Investor's Corner

Tesla Doubles Down on Demand Generation

Inside Tesla's new pop up store in Santa Barbara, CA

A couple of weeks ago, Tesla Motors unveiled the mobile, “pop-up” concept store in Santa Barbara in hopes to deliver product knowledge and buzz to the public for its electric, Model S cars. According to Green Car Reports, Tesla’s pop-up concept is stationed in Santa Barbara for one month, before heading to its East Coast summer destination, the Hamptons on Long Island, NY.

Tesla Motors pop-up store in Santa Barbara, CA

Tesla Motors pop-up store in Santa Barbara, CA [Source: Tesla Motors]

The pop-up announcement came late in the week, right before the long holiday weekend and I thought it was a bit odd for Tesla, considering such a novel marketing play. Why so quiet?

The answer could be that Model S demand may be soft for 2015, especially with recent posts on Tesla’s site showing a hefty amount of scheduled test drives, and a new wrinkle – partnerships with destination charging hotels. Solid marketing moves, but it seems Tesla is playing down its marketing efforts.

Of course, Tesla’s Fremont production facility may be hitting its stride this year with the Model S, but Musk may want a production hedge with the Model X. Musk hinted that by Q4 2015 they could have a steep ramp of Model X deliveries of 1,000 per week, but Musk is known for over-promising and missing deadlines with SpaceX, Telsa, etc…

From the Q1 earnings call:

Musk: I mean, actually with Model X production ramping up quite heavily in Q4 depending upon how that ramp goes and obviously it’s difficult to predict that with perfect clarity, but our volume essentially doubles in Q4.

Musk: For the S, we had quite a long ramp from–we’re like six months from the very first deliveries to a significant volume. We’re trying to compress that to maybe like two months or three months at most….Once we start delivering cars en masse, because we’re going to go from a small number of cars to like 1,000 a week pretty fast.

As documented on Teslarati, hotel destination charging partners have been working with Tesla Motors to install Tesla’s high-powered charging units at various hotels for the last year in the U.S., Europe and China. So the new wrinkle is partnerships with hotel destination properties and regular hotels for numerous Model S test drives this summer.

Here’s an interesting passage from a Pennsylvania media outlet covering a recent hotel test drive:

…But not until the California-based car manufacturer and Normandy Farm Hotel in Blue Bell partnered up did he (test driver) make any serious inroads into possibly buying one. First step, of course, was the Wednesday morning test drive, hosted by Normandy Farm.

“I put (a test drive) off because I knew I’d love the car,” said Corbett “But I’m absolutely satisfied with it. If I had the cash I would have had one already. It’s something I would budget for to make happen. It’s that impressive.”

The company is taking the product out on the road. Other upcoming hotel events include the rolling hills of Sonoma County at the Best Western Inn, which has three Chargepoint charging stations in Healdsburg, Calif.

So Model S demand may be lacking in China and other parts, but it looks like the Tesla marketing machine will be busy this summer.

*Author’s note: The Elon Musk biography is a must-read!

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