Elon Musk’s Driveway Deliveries Could Be the Key to Maintaining Momentum

(Bloomberg) -- Before Tesla Inc. blew past expectations for vehicle deliveries this week, Elon Musk was on Twitter promoting a months-old service that remains a bit of a mystery to the legions of electric car fans that follow the company's every move.

The program, called Tesla Direct, offers some buyers of the Model 3, S and X the option to have their car dropped off right to their home or office. Musk and Tesla have said little about how prevalent the service has become since it started last year, and the company didn't mention it in its statement Tuesday announcing that worldwide deliveries surged to 95,200 last quarter.

But based on Daan Hermsen's experience, the growth of Tesla Direct could play a role in helping the company maintain momentum. The 30-year-old medical plastics industry salesperson living in the Utrecht province of the Netherlands initially planned to pick up his metallic blue Model 3 from a Tesla facility in Tilburg about 90 kilometers (56 miles) from home before finding out he'd been chosen for direct delivery.

“My neighbors saw it arrive, and now they want to drive it,” Hermsen said. The only drawback he encountered was that the delivery specialist put some miles on his vehicle by driving it to his home in Amersfoort.

In his tweet on Monday, Musk quoted a follower in Santa Clara, California, who likened Tesla Direct to Amazon.com Inc.'s Prime service. The CEO seemed to appreciate the comparison.

Tesla's experimentation with home delivery should come as no surprise, given the company's approach to retailing has been somewhat unique from the beginning. It's flouted the franchise dealership model and sold cars direct to consumers, which allows Musk more flexibility to try something different.

“Customers desperately want an easier buying process with at-home delivery,” said Michelle Krebs, an analyst at car-shopping researcher Autotrader. “Elon Musk is spot-on with consumer desires.”

While a number of questions remain about Tesla Direct -- including how cost-efficient and scalable it's been -- interviews with customers who've used the service yielded some clues to how it works. They describe taking delivery either from a flatbed truck driver or a specialist who gets behind the wheel personally and drops the car off in a driveway or office parking lot. The specialist then hails a ride back to a Tesla facility.

In the days leading up to the quarterly sales deadline, Musk had implored Tesla employees to “go all out” to hasten shipments of vehicles on order. It's unclear what role, if any, the direct delivery service played in what the company said were marked logistical improvements last quarter.

“We made significant progress streamlining our global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to our working capital position,” Tesla said in its statement Tuesday. Representatives for the company didn't respond to a request for comment on Tesla Direct.

Eric Okon, the co-owner of a corporate car service in New York City, had two Model 3s delivered to the company's office in Queens on June 28.

“It was certainly convenient,” Okon said. “It was a quick process; it was really easy.”

To contact the reporter on this story: Dana Hull in San Francisco at dhull12@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Chester Dawson

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