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Will Tesla's Magic Work on Mass-Market Consumers?
Fox Business ^ | April 7, 2016 | Steve Tobak

Posted on 04/10/2016 5:55:38 PM PDT by jazusamo

You’ve got to marvel at the man’s sense of timing and showmanship. Whenever there’s bad news on the horizon, Tesla CEO Elon Musk just takes off his top hat, waves a magic wand, and pulls out a shiny new rabbit. He may have missed last quarter’s production target, but then, he pulled out the shiny new Model 3. And all is forgiven.

Well, not exactly.

The master of hyperbole has proven that Tesla can ship tens of thousands of luxury electric cars – albeit years later and for $30,000 more apiece than originally promised. And, even at $106K, Tesla still burns cash on every car sold, not to mention all the quality and production growing pains the company’s been experiencing.

While that slight of hand has worked on Musk’s wealthy Silicon Valley fan boys and cult-crazed investors, I doubt it will be effective with everyday consumers as Tesla attempts to challenge the likes of GM, Toyota and Mercedes as a mass-market supplier of a broad range of cars.

Of course, I could be wrong. Maybe this is just another example of an innovative tech entrepreneur disrupting an age-old market like Amazon did in retail, Google in advertising, Netflix in video, Uber in ground transportation, Airbnb in hospitality and GrubHub in food delivery.

Besides, it’s not as if up-selling is limited to tech. Consumers didn’t always fork over $100 for a pair of blue jeans or sneakers. Who knew you could triple the price of a $20 sweatshirt just by calling it a hoody? Or get millions of people to feel good about not working out by selling them a whole new wardrobe of athleisure wear.

(Excerpt) Read more at foxbusiness.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: model3; musk; tesla
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Interesting...Tobak makes some very good points.
1 posted on 04/10/2016 5:55:38 PM PDT by jazusamo
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To: jazusamo

Without gov’t funding, Tesla will go under, as would most of Musk’s ventures. I don’t think that any have turned a net profit yet.


2 posted on 04/10/2016 5:59:40 PM PDT by EagleUSA
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To: jazusamo
With all the coal plants going belly-up thanks to Obama, I'm not sure how these electric cars will be feasible.

But the low-infos really believe that that two-pronged outlet in the wall produces endless energy.

3 posted on 04/10/2016 5:59:42 PM PDT by Extremely Extreme Extremist (Rafael Cruz: Canadian-born, Cuban ancestry, ineligible for POTUS)
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To: jazusamo

Tesla makes nice-looking coal-powered cars.


4 posted on 04/10/2016 6:01:33 PM PDT by beethovenfan (Islam is a cancer on civilization.)
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To: jazusamo

Tesla makes nice-looking coal-powered cars.


5 posted on 04/10/2016 6:01:42 PM PDT by beethovenfan (Islam is a cancer on civilization.)
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To: beethovenfan

Sorry for double post.


6 posted on 04/10/2016 6:02:30 PM PDT by beethovenfan (Islam is a cancer on civilization.)
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To: jazusamo
Of course, I could be wrong

He is wrong. Musk had a fabulous week: made history with Falcon 9 first stage recovery and generated a $14 BILLION backlog for Model 3.

Tell me, when was the last time anyone was that enthusiastic about some piece of crap coming from Detroit? Or Tokyo?

Call him a crony capitalist, a deluded Millennial Leftist, or whatever you want...fact is, he's the guy with the market.

There's a guy who builds hotels and office buildings who does pretty good and people accuse him of being a fraud, but know what? They got the business.

7 posted on 04/10/2016 6:03:16 PM PDT by Regulator
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To: EagleUSA

Yep, Tobak brings out the fact that the $7500 tax credit will be ending and that even on the high priced Model S Tesla is losing money on every sale.


8 posted on 04/10/2016 6:04:46 PM PDT by jazusamo (Have YOU Donated to Free Republic? https://secure.freerepublic.com/donate/)
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To: Extremely Extreme Extremist

Don't worry, they'll figure it out. This particular one could be tripled in size.

9 posted on 04/10/2016 6:06:15 PM PDT by Regulator
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To: Regulator
generated a $14 BILLION backlog for Model 3.

So you didn't read the article? He addresses that point.

10 posted on 04/10/2016 6:07:40 PM PDT by jazusamo (Have YOU Donated to Free Republic? https://secure.freerepublic.com/donate/)
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To: jazusamo
And, even at $106K, Tesla still burns cash on every car sold

I wouldn't care except it's probably government cash that is being burned.

11 posted on 04/10/2016 6:10:41 PM PDT by libertylover (The problem with Obama is not that his skin is too black, it's that his ideas are too RED.)
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To: libertylover

Amen.


12 posted on 04/10/2016 6:12:01 PM PDT by jazusamo (Have YOU Donated to Free Republic? https://secure.freerepublic.com/donate/)
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To: jazusamo

Yeah and he dimisses it as a liability and is skeptical that Tesla can ever make money on it.

But the Model S and X were low production run items. The Model 3 now has critical mass for high production/low cost.

Venture capital is not a problem for Musk. Between DFJ venture capital, Larry Page and all his buddies, he has access to literally billions, if only for short term cash flow.

The factory is now highly automated. And as far as finding people in the U.S. who know how to scale that up, they already work there: it’s part of the existing planning.

The heritage automakers are just barely keeping up with this gig. Drafting on the leader sometimes lets you win, but only if you were close in the first place.

In this market segment, they ain’t even close. They didn’t even know it existed. As is painfully obvious now.


13 posted on 04/10/2016 6:15:32 PM PDT by Regulator
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To: jazusamo

When I have to drive to work, half of the time it is a long distance, no chargers and too far for a Tesla charge. No thanka unless Elon is waiting to push me home.


14 posted on 04/10/2016 6:19:10 PM PDT by MtnClimber (For photos of Colorado scenery and wildlife, click on my screen name for my FR home page.)
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To: libertylover
"I wouldn't care except it's probably government cash that is being burned."

Which, of course, is your cash, and mine!

Owners seem to love the cars, although I don't really understand why. (I'm waiting for one of the Discovery car shows to cut out the Tesla battery and install a V8 and a 6-speed manual. The EPA SWAT team would probably raid the show before it was ever broadcast, though.)

15 posted on 04/10/2016 6:32:58 PM PDT by Sooth2222 ("Every nation has the government it deserves." - Joseph de Maistre (1753-1821))
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To: jazusamo

Hard to say. Working people don’t throw their money away as easily as the Richie Riches who buy Teslas.


16 posted on 04/10/2016 6:39:41 PM PDT by ozzymandus
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To: ozzymandus

Exactly, the average working people in this country will not be supporting Tesla.


17 posted on 04/10/2016 6:46:07 PM PDT by jazusamo (Have YOU Donated to Free Republic? https://secure.freerepublic.com/donate/)
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To: Sooth2222

Drop in a naturally-aspirated V8, automatic and I’d be fine. There are some things in a car that cannot be replicated with Tesla’s drivetrains.

The only roadblock would be if Tesla tries to blackball you from receiving parts. They’ll do it if you start with a salvage model, and good odds would be on them doing same with an undamaged one.

In short, Tesla would be after you well before the EPA got word of what happened.


18 posted on 04/10/2016 6:51:39 PM PDT by setha (It is past time for the United States to take back what the world took away.)
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To: jazusamo

While that slight of hand has worked on Musk’s wealthy Silicon Valley fan boys and cult-crazed investors,

...

With a sentence starting off like that, this article couldn’t possibly be biased. The Model 3 really isn’t mass market. It will compete in the low end luxury market with Mercedes, BMW and Lexus.


19 posted on 04/10/2016 6:54:18 PM PDT by Moonman62 (Make America Great Again!)
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To: jazusamo

The same will be true of his rockets much to the dismay of the US government and his commercial customers.


20 posted on 04/10/2016 7:24:21 PM PDT by Rockitz (This is NOT rocket science - Follow the money and you'll find the truth.)
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