Posting in Design
Tesla Motors sells direct to consumers, which has prompted car dealerships to cry foul. Could the electric automaker change not just the cars we drive, but also how we buy them?
If you are waiting with bated breath for electric vehicles to revolutionize the transportation sector, you are likely to pass out. If it happens, it will not be an overnight process. That said, there is significant momentum behind the nascent industry. While sales of purely electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) are still minuscule compared to those with internal combustion engines, the 16 EV models on the market today will grow to 40 over the next two years and the 42 PHEVs models will grow to 73 by 2014.
Every major carmaker is putting considerable resources into electrification, but one of a few purely EV startups -- Tesla Motors -- is shaking up more than just the drivetrain.
Tesla began opening its retail stores and smaller format "galleries" in 2008. There are currently around 25 of them in North America. Visitors (both perspective owners and curious browsers) can learn about the cars, sit inside one and in some cases take test drives and place a reservation for their very own. Not unlike Apple stores, these spaces are high-touch and modern. But they're also rattling the foundation of how cars have traditionally been sold, and as a result, Tesla is being sued by the dealership franchise organizations in Massachusetts and New York and is under the threat of lawsuit in at least two others.
Stepping on Dealer's Toes
At issue is the fact that Tesla sells its cars direct to consumers. This might not sound so revolutionary, but in the world of auto sales, it sure is. In 48 states, dealership franchise laws prohibit manufacturers from also selling the cars they make, rather than selling through third party dealers. These rules are designed to ensure that manufacturers can't undercut dealers on price. In exchange, carmakers have rules and standards that dealerships must follow in order to be able to sell the cars, repair them and represent the various brands.
While it does not plan on suing Tesla, the National Automobile Dealers Association says it supports the state boards that are pursuing legal action and that the dealership model offers consumers "a reliable network for sales and service, which is strictly regulated to ensure the vehicle transportation needs of car buyers are met." NADA's chairman Bill Underriner adds that its dealers have fought this battle before -- and won.
"Over the years, other manufacturers have tried operating their own retail networks, but have concluded that the franchised new-car dealer system is the best method of serving the public for its vehicle transportation needs," he says.
For its part, Tesla says it takes pains to ensure it is operating within the laws of each state. Sometimes that means it can't operate on certain days, or provide test drives, or take orders onsite. (Tesla actually sells its cars online, so the location is moot in that respect.) But Tesla's vice president of sales and ownership experience George Blankenship says that's fine. Our goal is for "everyone to leave our stores with a smile on their faces," he says. If the company can make consumers stoked on EVs and especially on Teslas, that's the first step. "I want people to want the car, I don't want to sell them the car," he says.
That might sound Pollyannaish, but on the other hand, Tesla can't sell cars the way other automakers do, anyway. Each car is bespoke, and reservations are often placed many months prior to delivery. The stores and galleries exist, therefore, to introduce Tesla to a wider audience.
"It's fair to say that Tesla is facing a potentially challenging situation because I believe that conventional franchise auto dealers feel threatened by the Tesla model. They understand that consumers find it bizarre that they can't order a car [aside from Tesla] the way they order an iPhone. And because Blankenship is from Apple, the parallels [between Apple and Tesla stores] could not be clearer," says John Voelcker, EV expert and writer for Just-Auto.com, High Gear Media, and other outlets.
In 2010, Tesla recruited Blankenship, a retail veteran who served as vice president of real estate for Apple Computer, from 2000 to 2006 (and before that led retail strategy at The Gap) to direct Tesla's retail experiment. "In shopping malls, people who walk into our stores, they don't even know who we are. People will be walking down the mall and they'll see a car and they're drawn in by that" and often they don't know at first the car is electric. "We're educating, not selling. It's two different things. We're not just telling people why an EV is a good car but why it might be better than what they're driving today -- not just because it's good for the environment" but also for its storage capacity, or low maintenance or because instant torque provides a completely different driving dynamic, he says.
Holding a Charge
Last month, a Massachusetts judge refused to grant car dealers an injunction that would have forced Tesla to stop its operations there. Still, the legal battles might be long and protracted, and there are more than 45 other state franchise boards that could decide to sue Tesla, as well. Car dealer groups are digging their heels in. NADA's Underriner told Automotive News: "We've got a whole mess of lawyers in Washington who work on state franchise law." Yikes.
Underriner and Tesla CEO Elon Musk did have an hour-plus meeting at Tesla's California headquarters late in November, according to a report, but neither has divulged the specifics.
Meanwhile, Tesla continues to establish more retail outposts and is launching more production and distribution in Europe. Its Model S is Motor Trend's Car of the Year for 2013. Plus, Tesla has reached some milestones that naysayers loudly doubted, such as hitting its summer 2012 deadline for the Model S (which starts at $50,000). Confidence defines Tesla's corporate culture.
Blankenship has no shortage of confidence, either. What Tesla has accomplished thus far -- producing the Roadster, with its incredible speed and long range, followed by the Model S, with even more range -- wasn't just difficult, "it was impossible," Blankenship boasts. Given all that, what's a couple lawsuits (so far) threatening to shut down Tesla's factory stores? Time will tell.
Dec 19, 2012
To my knowledge there are rules and standards for both the manufacturer and the dealers of selling out cars to that they have to abide by. http://automotorinsure.com/cheap-car-insurance/
I guess Tesla retail stores are performing good services as people can have a test drive and if they like they can reserve the order to make purchase. http://www.tyre-shopper.co.uk/branches/dunfermline
well thatâs the spirit to go, never give up and I know they will do it soon.. Every one just need the time and resources to achieve something well with tesla they are waiting for the right time, when they can hit it to the markets. http://www.national.co.uk/branch-165-Ipswich.aspx
This blog post is really great; the standard stuff of the post is genuinely amazing. http://www.sellyourcarfast.com.au/selling-a-car/
There are no electricity mines, nor hydrogen wells either. I have no doubt that the vehicle of the future will be powered by hydrogen or electricity. But the source of either one of these is going to be solar panels? wind? tides? or biomass? or even hydroelectricity? No way. Smart Planet has two sites dealing with nuclear power. In one, there is a movie to be shown at Sundance, featuring a nuclear breeder reactor that the USA idiotically abandoned in the Clinton administration. In the other, a thorium-to-fissile-uranium breeder reactor is presented. Look 'em up. Breeder fission reactors create a renewable energy resource - they turn non-fissile atoms into fissile ones. Better than that, unlike forests which are renewable but seem to get cut down, their output of energy is so prodigious per ton of fuel that the whole idea is sustainable.
Sadly enough, the fact that Big Auto is fighting Tesla tooth and nail for their refreshingly sane business practices is the mark of success these days. I honestly feel that Big Auto is just another obsolete paradigm (in the same vein as Big Pharma, medical insurance corporations and most of the music industry) that is trying to fight anyone that introduces change so that they can keep their stranglehold on the market, because they know they are obsolete and, hopefully, on their way out. I know I may catch some flack for this, but I honestly think we should have let GM and Ford go under instead of bailing out their inept and archaic business practices. Apparrently I am alone in that belief, though. Being from the city that General Motors was created in(Oshawa, Ontario, Canada: started by Col. R.S. McLaughlin as General Motor Carriage corp. for those who are interested), the response I get when I say that we should have let GM go under is quite the hostile one, but they're obsolete and they know it and the world would be a better place if GM and their ilk would just go away and were replaced by companies more like Tesla. Meh....dare to dream eh.....
...If greed steps in and creates failure? It is tough for any battery to compete with the awesomeness of hydrocarbons, but it's even tougher as per all the truths stated already. Electricity is delivered at the speed of light in an already built infrastructure. The only problems are that of third party profiteers which prevent cheaper batteries (and solar energy)!
Knowing the quality of the company, I would be really proud to represent in QuÃ©bec City, Canada. FranÃ§ois de S. L.
I imagine every large auto dealership would love to sell you any new car you want, not just those the gov't and The Big Three let it sell. Think of Car Max -- how big of a stretch is it to imagine them selling new cars as well as used? Do all their current customers feel cheated by not going to a dealership to buy their used car? How is it any different if the car has 3000 fewer miles on it? If new car sales are subsidizing the service part of the dealership, perhaps service customers should start paying the true cost of service and let new car customers pay the true cost of a new car. The same number of cars will need the same service no matter who sells the cars. So the demand for service centers will be the same -- the only question is whether that same service facility will sell you a new car or not.
To show the media bias, this is a 10 year old company that is called a "startup". Read the financial results and the actual sales very projections. http://www.freep.com/article/20120926/BUSINESS01/309260025/Tesla-Motors-warns-it-will-miss-sales-expectations
Tesla is a 10 year old company that has scrapped its plans for everything that it was building, as it pours off losses, and draws down Government money to build a sports care with a battery that 99% of the population would never consider. It is an ego trip of one man, with a nealry $500 million "gift" from taxpayers as its main current funding source. http://www.triplepundit.com/2010/06/what-do-the-financial-problems-of-tesla-ceo-mean-for-the-company/
The bigger corporations and banks get the worse they are for us. They manipulate the government and regulation to fix favor in their direction, which is the opposite of free market. Free to do business with them and lock everybody else out. I've come up with a new motive: buy and do business with the smallest business entity I can find whose price (long run or short run) is in the ball park of the mega-corporation. I'll pay a little bit more just to avoid the abuses of the mega-corporations and mega-banks.
Let's face it, auto dealers are rip-off artists from the word, "go." They have a "bottom" price at which they will sell a vehicle, but the average person pays much, much more. It's nothing but legal theft.
The whole world seems confused, batteries should be replace on each use, in automatic service stations(the current gas stations) "plug and play" you drive in over a service pit. a robot scans a code, it removes the batteries and replaces with fully charged units.. in under two minutes.. simple, Problem is greed.. the companies will not supply just two types of batteries they will fight for dozens.. with all different fitments.. so they can rip everyone off as before..
will sort it all out. Let the free market determine all the pluses and minuses of each marketing model. If the Tesla model is viable, it will survive and flourish. If not, it will go the way of the Edsel.
I drive a Tesla Roadster and I love it. It's quick, attractive and costs very little to run (1/7 of a regular fuel) They have reinvented motoring and I'm sure the retail dealerships are not the only ones threatened.... The internet revolution has impacted most industries and why should motoring be any different. And yes... an electric car is very different and hence will need lots of education. I think the public will be very supportive of this brand, despite industry opposition.
The dealer laws stem from an age when information was not transparent or widespread and personal vehicles were not as rapid and common as they are today. This is like ...forcing people to call each other via a switchboard and operator! (not that I have anything against the often undervalued women and men who (wo)man(ned) those switchboards!). It's just not timely. And the Tesla is - in addition to being a good looking vehicle - certainly timely.
There is more than one storyline here for NADA not wanting Tesla changing things up. They want to change over to EV from combustion engines on their (car makers) own terms in their own time line. To change the way they produce cars means that they have to spend money to make new production lines in their factories or new factories all together and then train workers to work on the lines and that all costs big bucks. On a side note - one reason it has taken so long for industry to get the higher MPG cars is the consumer. All the gadgets and gizmo's consumers expect and demand in their cars takes power from the engine and therefore causes lower gas mileage --- SIrrius radio and internal GPS and heated seats and all the other niceties that people expect but are not really needed to have the car move down the road. If consumers didn't demand all the extra's - we would have reached higher mileage cars a long time ago.
The Big 3 are happy with the way things are and are going to use every tool they have to keep upstarts (like TESLA) down, including this. Look at what you get for 50k with a Tesla, now look at the cost of a Volt. Holly cow with multiple fees, financign etc the crapy volt cost more... Becasue you have to pay for the big 3 auto's big 3 expenses.
because, it's not a business model which could exist without government assistance. GM and Chrysler were bailed out by government, but, they were viable for many decades, before government regulations and unions ruined them. Tesla has never been able to make it without government subsidies. Chrysler and GM can rescue themselves, and it will take time, but, Tesla won't ever make it on their own.
Actually Ford did not take any of the bailout money from the government. They reorganized and refocused their efforts in the true spirit of free enterprise. I will remain a loyal Ford customer, since 1965, entirely because of their management and their decision to do the right thing rather than take advantage of a government handout that has cost the citizens as much as about 10 billion dollars in tax dollars. Ford should be rewarded with loyalty for their decision.
What would be really nice if cars' components weren't designed to fail after a certain number of miles, so that cars wouldn't have to be serviced nearly as often. Not a single component goes into any vehicle from GM, for instance, that isn't designed to fail after a certain point. They make the excuse that practices like that are there so they can sell more vehicles, but that's the main reason why I still ride my bike instead of driving a steel monstrosity that's designed to fail at a certain point, and could be just as easily made out of aluminum, which does not rust readily. Especially when the electric car was invented before WWII, and it is extremely easy to retrofit a diesel engine (easier to do than with a gasoline engine) to run on hydrogen, which can easily be produced on-board through the electrolisis of water. Funny thing is, when I say that we could run all of our cars off of water, people look at me sideways, but think about it: Water's base components are 2 parts Hydrogen, and one part Oxygen, which are easily separated with the use of positive and negative electrodes in a specialized containment vessel. At this point, Big Auto (and that includes the dealerships that sell their vehicles) has nothing to say to me, let them go under.
Nice link to an article that's over 2 1/2 yrs old. Tesla received a $465mil loan from the Department of Energy's Advanced Technology Vehicles Manufacturing Loan Program to (1) reopen an auto manufacturing plant in Fremont, California to produce specially-designed, all-electric, plug-in vehicles, and (2) to develop a manufacturing facility to produce battery packs, electric motors and other powertrain components that will power all-electric plug-in vehicles manufactured by Tesla and other original equipment manufacturers including Daimler and Toyota. Under the same program, Ford received $5.907bil and Nissan $1.448bil. https://lpo.energy.gov/?page_id=45
sounds good on paper, and could actually work.... Until... Competing battery sources/recharging stations come into the picture, where, a new battery will have a lot more value than an older used battery. Then, how does a recharging station compensate the dealer from which the newer battery came, and the original charging station is hundreds or thousands of miles away? Sure, it could be done via computer transactions where batteries are kept track of, and relative value is computed and compensated for. But, not everybody will play by the honor rule, and some will try to claim a lower value for newer batteries, while claiming higher values for older batteries. Then, there is the problem where a battery doesn't give the "charge life" that was sold, and the driver is caught with a dead battery in the middle of nowhere. There will have to be a way to confirm a minimum distance for a charge that a person is paying for. Also, if someone is caught with a dead battery in the middle of nowhere, will there be something like a tow truck that can recharge batteries, or carry spare batteries?
Auto makers should develop 2 or 3 standard battery packs that are engineered for quick swaps, kind of like the batteries in your flashlight. Then as you say just pull in to a filling station and swap batteries. There would be no anxiety over range or battery replacement costs. Let the filling stations take care of batteries that are worn out recycling them and bringing in new batteries as needed.
1/7 regular fuel cost.... work out the cost over 10 years plus batteries and compare with say bmw or merc of similar spec. Would be fantastic if it had the original Telsa free run motor. But not in present form cost wise. There is a way to sell without dealer and that is in kit form, say delivered with wheels removed or whatever necessary to comply with law and assembled by a local independent approved garage or by self, who could also service car if required but not sell them.
You comment on overloaded cars is right on the money. Actually, most xtra items in my car are now contained in my smartphone. The only items now required from the car are speakers, an application for displaying on my mobile phone the current vehicle status and warning lights, fuel guage, etc. and a/c & heater, which could also be controlled via an application on my phone to eliminated dashboard items that could be eliminated providing more glove compartment space. GPS, radio, tv, et. al. are on my phone with single finger touch controls. Emergency items, low fuel, hot engine, etc. could be popup displays on the mobile. Interesting to the no dealer, no service aspect mentioned in several reader replies is that capitalism and market forces will eliminate that need for successful direct sales manufacturers. Entrepreneurs will see the need for repair and service and send their technicians for training at factory for certification, then start there own chain of repairs centers. Shoe manufacturers do not set up repair points, right? No, they rely on 3rd parties to do so. A Tesla factory can offer online parts orders, tech manuals and troubleshooting support for 3rd parties providing services and repair for their cars, ergo no monopoly dealerships required. jim
My 86 year old mother decided to quit driving and gave me her 2000 Avalon. I lived all my life without heated seats and could easily continue to do so but I'll tell you, on these cold winter mornings those heated seats are awful nice to my 60 year old body.
Charles, you need to go back to 2008 and see how many dealers the Big 3 shut down, took over, or tried to shut down.
trade in, and manufacturer incentives, and dealer incentives, and the $7500 government "green car" incentive. That still won't get me to purchase the Volt when I can get a combustion engine car that can take me 500 miles on a tank of gas, and which I could "reload/refuel" in about 5 minutes time. Plus, a combustion engine and transmission and other moving parts, can be serviced by most repair shops that probably number into the hundreds of thousands in the U.S. alone.
And so is their expenses. Tesla needs to deliver just 160 cars per week to become cash flow positive.
Ford Motor Company closed a $5.9 billion loan arrangement under the Department of Energyâs Advanced Technology Vehicles Manufacturing Loan Program to upgrade factories across Illinois, Kentucky, Michigan, Missouri, and Ohio and to introduce new technologies that will raise the fuel efficiency of more than a dozen popular vehicles. The project will convert nearly 33,000 employees to green manufacturing jobs. https://lpo.energy.gov/?projects=ford-motor-company
I think Tesla considers that their battery design is a competitive advantage, so they will only want it to become industry-standard if other EV manufacturers buy their battery packs from Tesla (as some manufacturers already do).
when they essentially took "ownership" of the car companies. Most, or all, of those dealerships would have stayed open if the government hadn't dictated terms to the car manufacturers. To boot, the dealerships that were closed, were those that were least "friendly" towards Obama and democrats. Many thousands of people were laid off, mostly for political reasons.
Gasoline is going to cost more and more. Already, there's a huge cost being imposed upon other people, in terms of the pollution of the atmosphere. I don't know how soon I'll buy an electric car, probably never, 'cause I'm old. But if ever the country gets sense enough to put coal, petroleum, and gaseous hydrocarbons out of business, the basic energy currency will be electricity.
If yoi want a car that you can only drive to certain places, and have limited opportunities to have repaired near you, this is the car for you. I will not become mainstream. The problem that Tesla has is that it could never set up a nationwide network of dealers with its tiny volume. They have no choice. Who would invest in a service network (as a dealer) when there were 5 cars in your area?
The electric motor in a Tesla will probably never require service. The batteries only need to be replaced every 5 or 10 years. With a full tank of gas and a fully charged battery a Volt will go about 380 miles. That's far enough for most people.
Swapping batteries is good for high volume economy cars like the Toyota Corolla and Hyundai Elantra. Each sold more than 1mil worldwide in 2011. http://www.forbes.com/sites/joannmuller/2011/12/25/the-worlds-most-popular-cars-are-changing/ It will take well over a decade before an pure electric car can do that.
There would be no warranty because you don't really have to own the batteries. You would just swap them for another set at the filling station. You would pay for the electricity on the batteries and a handling fee that allows the station to make a profit. They take your core and recharge the ones you leave for the next customer to use. As the batteries age and wear out the station would recycle them and bring in new supplies. When batteries get aged enough they are no longer useful for vehicles they still have a lot of life left in them and could be repurposed as grid storage. It would work kind of like exchanging the gas bottles for an oxy-acetelene torch set. When they're empty you take the old one back and get a full bottle but you don't have to pay for the bottle itself except for the first time when you're getting started.
Service Center locations are chosen so that 9 out of 10 Model S reservation holders will be within 100miles of one. If you can't bring the car to them, for an extra $100 Tesla can send a Tesla Ranger (technician) to you. http://www.teslamotors.com/service
I've never had any local repair shop refuse to service our family's 2009 Toyota Prius. If anything the mechanics seem disappointed when most of the parts are no different than any other modern automobile! Tesla has smart enough designers on staff to know that trying to re-design every component down to the car air conditioner is a recipe for cost over-runs, and customer backlash when it comes time to make basic repairs. The beauty of an electric engine is having hundreds fewer parts than an internal combustion engine with their exhaust, ignition, cooling, and lubricating systems.
Driving a hybrid or a pure electric vehicle requires more planning than a regular car. More and more people are doing it everyday. The base price of the Model S is $57,400 which makes it priced toward buyers of the BMW 5 Series and Mercedes E Class. If those are not your type of cars, then neither is the Model S.
If you owned a Porsche, Mercedes or BMW, would you take it to just any repair shop? Tesla's Service Center locations are chosen so that 9 out of 10 Model S reservation holders will be within 100miles of one. Plus, if you're worried about who's going to repair your power windows or air conditioning then stick to a Ford, GM, Honda or Toyota.
That will never make the Tesla a practical car to own, and it's a lot less practical when one has to pay $100,000 or more for one of them to begin with. The Tesla has the "coolness" factor going for it, but not much else.
Rivera, I don't think so. Where would they get the parts? Who would train them? Try taking a Prius into a local repair shop and asking them to fix one. Do you believe the air conditioner on a Tesla works the same way as any other car? Do you think you can take a Tesla anywhere for service and not void the warranty?
All of those other things you mention are pretty standard equipment that just about any competent repair facility can fix. I don't know that batteries cost more than gasoline. Certainly the electricity you buy to charge the batteries is far cheaper than gas. There's a lot of research going on in battery technology and it will be interesting to see what develops over the next decade.
What about the air conditioning, the power windows, the brakes, and 100's other items. The batteries are the equivilent of gasoline and probably cost more than gasoline. Repairs are seldom on most car engines today, they are on the electronics and all of the other parts of the car.