In a surprising move, electric-car maker Tesla Motors (NASDAQ: TSLA) is deploying Model X vehicles, with mobile mini-stores in tow, around the world. The company hopes the "playful spin" on its retail concept will help it educate interested customers and -- ultimately -- sell vehicles.
Continue Reading Below
Tesla Model X with a mobile Design Studio in tow. Image source: Tesla Motors.
Here's why the idea makes complete sense.
A marketing machine
By traditional automakers' standards, Tesla Motors' (NASDAQ: TSLA) falcon-winged Model X shouldn't exist. Or it, at least, should be limited to a concept design, not actually making it into production. After all, famed auto industry veteran Bob Lutz said earlier this year Model X, with its complex doors, "appears to be unbuildable." And even Tesla CEO Elon Musk has said the company "put too many new features and technology" on Model X.
But Tesla has charged forward -- and production has soared. Sure, ramping up production wasn't easy; Model X production troubles are largely why Tesla has missed its own vehicle delivery targets for two quarters in a row. However, there's no turning back now. Model X production now looks like it could rival the build rates for Model S as early as this quarter.
Still, is Tesla's stubborn persistence with Model X a problem?
Despite the SUV's negative impact on Tesla's production goals in 2016, there's one very good reason for the company to keep shipping Model X and its wild, flashy doors: The tech-packed vehicle is just as much a marketing tool as it is a vehicle.
Model X's Falcon Wing doors may have been difficult to manufacture, but they're undoubtedly efficient at turning heads. Operating on two hinges, the doors fold up and then out in a dance-like, futuristic fashion, all while dodging objects to the side and above thanks to capacitive, inductive, and ultrasonic sensors built into the doors. Put simply, Tesla's falcon wing doors put on a show.
Model S (left) and Model X (right). Image source: The Motley Fool.
Earlier this year, I arguedModel X units shown off in Tesla stores were likely to draw additional foot traffic and serve as a marketing tool for not only the Model X itselfbut also Model S and even the company's upcoming lower-cost Model 3. And Tesla seems to agree. Its new move to deploy Model X with mobile design studios attached highlights the automaker's confidence in the SUV's ability to draw crowds and solicit orders.
The Tesla Airstream store
Already known for its unorthodox retail strategies, opting to sell vehicles directly to customers and to open stores in high foot-traffic areas like indoor and outdoor malls, Tesla's new take on auto retail is perhaps its most unconventional yet. The idea seems to be that Tesla can roll up a Model X with a small store in tow, open up the SUV's falcon wing doors, and sell vehicles.
Tesla described the stores in a statement to the Fool:
Tesla Airstream mobile Design Studio. Image source: Tesla Motors.
These new mobile Tesla stores will be "roaming to destinations near and far this fall," the company said. Tesla's website already shows over 10 planned locations, including Tampa, Saratoga Springs, Atlanta, Portland, and more. In addition, Tesla says customers and enthusiasts can "request a stop near them."
We've yet to see the impact Model X will have on demand for the company's vehicles. While the first Model X units were delivered late last year, it wasn't until this quarter that the SUV made it to most of the company's stores and was widely available for test drives.
As flashy as Model X is, this is likely just one of several tactics the company will execute over the years to take advantage of those dancing doors' head-turning prowess.
A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.
Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.