Customers are used to seeing and testing a car, says Fields.
Tesla’s decision to shift its sales completely online is a “leap of faith” that may not necessarily succeed, former Ford CEO Mark Fields stated on Friday.
While the American automaker has a “very sustainable brand,” it has to find out how to churn out cheaper Model 3s while attempting to become profitable, he stated on CNBC’s “Closing Bell.”
“It all comes down to the consumer because, without incentives, that is going to impact the business model,” Fields stated. “By eliminating their stores, are consumers going to want to purchase a vehicle like they buy a Crock-Pot on Amazon?”
Last week, Tesla announced it is shifting its sales to online only. It will need the company to decrease headcount in sales and should help slash some operating expenses. In a blog
The company has had to keep prices high enough to recover its huge investments and turn a profit but at the same time keep them less enough to rival with the larger automakers. CEO Elon Musk once seemed optimistic Tesla would turn a profit in the first quarter of this year but these days he’s predicting a loss.
The move to online sales is part of Tesla’s plan to cut down costs. However, customers are used to seeing and touching a vehicle, stated Fields, who served as Ford Motor’s CEO from 2014 to 2017.
“It is the second-biggest purchase that they make in their life, after their house, and will they want to do that just online, not physically seeing or test-driving the vehicle? That’s a leap of faith.”