We’ve been following Tesla Motors for a while, covering both its successes and its failures.
Wait, failures? Tesla Motors is the most successful electric vehicle startup of, well, all time! No, I’m not talking about their technology or marketing strategy or even their sales strategy. Actually, it has everything to do with their sales strategy.
Unlike all other automakers, who sell their vehicles through franchise automobile dealerships, Tesla Motors sells the Tesla Model S direct to the customer. Without a middleman, that is, the dealership system, Tesla can control pricing and advertising and stay on top of the whole automobile sales and service experience.
Most automobile dealer associations [ADA] don’t care for this and most states have laws barring automakers selling directly to the consumer. Tesla Motors‘ situation is slightly different because it has no dealership franchises, so the law in most states technically doesn’t apply. Still, ADAs are pressuring state governments to bar Tesla Stores.
Tesla Motors has already beaten back pending legislation in Minnesota and Massachusetts, but other states have been reluctant to even bring the bill to the floor, such as in Texas and, most recently, New York, both of whom ended their legislative sessions without touching the ADA bills. New York State, if they had passed the law, would have forced Tesla Motors to shut down three stores and two service centers in the state.
Lee Zeldin, who sponsored the bill in the upper house, denies trying to put Tesla Motors out of business, as they could still establish franchise dealerships. The only problem is that dealerships of conventional vehicles have zero incentive to sell electric vehicles. An electric vehicle, like the Tesla Model S, is a completely different kind of vehicle, and really does need a different sales model. Tesla Motors will have to wait until the New York legislature reconvenes and, for now, is still open for business.