Posted on March 18, 2015 by Matt Pressman
In recent news, Tesla Motors has finally won the right the sell it's cars in New Jersey. And, Connecticut is inching closer to direct sales as well. Nevertheless, Tesla’s unique company-owned store/retail approach continues to come under fire by dealership associations in many states. These dealership associations lobby (and “contribute” to) government officials to protect themselves from any competitive selling models. The result: government officials in many states have banned Tesla altogether from opening their own stores. And, in some other states, Tesla can only open a “gallery” space to display their Model S – but they’re not allowed to help customers in the sales process, quote any pricing, or, even offer test drives.
Debates are rampant about the legality of this issue - even the FTC has publicly backed Tesla. And, leading economists and legal experts have also weighed in on this affront to the free market system. Most recently, a compelling letter was signed in support of Tesla’s right to sell direct by powerful political allies on both the far right and left sides of the aisle including the Koch brothers’ Americans for Prosperity and Sierra Club. How can a new electric car company expect a franchise dealer, a sort of middleman, to sacrifice their “bread and butter” gas-guzzling internal combustion vehicles to, instead, champion this new electric vehicle technology? It would negate 98% of the cars on their lots. Other electric car companies (e.g. Fisker and Coda) tried the franchise dealership model and have since gone out of business.
Tesla Motors knows this sales model presents a conflict of interest for franchise auto dealers and has decided to try a different sales model – a model that they control. Instead, Tesla owns its own stores and service centers.
But, let’s drill the argument down further and make it personal. What does it mean to you, the car buyer? Is it better or worse to buy direct from Tesla through a Tesla-owned store? In an effort to provide a helpful analysis, let’s examine eight (8) factors that affect you, the car buyer: seeing the car in person, human interaction, the purchase process, negotiating the deal, a (possible) trade-in, financing, service, and amenities.
After evaluating these factors, it becomes clear that Tesla stores (owned and operated by the manufacturer, Tesla Motors) are beneficial to the customer. To present this in a visual snapshot, check out the infographic below for a compelling rationale in support of Tesla Motors.