Thread by @tsrandall

Yesterday Elon Musk announced sweeping changes that will transform Tesla. A few thoughts 1/
bloomberg.com/news/articles/…

First: the price cuts. Tesla introduced a $35k Model 3 and made unprecedented price cuts across its entire lineup. The cuts affect every vehicle Tesla makes, in every region that it sells cars. Just look at what they did with prices in China:

https://twitter.com/vincent13031925/status/1101412202089570304

2/

This raises the level of difficulty for every major automaker preparing their big EV debuts. Tesla is now the #1 target, and if you’re trying to benchmark against a comparably priced Tesla, your job just got harder. However, 3/

It’s also drawing an outpouring of customer regret on Tesla owner forums—especially by people who only recently took delivery of their new cars, only to find price slashed and resell value eroded. The price of early adoption has never seemed so high 4/

To make these price cuts possible, Tesla is moving 100% of its worldwide sales online and closing most stores. This is a striking reversal. It was only a few months ago that Tesla was celebrating opening new stores 5/
electrek.co/2018/12/10/tes…

If you’re a brick-and-mortar retailer (or heavily invested in commercial real estate), this should be a wake-up call. If you don’t need stores to sell expensive cars by a relatively new brand, what *do* you need retail space for? That said, 6/

Tesla’s shift away from a retail footprint is a big risk. Sure, some 80 percent of their sales may already be executed online, but how many of those customers got to know the brand first by stopping in a store, climbing in cars, taking one for a test drive? 7/

If Tesla can sell itself by word of mouth alone or by some other creative mechanism, that would be a formidable. But the decision appears sudden, and its impact long-lasting. Tesla's stores are the envy of retailers and a big part of its brand. It would cost dearly to be wrong 8/

Side note: What about solar? Over the last two years Tesla has dismantled its door-to-door sales force, promising cheaper customer-acquisition costs by selling through stores. SolarCity was America’s biggest rooftop solar installer—whither Tesla Solar? 9/

Another question: Tesla, which struggled last year to make volume cars, has just pulled a very long row of demand levers. Does that indicate slowing demand, a surge in supply capacity, a bit of both? 10/

I asked Musk about this on the call. He answered with the most detailed production forecast yet. He says Tesla will make between 420k🍀 and 600k cars, including 70k-100k Model S and X. Let’s take those huge #s with a with a grain of salt, but bloomberg.com/news/articles/… 11/

Our Tesla Model 3 Tracker has also suggested a significant increase in production to start the year. But be warned: There’s reason to be wary of our latest numbers too, as the international launch may well have temporarily goosed the VIN registrations bloomberg.com/graphics/2018-… 12/

Musk’s new wager is that if Tesla focuses on nothing but the product, price and (he vows) service, the cars will sell themselves and no one will be able to catch up. It’s a super-lean sales model, and he’s taking a meat cleaver to everything that doesn’t serve those goals 13/

People will argue whether this is a brilliant strategic move, or an act of desperation. But I wouldn’t trust anyone who expresses certainty in how it all plays out 14/