> Until then, said O'Connell, Tesla will sell its cars the way it wants. If some states don't allow that, then Tesla will simply sell them elsewhere.
I think this last line of the article is very important. This has the power to get the consumer on Tesla's side of this fight. If enough of the right people in Texas (and other problem states) want this car and think the laws are stupid... they'll need to find a way to make that happen. Laws can be changed. If not then they'll just get them out of state.
This is especially relevant at this stage of Tesla. I would guess that there aren't a lot of people wandering through the mall to buy a tesla or making it one stop on their trek through the dealerships. People (right now) are setting out to buy a Tesla. It's also expensive enough to warrant going to one of the already established outlets, even if that involves travel. I doubt not being able to sell physically in North Carolina will really hamper their sales too much.
This is a straight-up technological disruption of an existing sales channel. The third-party dealerships are an artifact of primitive 20th century supply chain management - they're basically a caching mechanism to handle latency in the network, to put it in computerese terms. With the power of computers and online ordering, Tesla has no need for these dinosaurs. They can "cut out the middleman and pass the savings on to you", terms every consumer can understand.
The fear for the dealers is not that Tesla will go around them, but that other manufacturers will follow. The big car makers already have experience setting up alternative brands to play with techniques that are too radical for their mainstream business (remember Saturn?), so it would be easy enough for something like GM spinning the Volt off as a new car company, not just a Chevy, and running Tesla-style sales.
I'm not sure I understand the apparent surprise here.
Firstly, there is a reason why, when driving through small towns, the names you see on the car dealerships are among the richest (if not the richest) around. Further, it is far from shocking that they have leveraged the power they have to entrench themselves.
What is so special about Texas that you would think they would be unique?
The article brought up the point that Tesla owns all of the service centers. I don't care if Tesla owns all the dealers, but having a monopoly on Tesla repair would be bad for consumers. If the process for becoming a "Tesla mechanic" allowed competition with the Tesla service centers, that would be OK.
Do the provisions of the Magnuson-Moss Warranty Act, which basically say you can get your car serviced anywhere you want without voiding your manufacturers' warranty, not apply to Teslas?
It might matter later in Tesla's life, when they have a larger number of cars on the road (3 to 5 years), but right now Tesla is the only one who can ensure the quality of the customer experience. Ensuring a good customer experience, right now, will sell more cars than lowering the cost of maintenance.
yeah, i agree with that 100%. more than buying a car from a dealership, i hate getting my car serviced at one. the other complaints are just the dealers bitching because they know their unfair, shady practices are soon coming to an end.
The American automotive industry is where sleaze bags get trained. It is home of the biggest scum of the Earth. I currently contract with a startup that caters to it, and am impressed daily with how vile these people are. Its is downright evil.
> The traditional dealer franchise system is best for car buyers, Wolters insists, because it preserves competition between dealerships selling the same products.
I'm not sure I understand this argument. If I follow this argument to completion, what they are basically saying is that when you have lots of middlemen selling the same product, that "preserves" competition between them, limiting the amount of additional cost they add. Wouldn't removing the middleman also remove that additional cost?
I think the idea is that if the manufacturer was the only one selling, that they could inflate their prices higher than what the middleman overhead would be since they're the only one offering that product.
Why he thinks competition between brands isn't enough to counteract this I have no idea.
Wow. In "The Land of the Free" a company cannot sell its own products as it pleases and is potentially forced to go through middlemen that provide no added value other then forcing folks to haggle?
This is not medicine we're talking about (where I can see pharmacists as an important part of the system).
How can it even be suggested to be illegal to open up a store and sell your own product? Should Apple be barred from selling their own products in Apple stores and go through Walmart instead?
In a sane system, America's car dealers would be viewed as an illegal cartel that interrupts trade and would be abolished. Indeed, a trade-interrupting cartel is exactly what they had in mind as they pursued a legislative agenda for decades to make it nearly impossible to sell new cars in the US without going through their system.
Will Elon Musk fold under the pressure and cooperate with the dealer network when they offer to sell at low to no markup to bring him into the extortion racket of Car Dealers?
I loathe buying cars so much because of the snakes that run those Dealerships. They want the car buying process to be so excruciatingly painful so people will leave money on the table to "Just take my money and make the pain go away".
How far are Dealers willing to go to make it illegal for Tesla to sell cars anywhere? Would they go so far as to outlaw the production of Tesla vehicles in America because it goes against the Dealer protection racket?
They want the car buying process to be so excruciatingly painful so people will leave money on the table to "Just take my money and make the pain go away".
Well, this is why I bought my last car used from Carmax. Sure, you probably spend more than you you might spend if you were willing to go to a dealer and haggle, but I found it to be worth the premium.
I don't see how this will stand up if Tesla chooses to fight it. I don't think the laws were intended to guarantee the extension of the dealership model to entirely new manufacturers. The laws were intended to protect dealers from having the manufacturer come in and undercut them after they were established in the market.
On the other hand, I think the dealership model exists for a reason. There's a racket aspect to it, but would a Ford or GM really want to manage customer sales and showrooms all over the US?
This story was recounted in a yesterday article on the topic:
"I sat down in Palo Alto with Elon Musk, hat in hand, and said we want to partner with you, you can have it exactly as you want it — 'Tesla of Austin,' " said Wolters of the Texas dealers association. "You can do it just as you want to, within our law, you just can't own the showroom."
Musk, Wolters recalled, didn't cotton to the suggestion, leaving the room quickly, but not before pledging to spend an inordinate amount of money to battle automobile franchise laws.
I don't think he will, and I hope he won't. But Elon tends to be a guy who thinks very long term, and I think he knows the future for Tesla would be much better if they sold their own cars, and never depended on the dealers again. Plus, it's not like he's in a bad position with Tesla right now, and he's desperate.
[+] [-] jack-r-abbit|13 years ago|reply
I think this last line of the article is very important. This has the power to get the consumer on Tesla's side of this fight. If enough of the right people in Texas (and other problem states) want this car and think the laws are stupid... they'll need to find a way to make that happen. Laws can be changed. If not then they'll just get them out of state.
[+] [-] mayneack|13 years ago|reply
[+] [-] darkarmani|13 years ago|reply
It's very unfortunate that the state is Texas and not a state like Rhode Island. They (dealers) have 15 hours of protection in Texas.
[+] [-] beat|13 years ago|reply
The fear for the dealers is not that Tesla will go around them, but that other manufacturers will follow. The big car makers already have experience setting up alternative brands to play with techniques that are too radical for their mainstream business (remember Saturn?), so it would be easy enough for something like GM spinning the Volt off as a new car company, not just a Chevy, and running Tesla-style sales.
If that happens, dealers are doomed.
[+] [-] auctiontheory|13 years ago|reply
[+] [-] nostromo|13 years ago|reply
Suddenly they'll speak convincingly about the benefits of centralized markets, price controls and protectionist trade policies with no sense of irony.
[+] [-] taeric|13 years ago|reply
Firstly, there is a reason why, when driving through small towns, the names you see on the car dealerships are among the richest (if not the richest) around. Further, it is far from shocking that they have leveraged the power they have to entrench themselves.
What is so special about Texas that you would think they would be unique?
[+] [-] lquist|13 years ago|reply
[+] [-] adventured|13 years ago|reply
[+] [-] axus|13 years ago|reply
[+] [-] atourgates|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] jared314|13 years ago|reply
[+] [-] jukaks|13 years ago|reply
[+] [-] orangethirty|13 years ago|reply
[+] [-] darkarmani|13 years ago|reply
I'm not sure I understand this argument. If I follow this argument to completion, what they are basically saying is that when you have lots of middlemen selling the same product, that "preserves" competition between them, limiting the amount of additional cost they add. Wouldn't removing the middleman also remove that additional cost?
[+] [-] Contero|13 years ago|reply
Why he thinks competition between brands isn't enough to counteract this I have no idea.
[+] [-] linuxhansl|13 years ago|reply
This is not medicine we're talking about (where I can see pharmacists as an important part of the system).
How can it even be suggested to be illegal to open up a store and sell your own product? Should Apple be barred from selling their own products in Apple stores and go through Walmart instead?
[+] [-] beachstartup|13 years ago|reply
[+] [-] greyfade|13 years ago|reply
[+] [-] adventured|13 years ago|reply
[+] [-] maeon3|13 years ago|reply
I loathe buying cars so much because of the snakes that run those Dealerships. They want the car buying process to be so excruciatingly painful so people will leave money on the table to "Just take my money and make the pain go away".
How far are Dealers willing to go to make it illegal for Tesla to sell cars anywhere? Would they go so far as to outlaw the production of Tesla vehicles in America because it goes against the Dealer protection racket?
[+] [-] msluyter|13 years ago|reply
Well, this is why I bought my last car used from Carmax. Sure, you probably spend more than you you might spend if you were willing to go to a dealer and haggle, but I found it to be worth the premium.
[+] [-] gnoway|13 years ago|reply
On the other hand, I think the dealership model exists for a reason. There's a racket aspect to it, but would a Ford or GM really want to manage customer sales and showrooms all over the US?
[+] [-] blhack|13 years ago|reply
full disclosure: I work in the automotive industry. (Although not for them)
[+] [-] yaliceme|13 years ago|reply
[+] [-] revelation|13 years ago|reply
"I sat down in Palo Alto with Elon Musk, hat in hand, and said we want to partner with you, you can have it exactly as you want it — 'Tesla of Austin,' " said Wolters of the Texas dealers association. "You can do it just as you want to, within our law, you just can't own the showroom."
Musk, Wolters recalled, didn't cotton to the suggestion, leaving the room quickly, but not before pledging to spend an inordinate amount of money to battle automobile franchise laws.
[+] [-] mtgx|13 years ago|reply