Will Tesla Stores Change the Future of Car Sales?
January 7, 2015
Tesla Motors sure does know how to rock the boat. People taking auto mechanic courses already need to learn a whole new set of techniques to work on their all-electric cars and now, if Tesla’s approach to sales catches on, auto sales college graduates will be adding a whole other skill to their repertoire.
Those with sales-focused auto careers shouldn’t jump the gun, though. The online Tesla approach is meeting with significant resistance, especially in the US.
Company Stores and Online Sales
Instead of franchise dealerships with large showrooms, Tesla has opted for a slimmer, more tightly-controlled model. They have set up what amount to boutiques, sometimes as storefronts in commercial sectors and sometimes in shopping malls, all owned directly by the company.
These generally have no more than two actual cars on site for prospective customers to look at and test drive. The rest of the space is dedicated to educating people about how the Tesla electric car works through visual displays.
People can purchase a Tesla at these stores, but they can’t drive it home. That’s because all Tesla sales happen online and all vehicles are delivered directly to the customers. Tesla stores are just locations that promote and can facilitate a Tesla online purchase.
Low Pressure Sales
Tesla has yet to sell 100,000 cars overall and is still primarily focused on promoting the idea of electric cars in general as well as their products specifically. As such, Tesla stores are focused on education, which results in a very low pressure sales environment.
The company even offers test drives to people not financially capable of paying the $100,000 sticker price the Tesla Model S carries. They consider word-of-mouth to be extremely important and feel this is a great way to foster it.
Resistance From Traditional Dealerships
With such a radically different business model, it’s no surprise that traditional dealerships aren’t happy. The state legislatures of Michigan, Arizona, Texas, Virginia and New Jersey have all passed laws barring Tesla from setting up stores. Other states have passed laws restricting the number of Teslas that can be sold at company-owned stores.
These laws are the result of lobbying efforts by state auto dealers’ associations. One of the associations’ main arguments is that local franchise dealers are better positioned to stand up for the consumer in the event of product recalls and other important situations.
There are currently only four Tesla stores in Canada: one in Vancouver, two in Toronto and one in Montreal. Instead of trying to get these stores shut down, the Canadian Automobile Dealers Association is taking a wait-and-see approach.
“Tesla’s an interesting example,” the group’s spokesperson Huw Williams told The Globe and Mail, “but I think for more than what structure they put together. They’re a very small manufacturer and they’ve obviously got a different product offering. So we’ll see what ultimately ends up happening on their [sales] model.”
Williams’ comments underscore a general consensus that Tesla will ultimately switch to the franchise dealer model when the demand for their cars outgrows their current setup.
What do you think of Tesla’s approach to sales?
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