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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (21242)8/22/2018 9:53:56 PM
From: robert b furman3 Recommendations

Recommended By
John Pitera
longz
roguedolphin

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Hi John,

All other manufacturers have a franchise system. A system where dealers pay the floorplan covering expense of the the inventory.

TESLA has their own service centers.

ALL other OEM car manufacturers must pay the dealer organization to repair the OEM's defects.

Independent dealers have a lower cost than OEM manufacturers.

So when the rework is done at factory owned stores - they absorb the total cost.

Not sure at all, with their "franchise free" business model that it is all so efficient if they are having rework problems at an OEM's cost to repair those defects .

Could very well be part of the business model's unresolvable cash flow problem!??

Elon' s working late getting an education of how efficient an OEM must be to earn a low margin.

His one killer mistake was taking on a low margin business with high R&D expense on his side.

Then if you don't make it last - you have all of the defect expense to reserve as warranty expense.

If you do that wrong, any buyer will pay a purchase price but the cost of warranty liabilities will be subtracted from that transaction price.

I don't think it is going to be pretty.

The auto industry's history is littered with better cars - that didn't make money and crashed. Stutz bearcat, cord,tucker,studebaker blah blah blah.

JMHO

It's a generational short!

Bob
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