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Thursday 17 August 2017
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Tesla At Odds With Dealers – Car Pro News

Tesla Motors is facing a formidable opponent it may not have sufficiently appreciated: the auto dealers of America, and their state associations.
Tesla, you may remember, is selling its electric cars online, not through franchised, independently owned dealers, and delivering them directly to buyers from the factory.
In doing so, Tesla Motors [NSDQ:TSLA] has removed the two parts of car shopping that customers clearly hate most: haggling and buying.
Its Tesla Stores, it says, are simply educational showrooms where no cars are actually sold.
Dealer groups–who view the approach as a dire threat–do not believe this, and they are both changing state laws and suing Tesla to prevent the company from opening its stores.
By the beginning of this month, Tesla faced lawsuits in four states over its stores.
Monday, Tesla CEO Elon Musk weighed in, posting what was for him a relatively polite, conciliatory response to those challenges on the company website.
“In many respects,” he wrote, “it would be easier to pursue the traditional franchise dealership model,” which would save Tesla money and broaden its distribution much more quickly.
The problem, he argued, is that any conventional dealer has a fundamental conflict in explaining the advantages of battery electric cars when they rely on gasoline vehicles for the bulk of their sales and profits.
The 2012 Tesla Model S is so different from any other car, he said, that consumers require a great deal of education before they can even start to think about buying.
That’s what the Tesla Stores do, he wrote: let the public learn about the Model S from product specialists–who are not on commission–and, critically, about electric cars in general.
“Their goal and the sole metric of their success is to have you enjoy the experience of visiting so much that you look forward to returning again,” Musk said.
He acknowledged existing state laws and pledged that Tesla follows them. “We do not seek to change those rules,” he wrote, “and we have taken great care not to act in a manner contrary to those rules.”
In respect to two lawsuits filed against the company, he said Tesla believes they are “starkly contrary to the spirit and the letter of the law.”
Musk noted that they were filed in one case by a Fisker dealer, and in the other, by “an auto group that has repeatedly demanded that it be granted a Tesla franchise.”
He also noted that U.S.-style franchise laws do not exist elsewhere in the world, and described Tesla’s plans for service facilities in some detail.
In 48 states, according to the National Automobile Dealers Association (NADA), franchise laws forbid or severely restrict the ability of automakers to sell vehicles directly to the public.
The specific wording of those laws varies from state to state, but most are based on the rationale that letting big automakers sell cars to customers would stifle competition.
There’s some history that supports the notion that franchised auto dealers may face unfair competition from factory stores selling the same cars.
Tesla Motors, of course, doesn’t have a single franchised dealer.
It has only factory showrooms, and the only way to purchase a Tesla Model S is to order it online.




2 thoughts on “Tesla At Odds With Dealers – Car Pro News

  1. Perry

    Tesla IS a special vehicle. Somewhat like a Prius. A customer generally has to WANT one vs just walking in the Dealership to buy a “car” because it’s a little different. A customer wants a Prius for the tech or the mileage. (Me for the tech like a regenerative braking that’s very reliably used in industry.) Those for the mileage only sit in it and see the controls are “strange”. After tech is explained they make a first impression if this is right for them. Just thoughts for a penny….Apple, B&O, others are not trying to be all things to all people. They have specific distribution to serve the public in the best way for their products. (Apple & Best Buy excluded!)

    Reply
  2. Perry

    To clarify what I mean about Best Buy selling Apple is BB really don’t seem to know the product; at least in the two stores close to us. Me, I would prefer dealing with a factory owned Tesla dealer who really know the product. (Just wish I could afford one…kids & UT payments right now instead!)

    Reply

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