either a) decreased sales or b) expectation of decreased sales. If your response to an incoming sales wave is to close stores, it’s clear that the business model you used to justify opening the stores in the first place was massively flawed. At the very least, there is a strong implication that Tesla could only afford to operate its own stores when it did not have to be concerned about running a profit; if that’s true, Tesla’s plan of a dealership-free future has some serious unanswered questions. It’s one thing to say you’re going to own your own stores, but it’s quite another to say there will not be any stores.

“Given that Tesla is reversing course on having physical stores, Lutz deserves to have a certain level of ‘I told you so’ here.”

Absolutely not. Dinosaur Bob only argued that Tesla Stores were not going to be a success for Tesla as part of his argument that Tesla would move to a traditional dealership model. Instead, Tesla is moving even further away from that!

The best you can say for Dinosaur Bob is that in this narrow case, he was right… for the wrong reason. Nobody deserves credit for that, any more than a broken clock deserves credit for being right twice a day.

Tesla isn’t “moving even further” from the dealership model, because operating your own storefronts isn’t any “closer” to a dealership model in the first place; the dealership model is not that brick-and-mortar stores exist, but that the manufacturer doesn’t own/operate them. An online-only dealership is still a dealership.

And depending on how Tesla decides to handle used cars, they may actually be moving closer to a dealership model. If Tesla ends up signing a contract with a third-party (e.g. CarMax) to handle all trade-in and resale of used cars, that’s 1/3rd of what a dealership does for an automaker right there. As a point of comparison, if CarMax also had an agreement to act as a storefront for new Teslas, that would be 2/3rds of what a dealership does, and if they also agreed to service Teslas, that would be everything a dealership does for an automaker.

From what others more knowledgeable have said, Tesla is most likely just selling off their non-Tesla used vehicles to auction houses, like many dealerships do with some of their trade-ins.

Another Euro point of view

Even when I decide to buy a second hand car I go to a store. Check out the car, see if I like it then explore the second hand market and find a nice out of leasing 2 years old model. It is not that I want to buy a car in a store but I want to see it. Sit inside it, possibly try it. Then way I buy it is completely irrelevant (on line or else). Also the millenials Musk seem to target who will buy a Tesla like a book on Amazon are probably more likely to buy a USD 400 electric scooter than at USD 40k car and rely on Uber for longer distances.

I clearly remember telling my friends about 15 years ago, Amazon will take over a large part of retail sales. They laughed at me and said Amazon who? Could not stop laughing, had to drop the subject.

It is funny how an industry being disrupted does not see it when it is happening right in front of its eyes…

How will someone trade in a car? Have you heard of Carvana.com?

I have, now, thanks!

I had never heard of Carvana before reading comments here. Thanks!

Bob, a car revolution is underway, move over the electric cars are coming.

*click*

If Lutz says “That’s Not Gonna Work” you may be sure that Elon Musk has taken the right decision. This guy is from the previous century 🙂

Did Tesla or Musk ever say that there would be no test drives? It seems that, by far, the biggest criticism of closing their stores is the lack of test drives. However, I have not seen where there was any indication that test drives were off the table. You don’t need a brick-and-mortar sales outlet in order to arrange a convenient test drive.

The Tesla press release seemed to imply there would be no test drives offered for the Model 3 in many or most markets, because it played up the idea that you can return a Model 3 after purchase for up to 7 days for a full refund.

But as I think about it more, my guess is that Tesla will offer test drives thru its Service Centers. However, that’s only a guess on my part. That would be putting an additional burden on the already very busy Tesla Service Centers, and Tesla may have other plans.

For someone who supposedly ‘doesn’t matter’, he sure is in demand on these popular shows.

Cause it generates lots of clicks. Yay to the internet!

But sadly, CNBC gives him a microphone only for his entertainment value, not for any informational or logical value in his comments. In other words, they’re treating him like a clown.

Won’t this old obsolete crank that lead GM into bankruptcy ever just shut up?

Lutz is terminably stupid. Why on earth would anybody listen to this right wing nutcase with a record of getting everything wrong? Tesla is wildly successful while Lutz is just a washed up corporate hack who can’t accomplish anything. This guy just can’t accept that the world has changed and others are a whole lot smarter than he is.

Lutz is old and Musk is young, the obvious choice for Millennials is…guess who?

OK let’s answer some of Bob’s “concerns”:

In the UK we have auction houses and companies like “we buy any car” that will take your unloved, unwanted trade in and give you some money for it… heck even eBay list cars!

Secondly – Tesla are closing sales centers, not service centers. Whilst service remains an issue, resources are being committed to solving the problem. Plus Tesla have a rapidly growing mobile service division and self diagnosing vehicles. Given time if GM are still trading they might follow Tesla’s lead.

Kudos should be given to Bob for noticing the restructuring exercise will deal with the “misallocation of company resources” tied up in retail stores!

This guy is literally out of touch.

Why would anyone listen to Bob Lutz? He helped drive GM into bankruptcy. Conveniently taking his very generous pension weeks before GM was rescued by the Government (but he always claims that Tesla, which repaid its much smaller loan years ago, is a basket case). His background was actually in marketing NOT engineering but he pontificates about global warming and battery engineering. He really should be ashamed of himself (as should CNN and the rest of his enablers)

It’s an interesting risk. It seems that many people are OK without stores and test drives. I think this may work short term for Tesla because of all of the hype for the Model 3. I personally could never buy a car without a test drive. Let’s say 70% of people are fine buying a car without a test drive. Aren’t you still knocking yourself out of the market for the other 30%?

The way they did it just seems like desperation to me. In order for the $35,000 M3 to be profitable, they had to save 6% by closing stores. I can understand that their model might be better than the dealership model, but having SOME stores or galleries available seems like a smart thing to me. I guess we will see. I see that when you go to purchase a $35,000 M3, it still says 2-4 weeks. How is that possible? Don’t they have many people still on the original waiting list? When will the first 35,000 M3 be delivered?

I figure, in the US, there might be anywhere from 20k to 30k people left holding onto a reservation for the SR (or SR+). At the rate they are manufacturing vehicles, they will tear through that backlog in less than two months, easily.

Without any data, that’s just a guess. I’m guessing they have north of 300,000 reservations left. Are you saying that only 10% want a $35k copy?

How is trade in done?

service center will handle a report on the vehicle, corporate will appraise and email you their number. Take it or leave it, if the car is traded in, they will flip it to a partnered wholesaler who will profit on your used trade. Each service center will likely have one trade-in rep who works in service too or body shop repairs and the rest goes to someone else.

Most New car dealership don’t want your beater trade in car. They flip them to Wholesalers, who sell them at auction, to lower level independent dealers. High end new car dealers resell very few of their trade ins. They’d rather go to auction to buy specific used cars for the line, unless they can rip you off on your decent car. They know their customer base and what sells.