You might have heard about the dealerships alliance wanting to ban Tesla from selling cars directly to the customers in the US of A. Well, the battle continues, after about 5 years now expanding to Georgia. You might have also wondered why all the fuss is going on, right? Let me explain you how the whole thing works and why I belive this is nonsene.
You can look at Tesla almost exactly as you look at Apple - it’s a company that makes a product that is found on the market in many shapes and forms, but it has its special ways of doing it and it also comes with a price.
Now, just as Apple does, Tesla is selling its products, mainly the popular Model S, to its clients without the need of a third-party dealership. Tesla wants to both own and operate its stores - pretty much like the famous electronics company does with its Apple Stores.
Why? In a blog post from March this year, the company said they chose to sell the cars on their own because dealerships might find it hard to promote a new technology, especially coming from a new luxury company. The other reason is that dealerships will have to learn new tricks to promote the advantages of an all-electric car over the gasoline/diesel powered ones they worked with.
Contrary to this decision, you got the franchised dealerships that exist from the beginning of the auto industry, which in time formed an alliance and adopted laws to protect their business. Laws that are opposing Tesla’s business concept, which they find pretty disturbing.
They're afraid about the fact that if Tesla can freely sell its cars to customers, other automakers might find a way to do that too, which can create a dubious competition between the dealerships and the companies who's vehicles they are selling. Competition that can’t actually occur in Tesla’s business, since they never had a franchised dealership network to begin with.
To clear it out, your local dealership has vehicles in its lot that he purchased from the automaker. The dealership owns those cars and because it will handle the registration, taxes and other stuff for you when buying one, they will sell it at a higher price to make profit.
The whole thing revolves around making more money, basically, but dealerships are hiding behind other reasons. The National Automobile Dealers Association (NADA) started a campaign to raise awareness about the benefits of buying a car through a dealership, stating that they are here to aid you with financing, insurance, trade-ins, titling, maintenance and recalls, ultimately saying they are protecting the customers and are also creating workplaces.
Why couldn’t Tesla offer the same thing? A Tesla Store can be anything a normal dealership is, only that the automaker will have to support costs involving the processes mentioned above to ease customers’ experience with them. They might be included in the car's price, but it can't compare with how much dealerships want to scrape out of you.
And regarding the fact that franchised dealerships create workplaces, the campaign doesn’t explain why Tesla-owned dealerships can’t create jobs. I’m pretty sure that Tesla is not creating cyborgs for the job in the back room, so why the fuss?
There are over five states now banning Tesla to sell its cars in a self-deployed dealership, with Georgia recently adding up to the rest, including Arizona, Texas, Virginia, Maryland and New Jersey.
Will Tesla back up? Not quite. In some states, its dealerships have been transformed to “Galleries”. They are not selling cars, but clients can still go see them, eventually sign up for a model to be sent there for test drive and ultimately put an online order to buy one.
So, according to what state you’re living in, there still is a way to buy a Tesla. Even if the “dealership” won’t take care of all the additional paperwork, there are clients on Tesla’s forum saying that the procedure is not really a pain in the backside.
For example, a Texas resident ordered his Tesla on the Internet, where he also customized it with the accessories he wanted without going through brochures and all the dealership nonsense. The annoying part was that he had to fully pay the car before delivery (well, you can find your own financing programs, you don’t really need a dealership to do it for you) and then go to the local county tax office to register it and pay a 6.25 % sales tax.
It seems like Tesla found a niche. All those laws have been adopted to protect franchised dealerships (which invested a lot into their business) from the automakers. In other words, automakers are not allowed to directly sell cars so that the dealerships can justify their existence. But since Tesla had no franchised dealerships, it’s not interfering with anyone.
I don’t know all about the legislation for each state, but if there are already laws against automakers to compete with dealerships, why would anyone panic for Tesla that has no dealerships to compete with?
What, did the dealerships suddenly realize that Tesla’s cars are good enough now for milking the cow and they want them at all cost? Haven’t they also thought that by adding their profit to each transaction might increase the cars’ price over the point they would make any sense? Or are they simply envious about Tesla’s way of doing things and gain fans so quickly.
Unlike the rest of the automakers now, Tesla came with a fresh attitude that seems more sensitive to what the customer wants, while also cutting all of the bureaucracy and latency the others come with.
The Model S might have some flaws, but people tend to buy it because of it’s fresh technology, exclusive experience and the services you get along with it - like the company constantly monitoring your vehicle for malfunctions or hackers (well, it might not be such a cool idea if you’re concerned about privacy and such but then so does Google with your phone), keep you updated with the latest software and even take notice at your wishes - see the case with the open letter to Elon Musk.
That’s why I like Tesla and I would buy a Model S if $70,000 were laying around the office. It wants to change the automotive industry and the way we interact with it. It’s not all about the green part of it, but the way the company approached the situation.
Call me a dealership hater, but how can you love a third party member between you and the car of your dreams that pretends to help you (with things you can do for yourself for free) and then bumps the price up to where it becomes unjustifiable for what you purchased?
There are dealerships out there that are taking the “affordable” out of what the automaker labeled as an affordable ride. And maybe Tesla wants to give them a lesson that their time of glory is about to pass. We now have the Internet with its unlimited possibilities which made purchasing stuff a piece of cake.
The Internet almost erased physical bookstores and put all the books on Amazon, where, for me as a client, is a much convenient place to sit and browse through titles and have them sorted in a much better way to make a better choice.
This concept has been applied to many other items and ultimately, I hope car dealerships will loose their meaning and stop being a financial barrier to buying a car. They can simply turn into authorized repair shops, if you’re afraid about all those people working there about to loose their job.
Now, just as Apple does, Tesla is selling its products, mainly the popular Model S, to its clients without the need of a third-party dealership. Tesla wants to both own and operate its stores - pretty much like the famous electronics company does with its Apple Stores.
Why? In a blog post from March this year, the company said they chose to sell the cars on their own because dealerships might find it hard to promote a new technology, especially coming from a new luxury company. The other reason is that dealerships will have to learn new tricks to promote the advantages of an all-electric car over the gasoline/diesel powered ones they worked with.
Contrary to this decision, you got the franchised dealerships that exist from the beginning of the auto industry, which in time formed an alliance and adopted laws to protect their business. Laws that are opposing Tesla’s business concept, which they find pretty disturbing.
They're afraid about the fact that if Tesla can freely sell its cars to customers, other automakers might find a way to do that too, which can create a dubious competition between the dealerships and the companies who's vehicles they are selling. Competition that can’t actually occur in Tesla’s business, since they never had a franchised dealership network to begin with.
To clear it out, your local dealership has vehicles in its lot that he purchased from the automaker. The dealership owns those cars and because it will handle the registration, taxes and other stuff for you when buying one, they will sell it at a higher price to make profit.
The whole thing revolves around making more money, basically, but dealerships are hiding behind other reasons. The National Automobile Dealers Association (NADA) started a campaign to raise awareness about the benefits of buying a car through a dealership, stating that they are here to aid you with financing, insurance, trade-ins, titling, maintenance and recalls, ultimately saying they are protecting the customers and are also creating workplaces.
Why couldn’t Tesla offer the same thing? A Tesla Store can be anything a normal dealership is, only that the automaker will have to support costs involving the processes mentioned above to ease customers’ experience with them. They might be included in the car's price, but it can't compare with how much dealerships want to scrape out of you.
And regarding the fact that franchised dealerships create workplaces, the campaign doesn’t explain why Tesla-owned dealerships can’t create jobs. I’m pretty sure that Tesla is not creating cyborgs for the job in the back room, so why the fuss?
There are over five states now banning Tesla to sell its cars in a self-deployed dealership, with Georgia recently adding up to the rest, including Arizona, Texas, Virginia, Maryland and New Jersey.
Will Tesla back up? Not quite. In some states, its dealerships have been transformed to “Galleries”. They are not selling cars, but clients can still go see them, eventually sign up for a model to be sent there for test drive and ultimately put an online order to buy one.
So, according to what state you’re living in, there still is a way to buy a Tesla. Even if the “dealership” won’t take care of all the additional paperwork, there are clients on Tesla’s forum saying that the procedure is not really a pain in the backside.
For example, a Texas resident ordered his Tesla on the Internet, where he also customized it with the accessories he wanted without going through brochures and all the dealership nonsense. The annoying part was that he had to fully pay the car before delivery (well, you can find your own financing programs, you don’t really need a dealership to do it for you) and then go to the local county tax office to register it and pay a 6.25 % sales tax.
It seems like Tesla found a niche. All those laws have been adopted to protect franchised dealerships (which invested a lot into their business) from the automakers. In other words, automakers are not allowed to directly sell cars so that the dealerships can justify their existence. But since Tesla had no franchised dealerships, it’s not interfering with anyone.
I don’t know all about the legislation for each state, but if there are already laws against automakers to compete with dealerships, why would anyone panic for Tesla that has no dealerships to compete with?
What, did the dealerships suddenly realize that Tesla’s cars are good enough now for milking the cow and they want them at all cost? Haven’t they also thought that by adding their profit to each transaction might increase the cars’ price over the point they would make any sense? Or are they simply envious about Tesla’s way of doing things and gain fans so quickly.
Unlike the rest of the automakers now, Tesla came with a fresh attitude that seems more sensitive to what the customer wants, while also cutting all of the bureaucracy and latency the others come with.
The Model S might have some flaws, but people tend to buy it because of it’s fresh technology, exclusive experience and the services you get along with it - like the company constantly monitoring your vehicle for malfunctions or hackers (well, it might not be such a cool idea if you’re concerned about privacy and such but then so does Google with your phone), keep you updated with the latest software and even take notice at your wishes - see the case with the open letter to Elon Musk.
That’s why I like Tesla and I would buy a Model S if $70,000 were laying around the office. It wants to change the automotive industry and the way we interact with it. It’s not all about the green part of it, but the way the company approached the situation.
Call me a dealership hater, but how can you love a third party member between you and the car of your dreams that pretends to help you (with things you can do for yourself for free) and then bumps the price up to where it becomes unjustifiable for what you purchased?
There are dealerships out there that are taking the “affordable” out of what the automaker labeled as an affordable ride. And maybe Tesla wants to give them a lesson that their time of glory is about to pass. We now have the Internet with its unlimited possibilities which made purchasing stuff a piece of cake.
The Internet almost erased physical bookstores and put all the books on Amazon, where, for me as a client, is a much convenient place to sit and browse through titles and have them sorted in a much better way to make a better choice.
This concept has been applied to many other items and ultimately, I hope car dealerships will loose their meaning and stop being a financial barrier to buying a car. They can simply turn into authorized repair shops, if you’re afraid about all those people working there about to loose their job.
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