Tesla analyst Adam Jonas from Morgan Stanley made interesting comparisons between Tesla and Amazon Prime in a recent note to investors. If you think about it, he's right, and we know it's working.
If you click on a product on Amazon, it will show you the perks of having a Prime membership, such as fast and free shipping, sometimes a lower price, and much more. If you use Amazon often, it really just makes sense to pay for Prime.
Pricing on Amazon is interesting much like Tesla's pricing. While Tesla doesn't have Manufacturer's Suggested Retail Pricing (MSRP), its prices are always up to date on its website. They may change often, just like the price of your favorite dish soap or breakfast cereal, so you can keep your eyes on the price and place your online order when the price appeals to you most.
Meanwhile, traditional dealerships may not follow MSRP, so markups are common. This is especially true when it comes to newer, sought-after cars, which are most of the EVs coming to market currently. Jonas recently struggled to trade in his minivan and get a brand-new SUV for the promised MSRP.
He finally got all the details worked out and drove an hour and a half to take delivery of his new car only to be told that there was no way he was getting it for MSRP. He even had screenshots of the agreed-upon price, etc. The dealer told him that negotiations typically start at $3,000 over MSRP, and he never sells at MSRP. In the end, he was able to get it to all work out, but not after way too much hassle.
Jonas already saw Tesla's direct sales system as an advantage it has over most of its rivals, but his personal situation made him see it even more. The Morgan Stanley analyst shared:
“While a lot of attention this year has been paid to Tesla’s frequently changing prices, within one region, all consumers pay the same price for the vehicle…It’s a smooth process that is creating an increasingly visible discrepancy between the legacy car buying experience and the Tesla experience."
The analyst concluded that Tesla owning its own stores allows it to tweak the shopping experience however it sees fit to make it "as easy as Amazon Prime." Morgan Stanley still believes that revenue is "the single most underappreciated advantage Tesla has" over its legacy rivals, and direct sales are a big key here.
