Tesla’s Latest Sales Pitch Will Blow Up Just Like Its Cars

Journalist:
August 5, 2019

You have to give Elon Musk a lot of credit. By creating some kind of news every single day about any one of his ventures, he is not only guaranteed to always be in the news, but he’s able to create a smokescreen that distracts people and investors from the fact that he’s just selling turbocharged snake oil. Only a genius can recover from the fact that Tesla cars explode.

Free Stuff From Elon and Tesla!

Over the weekend, Tesla announced that all new Model S sedans and Model X SUVs will come with free unlimited access to its network of supercharger stations.

If it weren’t so ridiculous a move, it might be considered audacious. Except that this announcement is ridiculous, and here’s why.

Up until recently, supercharging a Tesla was free for almost every vehicle. Recently, however, Tesla removed that perk for a number of different types of vehicles. Now it costs roughly $10 to supercharge a Tesla vehicle.

Elon Musk himself has said that free supercharging was an “unsustainable” model. The point of removing the free perk was to discourage the sale of lower-priced Tesla vehicles.

Elon Musk Does Everything Backwards

Elon Musk and Tesla have been switching their strategic approach toward pushing more expensive luxury vehicles. By offering this so-called unsustainable perk to buyers of these new expensive vehicles, Elon Musk and Tesla apparently hope to juice up demand – pun intended.

This is just another part of the overall Tesla smokescreen. For starters, there are only a few hundred supercharger stations in the entire United States. So even finding one of these unicorn glitter devices is difficult enough as it is.

While every little perk may help, selling Tesla vehicles to the luxury market with free supercharging is not going to make that much difference in terms of driving demand.

In fact, Elon Musk and Tesla are arguably doing the exact opposite of what they should. They appear to be effectively abandoning the lower-priced vehicles because of their lower margins. Yet maintaining a supercharger offer for even those models would be more likely to drive demand in that tier than the luxury tier.

Yet of the cars delivered in the second quarter of this year, just under 20% were Model S and Model X. Elon Musk and Tesla are abandoning the 80% of vehicles that were primarily delivered in the second quarter. This just makes no sense.

That is, it makes no sense for a legitimate car manufacturer. For a company that is losing billions of dollars every year, it makes perfect sense to try to get rich folks into its luxury vehicles and enjoy the fatter margins in order to try to save the company.

Tesla Starts Fraud Department. Why Not Start With the CEO?

On a related note, Tesla is seemingly creating a new team known as “global fraud management.” This group’s goal will be to “mitigate fraud, waste, and abuse through prevention, investigation, and remediation.”  That should help what one ex-employee called a “circus” at Tesla.

There have been numerous criticisms and accusations of fraud, waste, and sabotage within Tesla. Yet as is typical of Elon Musk, he tries to fix something at the company long after the majority of the damage has already been done.

There is also a sad irony in the fact that, if anyone should be cited for waste, fraud, and abuse, it’s Elon Musk himself.

Last modified (UTC): August 5, 2019 21:00

Lawrence Meyers @captsmedley

Lawrence Meyers has published over 2,500 articles on finance and policy at outlets including Breitbart.com, Investorplace, WyattResearch, LearnBonds, Lifezette.com, TownHall.com, U.S. News & World Report, and The New York Observer. He hails from New York City in the USA.