Electric-car maker Tesla Motors (NASDAQ:TSLA) is already known for its unique approach to selling its cars, bypassing dealerships and instead selling its vehicles directly to consumers in company-owned retail locations in upscale shopping areas. But it wants to push the boundaries of what consumers are accustomed to in the auto retail experience even further. Showing off the flexibility of Tesla's direct-to-consumer model, the electric-car maker is meeting customers at popular summer locations with a touring, full-fledged store experience -- a feat auto dealers may have difficulty matching.
Tesla's mobile store
When transported, Tesla's new mobile store fits on a single flatbed truck and is about the size of four shipping containers sitting side by side. Once expanded and transformed, the store is about 20 feet deep and 34.5 feet wide.
"Designed in-house, the shipping container arrives and unfolds to double its size in just a few hours," Tesla said in a media release. "The mobility and convenience of the design allows Tesla to bring our unique retail approach to customers in new locations where we do not yet have a brick-and-mortar location."
The store will highlight Model S components, including the Model S's electric powertrain and battery architecture. People visiting the store will be able to "learn about electric driving with enticing visuals and interactive displays," as well as to test-drive the Model S.
Just in time for the busy Memorial Day weekend shopping, Tesla's mobile container store landed in Santa Barbara, California, today, and will have its public grand opening tomorrow. After finishing up the month in Santa Barbara, Tesla will then transport its mobile store to its next stop in the Hamptons.
As Twitter user @TonyJGiannini pointed out, Tesla's mobile store is already touring in Europe. Mostly slipping under the radar in the media, the pop-up store made an appearance in England at the Bluewater shopping center in November and December.
There are three of these mobile stores in Europe and one in the U.S. The three in Europe are currently in Denmark, France, and Switzerland. Going forward, Tesla could very well expand its investment in these stores, Tesla spokeswoman Alexis Georgeson told The Motley Fool.
Tesla's secret weapon?
During Tesla's fourth-quarter earnings call, CEO Elon Musk said the company had "a secret weapon on the demand side that we'll probably start to deploy later this year for demand generation," adding that it could be a "good weapon against the dealers."
Is this unique touring retail experience the company's "secret weapon"? It's quite possible.
It would be difficult for traditional automakers to set up similar direct-to-consumer pop-up shops to sell their vehicles. Doing so would likely require the vehicle manufacturer to refer visitors to nearby dealers for test drives and sales, in order not to interfere with the local dealer network. Dealers, too, could have trouble matching Tesla's mobile store. They probably wouldn't want to set up shop far from their dealership, since the majority of dealer profits come from servicing cars -- not auto sales.
There's good reason to believe Tesla's investment in mobile stores is likely to pay off handsomely
First, Tesla's demand is arguably limited by the company's small retail footprint. So, every additional store is important.
Not spending a dime on advertising, Tesla relies heavily on its limited yet fast-growing retail locations for sales. Touring its mobile stores in high-foot-traffic locations could help Tesla expand its retail footprint to key areas without having to take the time to set up a physical brick-and-mortar location.
Second, Tesla's spending on retail locations to date has proven to be a lucrative investment. Musk said last year that sales per square foot for its retail stores are double Apple's. Apple was previously thought to have the highest sales per square foot in the world.
Last, customer education plays an important role in Tesla's selling process. In Tesla stores, customers ask employees many questions about driving electrically. By bringing mobile locations to popular destinations where Tesla doesn't have a retail footprint, the company can educate more people who are unfamiliar with the company's fully electric vehicles.
Tesla's growing footprint of retail locations has been a key driver in sales growth. Model S deliveries were up 56% year over year in the company's most recent quarter.
Is Tesla's production catching up with demand?
With Tesla constantly ramping up the pace of production for the Model S, the company's further investment in these mobile stores could be a sign that its production is finally catching up to demand. While Tesla did say orders continued to grow in Q1 and that it expects global order growth for Model S to continue to rise throughout the year, perhaps the level and rate of Tesla's production ramp-up is getting closer to the level and rate of order growth.
If Tesla's production ramp-up for Model S is catching up with orders, will an investment in mobile stores help Tesla achieve its goal to increase Model S sales by about 50% for the entire year?