Tesla CEO Elon Musk was granted his $878-billion compensation plan on Thursday night, but the headlines don’t really expound on the complexity of that plan. Like I said on Friday, the company won’t just hand Musk all of that money—it’ll come in the form of Tesla stock. More importantly, those stocks will only be granted to Musk if he completes a stringent set of near-impossible tasks, including multiplying the value of the company by eight times.
Considering Tesla’s aging lineup and a downturn in demand for the brand’s EVs in big markets like the U.S., Europe, and China, I really don’t see Elon hitting those goals. Unsurprisingly, the company is doing everything it can to revitalize sales. It just revealed cheaper versions of the Model 3 and the Model Y, and reportedly plans to launch its Cybercab next year. Now, it’s offering rentals for as cheap as $60 a day.
There’s more drama elsewhere in the car universe. CarMax, the nationwide used dealership chain famous for its no-haggle pricing model, is not doing well. The company missed earnings back in September thanks to lower-than-expected sales, leading the CEO to resign. Now, at least one analyst believes the company is “officially broken.”
What else? Not to get too Tesla-heavy, but sales for the company just hit a three-year low in China due to increasing pressure from domestic competition. Then there’s Rivian’s gigantic new pay package for its CEO, RJ Scaringe—a package that models itself after Musk’s awards (but on a much smaller scale).
Rent A Tesla For Three Days, Get A Discount To Buy One
I’m a firm believer that the best way to sell someone on a product is to have them experience that product themselves. There’s only so much that reviews and specs can convey—you can’t truly know how something feels unless you encounter that feeling firsthand.
The marketing team at Tesla seems to understand this, so it’s offering prospective buyers the chance to rent a car from its lineup any time between now and the end of the year. Here are some of the terms, straight from the rental website:
The rental duration is a minimum of three and a maximum of seven days, booked through the official Rental System. Daily rates vary by model and begin at $60 per day. While mileage is unlimited, the vehicle is prohibited from being taken out of state. A purchase incentive of up to $250 may be offered, with the final amount contingent on the rental duration. $30 fee will be applied if the vehicle is returned with less than 50% charge.
To me, this feels more like an extended test drive, since there’s a minimum and maximum timeframe you’re allowed to keep the car. The reason you can’t go out of state is that this rental program is only going on out of two stores right now, both in Southern California.
That $60 rate applies only to the Model 3 and the Model Y, according to InsideEVs. If you want to try out a Cybertruck, it’ll be $75 a day. If you’d rather get some seat time behind the wheel of the ancient Model S or Model X, the price is $90 a day. Sadly, only the more expensive Premium trims are available for rental, which means those new base Standard trims, as well as the sportier Performance or Plaid models, aren’t on the docket.
If you’re among the Autopian readers in the market for a new Tesla, these rentals will give you a chance to experience unlimited free charging through the company’s Supercharger network, along with “Full Self-Driving,” which Tesla points out requires “active driver supervision” and does “not make the vehicle autonomous.”
It’s worth noting Tesla has always offered normal, 30-minute test drives out of its company-owned stores, and earlier this year, began offering 48-hour test drives to potential customers. So to me this feels more less like a revolutionary sales tactic and more like a year-end push to drive up sales volume.
It seems to me that, if you need as cheap a rental as possible in Southern California, you’re probably better off sticking with a rental company. Unlike Tesla’s setup, which seems to require you to go to a Tesla location for pickup and dropoff, places like Hertz and Sixt have airport pickups, and at least the cheapest cars are about $15-$20 cheaper per day for a comparable gas-powered car, according to each company’s respective website.
[Ed Note: I’m a fan of Tesla vehicles/engineering (even if they are a bit dated). But this does seem like a tough sell given restrictions/cost. -DT].
Things Aren’t Looking Great At CarMax
Most people know CarMax from its no-haggle pricing model, but a lot of enthusiasts became familiar with the national dealership chain thanks to a product offered by the brand called MaxCare. This was a sort of bumper-to-bumper warranty you could purchase alongside a car sold by CarMax, which YouTuber and Cars & Bids founder Doug DeMuro famously exploited to get a bunch of expensive stuff fixed cheaply on an old Range Rover.
That saga happened a decade ago, but the CarMax marketing people will be happy to know it still lives rent-free in my head (I should’ve bought a cheap BMW M car from them when I had the chance). What they probably aren’t happy about is the current state of affairs within the company, which isn’t great, per Automotive News.
CarMax’s stock is down a colossal 62% this year, in large part due to an earnings report in September that showed results well below analysts’ expectations and CEO Bill Nash’s resignation. While consumer sentiment isn’t exactly great right now, the company’s closest competitor, Carvana, is doing well, with shares rising 47% over the same period. So what’s going on?
Back when those earnings were released, company leadership blamed tariffs for the sales slip earlier in the year, according to Autonews. But it seems CarMax’s problems are a bit more focused. The latest from Automotive News:
CarMax is contending with company-specific problems, analysts said. CarMax unexpectedly announced that CEO Bill Nash would be stepping down in December.
Truist’s Scot Ciccarelli said the company was “facing multiple strategic challenges,” and that the new management team will need to reassess the relevance of its business model in the current environment.
CarMax is “officially broken,” said Mizuho Securities analyst David Bellinger. “We see much of what has gone astray for the business as related to the strategic direction of the team.”
The company’s interim chair, Tom Folliard, expounded on the situation in a statement released last week, where board member David McCreight was named interim president and CEO:
“CarMax is the nation’s largest used car retailer because we have built a business that customers trust. We make car buying and selling simple, transparent, and personalized, backed by a beloved brand, unmatched physical and digital infrastructure and an award-winning culture that affirm the potential of this business. However, our recent results do not reflect that potential and change is needed,” said Mr. Folliard. “The Board has decided that more direct involvement from David and me will help strengthen the business in this transitional period. During this time, we are focused on driving sales, enhancing profitability and reducing cost.”
If I know anything about corporate business cycles, CarMax’s troubles are nothing a few hundred layoffs labeled as a “strategic restructuring” won’t fix, surely. But I hope not.
Tesla Is Suffering In China
I feel like I yap about Tesla a lot, but as the most valuable car company on the planet, it’s hard not to. Especially when things aren’t going well at the company. Sales volume is down for the brand across the planet year over year, but things are particularly bad in China, where the brand’s market share is shrinking rapidly. From Reuters:
Sales fell 35.8% from a year earlier, down from September’s figure of 71,525 when Tesla began deliveries of the Model Y L, a longer-wheelbase and six-seat version of its best-selling Model Y SUV until now only available in China.
[…]
Tesla’s share of China’s EV market shrank to just 3.2% in October, down sharply from 8.7% the previous month and its lowest in more than three years.
Tesla’s poor performance in the world’s largest auto market follows dismal sales last month in European countries such as Germany, Spain, the Netherlands, and the Nordics, in the latest sign that it continues to struggle on the continent.
Like I mentioned earlier, Tesla’s lineup is old as hell, which isn’t exactly helping the brand’s appeal. But unlike in the U.S., it also faces stiff competition from domestic Chinese brands like Xiaomi and BYD, which offer newer, better products for less money. While Tesla sales are down in the dumps, Xiaomi posted record numbers in October, according to Reuters, despite overall car sales in China falling last month due to disappearing government subsidies.
Another EV Carmaker CEO Gets a Multi-Billion-Dollar Compensation Plan
Rivian, the electric car startup made up of several ex-Tesla employees, has a habit of copying Tesla when it comes to things like launching a self-driving system or its own charging network. Now, it’s playing the mimic game with its CEO’s pay (albeit on a much smaller scale). The company has granted founder and CEO RJ Scaringe a new pay package that could be worth as much as $4.6 billion, though, like Musk’s package, it requires Scaringe to accomplish some pretty big feats.
From Reuters:
The overhaul highlights Rivian’s push to retain its founder and keep him focused on growth and profitability as the automaker, known for its R1S SUVs and R1T pickups, gears up to launch next year its smaller, more affordable R2 SUV that will compete with Tesla’s best-selling Model Y crossover.
The move comes a day after Tesla shareholders approved a record $1 trillion pay package for CEO Elon Musk.
Under the new plan, Scaringe is receiving options to purchase up to 36.5 million shares of Rivian’s Class A stock, about 16 million more than his previous grant, at an exercise price of $15.22 apiece, the company said in a filing with the U.S. Securities and Exchange Commission.
The award will vest only if Rivian achieves reduced stock-price milestones ranging from $40 to $140 a share over 10 years, as well as new operating income and cash flow targets over the next seven years.
Rivian’s stock is sitting at $15.08 as of this writing, so Scaringe has a long way to go if he wants all that compensation. Remember, Tesla is currently net profitable, while Rivian is not (and never has been). It’s a tall mountain to climb.
What I’m Listening To While Writing TMD
I’m not saying the CEOs of these EV companies—who are already multi-billionaires—are greedy, but these pay scale numbers are unfathomably high. So it has me thinking about this PARTYNEXTDOOR and Drake song, “Greedy,” from their album $ome $exy $ongs 4 U. Drake is not singing about money here, to be clear. It’s just the title of the song where I draw the connection.
The Big Question
The Tesla rental rate starts at $60 a day, which is decent for a luxury car, and free Supercharging and no mileage limit are both nice. But if you really have to go out of your way to pick it up from the facility, that’s tough. To me, especially with all the restrictions, it seems like a tough sell, and also like you’re paying for essentially an extended test drive, but tell me what you think. What are your thoughts on this new Tesla rental program?
Top image graphic: Tesla
The Tesla rental program is a joke. If it’s not easy, it doesn’t sell.
Carmax was always just a shined up version of the sketchy “buy here pay here” dealers that litter the country convincing people that they are not getting ripped off. The no haggle price was a red flag for me because it always meant everyone would be overpaying for every car. And yet, they still couldn’t make that business model work?
Elon can shove his rental crap straight up his Trump hole…
That’s how I feel about him and his rental crap.
“CarMax’s stock is down a colossal 62% this year, in large part due to an earnings report in September that showed results well below analysts’ expectations and CEO Bill Nash’s resignation. “
Sounds like Nash is gonna have to find something else to do… or maybe start a new venture… like a new car company.
I suggest he call it the Ambassador… which would be a high end luxury car and obviously a BEV.
And assuming he’s able to build that successfully, then move on to something more affordable… which I suggest he call the Rambler.
And to help with distribution, he might want to buy a dealer network.
I suggest the Hudson Automotive Group
I hope nobody wants to rent a Tesla in Delaware… Not very much room to drive that thing around.
Also reading through this more…
but they get unlimited free supercharging. You could easily spend over the price difference in fuel alone in SoCal, so it could come out ahead to get the Tesla rental.
Carmax needs more AI. Lots more AI. Also a greater presence on tiktok. They’re missing the boat.
Why do I get the impression your member name is a pseudonym?
I wish all manufacturers would do paid test drives that can be rolled into a purchase if you so choose. I much prefer a system where if I try it out and don’t like it, or just like something else better, I’ve paid my rental fees and can wash my hands of the transaction entirely. Right or wrong, there’s a certain level of commitment for me that comes with a free extended test drive or something like a 30 day return period. It’s much easier if the test drive is simply a business transaction.
Somewhat similar is how I actually prefer wineries that charge for tastings because if the tasting is free then the obvious implication is that you’re supposed to buy something afterward. I don’t actually drink that much wine at home and don’t buy it very often, but I do enjoy going to a nice winery and doing a tasting. I feel like an a-hole doing that at a free tasting place though.
Try and buy is common in so many industries and it works. The only wrinkle I can see for an automaker is handling the insurance, but that can’t be so hard.
The other wrinkle is that if people don’t like it and decide not to buy, now it’s not a new car anymore.
So the rental charge would have to equal depreciation, which is about 10% the minute it’s driven off the lot. And I am not paying a 10% value rental charge.
Dealers could keep a demo unit on hand rather than “rent” out the actual car being purchased. Which is a thing a lot of them do already. Limit the mileage to x amount, and then sell and use another as a demo. New car status is determined by whether or not its been titled, not mileage. Warranty still starts on the purchase date, although the mileage still counts against it.
Yep my 1972 Super Beetle was a demonstrator but was sold as a new car with around 800 miles on it, per the original invoice.
Which is fun to think about, how many (a hundred? more?) people drove my car and decided afterwards to buy a Beetle? My step grandfather drove past that dealership daily in 1972, so most likely he has seen my car on the road before.
That might work for the high-end, low-volume cars but… A lot of people per week come in to look at an Accord. They’d need an awful lot of demo cars if they rented them out long-term. Quite a bit more than a normal demo fleet which is used for test drives that last maybe an hour on the high side.
This was for a used car, but when I was a kid I remember my dad getting to take home a BMW for a day or two to see if he liked it.