Rather than working like a franchised dealership, Tesla skips the middle man and sells directly to its customers. Tesla doesn’t have dealerships, they have Tesla Stores, and they’re usually found integrated into a popular mall or shopping center.
Full Answer
Can you buy a Tesla directly from Tesla dealers?
Some of the states that allow Tesla to sell cars directly to customers are California, Colorado, Virginia, and New Hampshire, while Texas and New Jersey still comply with the dealer franchise law. Getting hands to a Tesla isn’t impossible, it’s rather a loophole process, but it’s fairly legal.
Is Tesla changing the way we look at the car dealer?
Tesla is changing the way we look at the car dealership. There has been a big debate on how Tesla is not playing by the rules and selling their cars directly to customers without going through a dealership. The fact is, you can’t just buy a car straight from a manufacturer because of federal laws in compliance with the franchise law.
Why has Tesla faced dealership disputes in some states?
The electric car company Tesla, Inc. has faced dealership disputes in several U.S. states as a result of local laws. In the United States, direct manufacturer auto sales are prohibited in many states by franchise laws requiring that new cars be sold only by independent dealers.
Does Tesla have a franchise problem?
That would, of course, be wrong, but Tesla does not have this issue. We have granted no franchises anywhere in the world that will be harmed by us opening stores. Regrettably, two lawsuits have nonetheless been filed against Tesla that we believe are starkly contrary to the spirit and the letter of the law.
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Why is Tesla not interested in auto dealers?
Tesla has good reasons for not wanting to get involved with traditional auto dealers, as Elon Musk has explained: "Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars.
When did Tesla open its store in Boston?
In September 2012, Tesla opened its 26th retail outlet near Boston. A legal challenge from the Massachusetts State Automobile Dealers Association was settled with an awkward compromise: Tesla was allowed to open the shop, but would not be allowed to actually sell any cars there. Later that year, dealer trade groups in New York and Massachusetts filed suit against Tesla, and the war was on.
How many signatures did Tesla get in 2013?
In 2013, a White House petition to allow Tesla to sell directly to consumers ultimately gathered some 138,469 signatures (of the 100,000 needed for a response). However, it was only a symbolic victory. The Obama administration responded that (full text here ):
Is Tesla a traditional company?
When it comes to marketing its vehicles, Tesla tends to take its cues not from industrial-age giants, but from other California-style internet-age companies. This has led to a war with entrenched interests - namely auto dealers, a powerful group both economically and politically. Like the culture wars over marijuana and LGBT rights, this technology war is being fought on a state-by-state basis.
Which states are banning Tesla?
According to Daniel Gatti of the Union of Concerned Scientists, states that currently ban Tesla stores include Texas, Michigan, West Virginia, Utah and Arizona, in addition to Connecticut. ===. Source: Teslarati, Electrek, Union of Concerned Scientists.
Does Connecticut have Teslas?
Chang also suggested that, when it comes to electric vehicles, dealers “are not doing their job.” Tesla has two models available, and no store in the state, whereas the dozens of dealerships in Connecticut have 33 different plug-in models on offer. And yet Teslas make up about two thirds of the 2,000 or so electric vehicles in Connecticut. This is the third time such a bill has been proposed in Connecticut.
Where are Tesla's opponents?
Tesla’s opponents are the various state auto dealers’ trade groups, which have plenty of influence in most state capitals and in Washington.
How many Tesla stores are there in the US?
Sales model. As of September 2020. [update] , Tesla operates more than 130 stores and galleries in the United States, and has stores and galleries in 34 other countries. It owns the stores and sells directly to customers via the internet and in non-US stores.
When did electric car manufacturers become dealers?
In 2015, 2016, 2017, and 2018 bills were introduced in the legislature to allow licensing electric vehicle manufacturers as dealers.
When did Tesla sue the DMV?
Upon learning of Tesla's attempt to obtain a second dealership in the state, the Virginia Automobile Dealers Association filed a lawsuit in March 2016 against both Tesla and the DMV to prevent the licensing of the second dealership.
What is Tesla's goal?
Some of Tesla's stated goals are to increase the number and variety of electric vehicles (EVs) available to mainstream consumers by selling its own vehicles in company-owned showrooms and online. Tesla states that owning stores "creates an information loop from our customers straight into manufacturing and vehicle design". Tesla attempts to not make a profit on servicing cars.
When will Tesla open in Virginia?
In July 2021, Tesla won approval from the Virginia Department of Motor Vehicles to open three new stores in Charlottesville, Norfolk and Arlington.
Where is Tesla located in 2021?
In August 2021 Tesla opened their first store and service center in the state on Nambé Pueblo tribal land north of Santa Fe.
Does Tesla have independent dealerships?
Forty-eight states have laws that limit or ban manufacturers from selling vehicles directly to consumers, and although Tesla has no independent dealerships, dealership associations in multiple states have filed numerous lawsuits against Tesla, to prevent the company from selling cars.
Why is Tesla opposed to franchised dealers?
Tesla’s opposition is rooted in the thinking that franchised dealers cannot properly sell electric vehicles. This inspired Tesla to spend billions creating its own retail locations, service centers and call centers, and on hiring personnel to populate them.
What would happen if Tesla shifted to franchise?
Consumers would have a better shopping and overall experience if the company shifted to a franchise model – which would also, after a time, drive up Tesla’s profitability. Better shopping and ownership experience = more cars sold = more profit;
What would happen if Tesla reversed course?
If Tesla were to reverse course, they’d be able to pass along enormous savings to consumers and investors. While Tesla’s model has merits for a startup in a niche market, its approach does not provide the community and consumer benefits every state has recognized that franchised dealers provide.
Does Tesla make its own prices?
Owning every step of the process from the moment manufacturing begins to the day the customer gets the keys, Tesla sets its own prices without downward pressure from retailers selling its product.
Will Tesla get more market share?
Tesla could grab more market share if it adopted a franchise model.
Does Tesla have direct sales?
Tesla’s direct-sales model deprives consumers of the thrill of driving the car home from the dealership – as well as the great discounts, experiences and incentives derived from competitiveness between franchisees.
Why is Tesla pursuing a company owned store and service center model?
In many respects, it would be easier to pursue the traditional franchise dealership model, as we could save a lot of money on construction and gain widespread distribution overnight. Many smart people have argued ...
How long has the automotive industry been selling cars the same way?
The U.S. automotive industry has been selling cars the same way for over 100 years and there are many laws in place to govern exactly how that is to be accomplished. We do not seek to change those rules and we have taken great care not to act in a manner contrary to those rules.
Do franchise laws exist?
It is further worth noting that these franchise laws do not even exist in the rest of the world, where almost three quarters of premium sedan sales take place.
Is the Model S the best car?
Anyone who has experienced Model S understands that our car is quite different from other vehicles. It is designed with the aspiration of not simply being the best electric car, but being the best car of any kind. Despite being purely electric, it is faster 0-100 than BMW’s top of the range M5 (according to Automobile Magazine) and yet can drive incredibly long distances.
Do franchise dealers sell electric cars?
Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars. It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business. This would leave the electric car without a fair opportunity to make its case to an unfamiliar public.
How is Tesla different than regular car dealerships?
Rather than working like a franchised dealership, Tesla skips the middle man and sells directly to its customers. Tesla doesn’t have dealerships, they have Tesla Stores, and they’re usually found integrated into a popular mall or shopping center. This is a calculated decision; by placing their stores in populated areas, busy traffic flows in and out of the stores regularly, even if it’s just to see what all of the hype is about.
How can dealerships follow Tesla?
Dealerships can follow the lead of Tesla by educating their customers about their options. If a customer is looking at a 2018 Toyota Corolla on your lot, instead of throwing prices around and mentioning what a “great deal” it is, start by talking about the features and the great things about the car.
Why do Tesla stores exist?
Instead of selling you a car, Tesla Stores simply exist to give customers a place to see sample vehicles and get more information. This format entirely removes the stereotypical sales-pitch that often comes with a car dealership; the people working in the Tesla stores are not trying to sell you a vehicle. They’re there to educate you. And that’s a completely different mindset.
Who brought Tesla into the automotive world?
Since the day Elon Musk brought Tesla into the automotive world, he has been reshaping the way we look at the car-buying process.
Can you buy a Tesla in a Tesla store?
But Tesla Stores work differently than car dealerships, primarily because customers can’t buy a Tesla in the store. Because of the franchise laws surrounding car sales, Tesla customers have to purchase their vehicles online. Automotive manufacturers are prohibited from in-person direct sales.
Does Tesla see it that way?
But Tesla doesn’t see it that way. Instead, the company believes its stores are reaching an entirely different set of customers than those shopping at a traditional dealership.
Do Tesla dealerships need to increase their digital marketing?
If dealerships are worried about Tesla stealing their customers , they may also need to increase their digital marketing. Most customers have made up their minds before they step foot on the dealership lot because they’ve done their research at home. If dealerships do more to maintain their digital presence, they have a better chance of reaching customers earlier.
What is the purpose of a car dealership?
Whatever the intention might be, let me tell you, car ( or any automobile dealership ) is a business entity and the very purpose of its existence is to earn profit.
Is there a target achievement incentive on new vehicle sales?
Target achievement incentive on new vehicle sale : but this is not fixed and may or may not be there, again depends on the individual company policy.
Does Tesla have a showroom?
Instead, Tesla has showrooms and service centers. The showrooms allow people to go in, look at the cars, arrange test drives, and order a car. Ordering is done via the Tesla Motors website so you can just as easily order from the showroom or from your living room. The price is the same no matter how you order.
Does Tesla have a dealer network?
Tesla was founded in the internet age, so they decided to sell their cars online. Many other small car manufacturers also do not have an own dealers network. Maybe they are way too small to generate enough business for a dealer to survive. It has yet to be proved, if Tesla can sell cars without dealers once they begin to sell in really large quantities - and they get competition.
Does Tesla have a warranty?
The dealership model not only requires profits from sale of new vehicles, but from warranty and maintenance. There is virtually no maintenance for a Tesla, and, therefore, Tesla performs its own warranty work, most of which can be done at a person’s home or office. 2.2K views. Sponsored by Best Gadget Advice.
Can you start a Tesla dealership?
You cannot start a dealership for Tesla. The company does not partner with independent dealerships. They sell their cars directly.
Can Tesla repair cars in New Mexico?
Instead pointing you to the Tesla dot com website. In Texas, it IS legal for car manufacturers to repair cars “directly” - but that is not the case in nearby New Mexico. So if you have repairs or warranty work in New Mexico, Tesla have to tow the car across the border into Texas where the work gets done legally.
Overview
US dealerships and automotive dealership disputes
As of September 2020 , there are stores and galleries —usually located in shopping malls—in 29 US states and Washington DC. Customers can buy vehicles from stores, as well as from the Tesla website. The stores serve as showrooms that allow people to learn about the company and its vehicles. Some galleries are located in states with restrictive dealership protection law…
Corporate strategy
Tesla has a 60% degree of vertical integration in 2016 according to Goldman Sachs. The integration includes its own sales channels and proprietary charging infrastructure, among others. The high degree is rare in the automotive industry, where companies typically focus on engine manufacturing and vehicle assembly, outsourcing 80% of components to suppliers while letting franchises serve as sales points.
States with total direct sales bans
2006 New Mexico Statutes, Section 57-16-5-V prohibits manufacturers like Tesla to be licensed as a dealer, directly or indirectly performing warranty or other services. Despite Tesla owners' pleas to change the law, they still currently depend on out-of-state centers such as Arizona and Colorado for Tesla sales and services.
In January 2019, the Public Affairs Committee approved the Tesla-friendly Senate Bill 243, but it …
States with limited sales
In Virginia Tesla has obtained license from the Department of Motor Vehicles (DMV) for a single direct sales dealership (Tysons Corner). Upon learning of Tesla's attempt to obtain a second dealership in the state, the Virginia Automobile Dealers Association filed a lawsuit in March 2016 against both Tesla and the DMV to prevent the licensing of the second dealership. In September 2016, the Virginia Department of Motor Vehicles (VDMV) recommended ending Tesla direct sales…
States for which Tesla gained the right to mostly unrestricted direct sales
In 2013, New Hampshire passed legislation to allow auto manufacturers with no existing franchise dealer in the state to engage in direct sales.
The Minnesota Department of Public Safety ruled in 2013 that the original dealer law "does not prohibit a manufacturer from becoming licensed as a dealer in Minnesota". The dealership association in the state failed in their attempt to get the law changed to block Tesla.
Surveys
In 2014, Consumer Reports performed a mystery shopper survey of 19 secret shoppers in 85 dealerships, querying electric vehicles. Most shoppers found it to be a positive experience, although 35 dealerships recommended gasoline cars instead, and 13 discouraged EVs. The most knowledgeable dealerships were Chevrolet, and the least were Toyota.
In 2016, two shopper surveys showed contrasting shopping experiences between Tesla and trad…
External links
• Tesla Direct Sales Map (US) and collection of state laws at Tesla Motors Club forum