Tesla’s online-only car sales strategy could be a money saver for the auto company: Gene Munster
Tesla CEO Elon Musk announced on Thursday the company would take its Model 3 sales online, closing brick-and-mortar stores in favor of home deliveries and test drives.
Loup Ventures managing director Gene Munster told FOX Business' Stuart Varney that Tesla's new way of doing business isn't a sign of struggle - and it could save the company money overall.
"Eighty-seven percent of Model 3s have been purchased without a test drive," he explained on "Varney & Co." Friday. "Basically you don't need that sales force - by eliminating that, that saves six percent and that's critical to getting to that $35,000 price point."
Musk said that the Model 3 would see its price drop to $35,000 and sales might slump in Q1 as a result.
Tesla consumers will now have to order them online and cover the down payment. The car is delivered to the customer's home where they can test drive it for seven days or 1,000 miles - whichever comes first. If the buyer isn’t pleased with the car, they can return it during that grace period for a refund.
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"It is going to be a change for a lot of people in terms of how they purchase a car," Munster said. "But with a seven day, no questions asked, thousand mile return policy - it's probably more generous. And actually no one likes buying a car in the current model and they [Tesla] may find a way to improve the buying experience."