[Nin ja]

Okay, watching this fight between Telsa and Dealer association and I came across this on-line story http://news.yahoo.com/tesla-ceo-fights-electric-car-sales-model-u-033508879.html

Here is the fun part for us Fisker Owners...

He (Elon) told shareholders that the traditional dealer model has not worked for other auto start-ups, including Fisker Automotive and Coda Holdings, which filed for bankruptcy last month.
"It didn't work for Fisker, didn't work for Coda. In the last 90 years, when did it work?" Musk said at the meeting in Mountain View, California that was also broadcast online. "We have to do this directly."

David Hyatt, vice president of public affairs for the National Automobile Dealers Association, disputed Musk's comments, saying the troubles facing Fisker and Coda did not stem from their sales models.

"Industry experts say Fisker failed because it rushed its product to market before engineering problems were resolved," Hyatt said in a statement. "Coda did not receive government loans and was under-capitalized."

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and you ready for the punch line ???

.....

"Thank goodness there are independent dealers left to try to help the customer," he added. "Manufacturers and brands may come and go, but the dealers are there for the long term."


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How's that working for us?

 

[pythagoras]

That ranks right up there with the Fox heads sudden positive turn on Tesla (conveniently forgetting its government loans) after the stock shot up 150%.

Just goes to show that everyone including Elon now just uses Fisker to say whatever suits their agenda. :dodgy:

One thing that makes me happy is knowing the retard Tesla shorts and electric skeptics just lost several billion more than the Fisker backers

 

[AnOutsider]

At the risk of being stoned, in this case, I'd say he has a point. If it weren't for some dealers and (now-independent) techs, Karma owners would be up the creek since the company has effectively gone dark.

In this instance, the dealers (whether they cover it under warranty or not), are helping keep the cars on the road.

 

[Nin ja]

At the risk of being stoned, in this case, I'd say he has a point. If it weren't for some dealers and (now-independent) techs, Karma owners would be up the creek since the company has effectively gone dark.

In this instance, the dealers (whether they cover it under warranty or not), are helping keep the cars on the road.

Try telling that to the Fisker owners that have been abandon by dealers - I'm sure Telsa cars would be priced much higher if dealers sold them and I'm sure Telsas direct sales model makes Telsa much more committed to their customers.

I'm sure there are some dealers who stuck it out, but the comment is false ... and laughable, hence my title.

 

[AnOutsider]

Some dealers have jumped ship, yes, and I don't blame them. Fisker HQ left both the dealers and the customers high and dry. The fact remains though, that there are some dealers (and techs from those dealers), who are still providing service (even if not free). Where would you be without them?

Fisker HQ is only giving them a perfect example of how manufacturers can screw consumers.

 

[Sandy Eggo]

Do you think the real reason they have resisted setting up a dealer network is that a dealer would have to push the price beyond what is already barely reasonable for such a car - just to make a profit? I'll bet it has something to do with it.

Elon's been arguing that Dealer's would not be good advocates for such a car (too 'different') and sales would suffer. Really? Or is it just that a perfectly rationale dealer/salesperson will quickly surmise that they can make a much fatter profit selling the BMW 5 series (on their lot) rather than the Model S?

Sorry Elon, you gotta compete just like everyone else. With the momentum they have now, I think Dealers would stampede for the chance to own a Tesla franchise/dealership. Time to drop the protectionist bullshit and open a proper dealer network.

 

[LonePalmBJ]

Do you think the real reason they have resisted setting up a dealer network is that a dealer would have to push the price beyond what is already barely reasonable for such a car - just to make a profit? I'll bet it has something to do with it.

Elon's been arguing that Dealer's would not be good advocates for such a car (too 'different') and sales would suffer. Really? Or is it just that a perfectly rationale dealer/salesperson will quickly surmise that they can make a much fatter profit selling the BMW 5 series (on their lot) rather than the Model S?

Sorry Elon, you gotta compete just like everyone else. With the momentum they have now, I think Dealers would stampede for the chance to own a Tesla franchise/dealership. Time to drop the protectionist bullshit and open a proper dealer network.

Sandy,

I think you have a point that adding a Dealer network would either increase the final price of the car to consumers, or erode Tesla's profit margin per car, or both. I'm don't see how either of those things are good for the consumer or Tesla though.

I agree that lots of people would like to be Dealers right now. People are falling over themselves to buy a Model S at the moment. That's because Tesla has invested heavily not only in the product but in marketing, savvy PR and Elon himself has been quite the poster child. As a result they have built up a very impressive brand and goodwill. These things are real assets that Tesla created - why should they give them away?

The automobile industry is the only business I can think of where the people who make a product aren't allowed to sell it. How does that make sense? In a true market based economy which you seem to espouse, the creator of a product should get to make whatever choices they think are best for reaching their customers, be it direct ownership of the brand message and sales channel (as Apple has been so successful with), by partnering with distributors or franchisees (which is how most perishables and many consumer products are sold) or through a hybrid of both which is how many many products are sold these days - I can buy a pair of Levi's from the Old Navy or directly from levi.com

The dealer's argument that it creates a monopoly is a bit ingenuous, as dealers often sign exclusive territory agreements with car manufacturers, essentially giving themselves a monopoly in the markets they serve. How does that benefit consumers any more than Tesla selling directly?

If Tesla is doing the marketing and advertising, if Tesla is doing the servicing, and if Tesla is making the product, exactly what value does a dealer network add to justify the extra pass-along cost or margin erosion? I just don't see it. On the other hand, I think Elon has a point - If a dealer can make more money selling a BMW than selling a Tesla to a given consumer they will opt to sell the BMW, which from Tesla's perspective is not a desirable state of affairs. Why would a company with a fiduciary responsibility to it's stakeholder choose to make that deal if they feel they can do a better job cheaper themselves?

The protectionism here isn't coming from Elon, it's coming from the well monied and well lobbied Dealer's interests who know they have a nice racket going and a direct sales model threatens that.

I think direct sales are coming to all car makers eventually for precisely the reasons stated above. Tesla isn't the only one playing with a direct model, but since they don't have a history and the contractual obligations of the legacy model that are a lot further along. Dealers may win victories against Tesla but I don't think they will be able to stem the tide forever. Bastardizing Victor Hugo, Nothing is stronger than an idea whose time has come.


Brent

 

[smoothoperator]

Tesla has a long history of not allowing customers to buy certain parts and forcing customers to use their service centers to keep a warranty valid. Granted this has changed a bit in the past few months but previously Tesla would try to void warranties if you did not have your car serviced by them (still true for the Roadster); furthermore they would not sell certain parts to customers who wanted to do work themselves (thus forcing customers to pay $175/hr) for mundane repairs. A regular dealership would have no problem selling parts to customers.

The main reason behind Tesla wanting to directly sell to customers is to control negative information/experiences that may be disseminated; which may damage Tesla's reputation.

 

[Sandy Eggo]

Hi Brent,

Some very well reasoned arguments there. I guess my main point is that I don't feel that Tesla deserves any special dispensation. Everyone should play by the same rules.

What is stopping a Manufacturer from selling direct in the states where Tesla is already doing so? I mean, besides a Dealer revolt involving pitchforks.

 

[LonePalmBJ]

What is stopping a Manufacturer from selling direct in the states where Tesla is already doing so? I mean, besides a Dealer revolt involving pitchforks.

Well right now for many states a manufacturer is legally obligated to use a dealer network whether they want to or not. In some states it is more-or-less illegal for Tesla to sell directly. Some states are even trying to make buying the car online (which to my mind is interstate commerce) illegal.

This is what Tesla is looking to change or challenge, and why they are in multiple state-based litigation. The dealers in these states are well entrenched and are funding lobbyists and advertising to thwart Tesla, and in some states (like Texas recently) are winning some battles.

For manufacturers I expect that their Dealer Network agreements expressly prohibit them from direct competion as well.

Brent

 

[ffcars]

Well right now for many states a manufacturer is legally obligated to use a dealer network whether they want to or not. In some states it is more-or-less illegal for Tesla to sell directly. Some states are even trying to make buying the car online (which to my mind is interstate commerce) illegal.

This is what Tesla is looking to change or challenge, and why they are in multiple state-based litigation. The dealers in these states are well entrenched and are funding lobbyists and advertising to thwart Tesla, and in some states (like Texas recently) are winning some battles.

For manufacturers I expect that their Dealer Network agreements expressly prohibit them from direct competion as well.

Brent

Exactly the issue. States like Texas, Louisiana, New York, etc will never change the laws to allow a manufacturer to sell direct.

In Louisiana, after GM and Chrysler starting shutting down dealerships in 2008-2009, the legislature went into emergency section to create a law that says if you (the manufacturer) close a dealership you have to buy the building, signs, tools, parts inventory, vehicle inventory, etc. .

Texas is another one. They go so far as putting limits on who I can sign up as a dealer and where. The general rule is 1 dealer per county. If you've ever been to Texas you wonder how that law ever passed. In Harris Co. (Houston area), a manufacturer would like to have a dealer on 59-N (Humble area), 59-S (Sugerland), downtown, 45-N (Spring), 45-S (Clear Lake/Friendswood), 10-W (Katy, West Houston), 10-E (Baytown, East Houston),etc.

So how do you do it in Texas? You have to ASK the FIRST DEALER you sign up in each county if it's OK if you sign someone else up. If they agree, they tell the motor vehicle board they're cool with it.

FL is much the same. You have to ask the dealer if you can add another dealership if the new location is within a certain distance.

The reality is, manufacturers should do what they do best---make things. Let the professional retailers sell the product and service it. It allows the consumers some protection from the manufacturer pushing services on you and what happens if the make goes under? At least there is a chance to get service.

I wouldn't want to try and run 150 dealerships nationwide. Each market is so different and many of the dealers are well known business people who are involved in the community because they live there.

Tesla has momentum; don't loose it by pissing off the very people that could help you take it to the next level. I understand "why", but the pros far out weight the cons of not going nationwide.

Many years ago I called Tesla about opening a dealership here in Georgia. I was told politly that they won't be doing business as usual. Here we are 4 or 5 year years later and you can't buy a Tesla in Atlanta.

Bill

 

[LonePalmBJ]

Exactly the issue. States like Texas, Louisiana, New York, etc will never change the laws to allow a manufacturer to sell direct.

...

Thanks Bill. That provides a lot more detail around my general comment.

Note that there's two issues at hand: 1) Whether or not Tesla should be allowed to use a direct model if they want to, and 2) Whether or not they should. I've only been speaking to the first issue. I'm of the opinion that the company should be allowed to sell their product however they wish and let the market decide if they are successful. There are lots of good reasons why having a dealer network could be useful and I'm not arguing that, but if Tesla thinks they can build a better mousetrap the legal business environment should encourage innovation not stifle it.

BTW, You can't buy a Tesla in Atlanta from a local Tesla dealer, but you certainly can buy one if you live here. Order direct online or by phone and it's delivered to the Tesla service center in Marietta where it is prepped and delivered to the new owner with some pomp and circumstance. There are probably upward of 100 Model S's running around the ATL now. I'm a member of an Atlanta Tesla Owners and Enthusiast group online here: https://www.facebook.com/groups/TeslaMotorsFansAtlanta/


Brent

 

[Falcon9]

One way or another dealerships have to evolve. Young people do not like dealership, they do everything online. There is a reason Amazon is worth 120 billion dollars when they don't even make a profit, because internet is the future of retail.