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Why Tesla Motors can't sell cars in most of the USA

northernlou

Idi Admin
Why Tesla Motors can't sell cars in most of the United States
July 16, 2014

tesla-model-s-tour-flickr.jpg

Tesla Motors makes beautiful, quality electric automobiles. Don't just take it from us; Consumer Reports rated the Tesla Model S the "best overall" car in its 2014 Top Picks report (which includes all non-electric cars as well). Yet, despite Tesla CEO Elon Musk's ongoing effort to expand his EV empire, state after state in the United States is pushing back. Not because those states are against electronic vehicles, Musk or even Tesla; it's about the way Tesla wants to sell its cars. Specifically, it's about money.

WHAT TESLA WANTS

You know how Apple has stores where it sells its computers, tablets, phones and other stuff? "Apple stores?" you ask. Yes, Apple stores. Tesla wants to do that. This is Tesla's business model:

Make things.
Sell those things directly to consumers in stores owned and operated by Tesla.

The first part of that business model isn't the problem; it's the second bit. Specifically, Tesla wanting to both own and operate stores -- rather, dealerships -- in the United States. When it comes to new cars, the concept of "direct-to-consumer sales" is illegal in many US states. Some states are even adding provisions to ban them: This past March, New Jersey Governor Chris Christie signed into law a bill that specifically makes direct-to-consumer car sales illegal.

WHY THAT ISN'T POSSIBLE


Why do so many states have provisions against direct-to-consumer car sales? Because of the way the car dealership system works. Early in the automotive industry, carmakers needed individual franchise owners to invest and set up a system for consumers to buy vehicles. Without highways, transporting vehicles was difficult. Additionally, cars required far more maintenance early on. Thus, the franchise model was born.

The companies making cars -- Ford, GM, etc. -- negotiated deals with car dealers. As The New Yorker explained in a 2009 piece, those early deals were weighted heavily against car dealers:

"In 1920, for instance, the US economy went into a deep recession. But Henry Ford kept his factories running at full tilt, and forced thousands of Ford dealers around the country to buy new cars that they had little chance of selling. The dealers knew that if they said no they'd never see a Model T again, so they ate the inventory. A decade later, when the Great Depression hit, Ford and GM used the same strategy to help keep the production lines going. They turned their dealers into a cushion against hard times."

To protect themselves, car dealers formed associations. Laws were enacted, and it's those laws -- meant to protect car dealers -- that are interfering with Tesla's ability to sell cars directly to consumers. Here's the logic of the argument against Tesla: If Tesla can sell cars directly to consumers, what stops the rest of the car industry from doing that? That is the heart of this, so let's be totally clear...

continued ... http://www.engadget.com/2014/07/17/tesla-motors-us-sales/
 
Tough call, if you could actually save a few bucks on the purchase of a new car by eliminating the middle man, then why not? OTOH, in my limited experiences, I recall going into a Sony shop and finding the TV model that I eventually purchased at Best/Buy offered at $400 less, than what Sony wanted for it.

I suppose eliminating middle men, could also eliminate competition and bargaining power.
 
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