Could Tesla Sell Cars Like Apple Sells iPads?

October 10th, 2012

Tesla's L.A. store

Tesla Motors has already succeeded at what many considered an impossible feat: starting a new car company in the United States. Tesla has redefined what’s possible, played by its own rules and created a company currently in production on its second model, with more on the way.

It didn’t get there by bending to expectations of failure or going down the same path trudged by so many others.

Now that the company is seeing success, another group has its sights set on forcing it to play by the pre-established rules. This time, not in how the cars are made, but how (and where) they are sold.

Currently, Tesla doesn’t have a network of traditional dealers. There are no independently owned businesses selling Tesla cars. Instead, Tesla has set up a network of boutique-type stores, often in malls, across the country. Consumers cannot actually buy a car at the stores, but they are able to learn about the vehicles and access Tesla’s online reservation system and put their name down with the intent to buy directly from the company.

This system has not made traditional dealer networks happy. In fact, according to Automotive News, they want to make the company-owned “showrooms” illegal.

Some states have laws that say an automaker can’t own a car dealership. Tesla’s position is that sales aren’t actually made at the stores, so they are legal, while dealer associations contend that the stores are part of the sales process and therefore illegal. Lawsuits are being filed.

From my point of view, this is like an old empire threatened by new ideas that make more sense. Rather than adapting and changing, they load their weapons and try to blow the threat away.

Tesla’s retail efforts are being spearheaded by the guy who created the Apple Store experience, a retail environment that has sparked a change in how technology is purchased. Seeing as how Tesla is new, and has no existing obligation to any established dealer network, why wouldn’t it be free to set up shop however it wishes?

Quite honestly, I’d love to see car dealers migrate to a system based on something new. The current system is quite antiquated, and while it has worked fairly well, I think innovative ideas and new experiences should be added to the car-buying process without someone filing a lawsuit.

Tesla says it is in no way trying change the auto retailing industry, just trying to get its name in front of as many people as possible.

Should Tesla be allowed to market and sell cars however it likes?

-tgriffith

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  1. Randy
    | #1

    You mention Apple but fail to note that there are thousands of non-Apple outlets where I can buy their products at the same price as the Apple stores.
    The whole point of preventing manufacturers from operating their own dealerships is to prevent unfair competition. Many manufacturers also own their own financing groups and the ability to eliminate the dealer’s profit margin and still get the same price from the car they would have gotten from the dealer. If this can be legally prevented by requiring cars to be sold at some MAP (minimum advertised price) then, like Apple products, the system could be operated fairly.
    In Tesla’s case, you can see what will ultimately kill this company. Eventually some issue will come up that will cause them to be sued out of business. It’s happened before and will happen again.

  2. tgriffith
    | #2

    @ Randy
    That’s a terrific point. You’re right… Apple has its stores but also has authorized retailers. Maybe Tesla could do the same, if it can survive any litigation that gets thrown at it.

  3. Randy
    | #3

    Thinking back to brands like Tucker, DeLorean, Citicar and others, being underfunded is a death sentence when problems arise or sales decline.

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