Elon Musk Fights to Sell Tesla Cars Like iPhones and iPads
Elon Musk, the founder and CEO of Tesla, is taking a leaf out of the Apple handbook by setting up its own showrooms to market its electric automobiles.
When Apple had a difficult time convincing retailers to carry their products many years ago (yes, there was a time stores were partial to Windows and Intel machines), they decided to set up their own showrooms which have now become the iconic Apple stores. The popularity of Apple products eventually gave birth to distributors who carry Apple devices exclusively.
With Tesla, it is a slightly different story.
Automobile distributors are still a bit wary of carrying electric automobiles in their showrooms as they are seen as being partial to gas powered cars.
Which is why Tesla decided to follow Apple’s footsteps and set up their own stores and deal with consumers directly.
However, the same car dealers are also scared that Tesla automobiles would eat up their sales and profits, and have petitioned State authorities to prohibit Tesla from selling directly to consumers.
In New Jersey, the New Jersey Motor Vehicle Commission has already made a ruling that Tesla is banned from conducting direct sales of Tesla electric cars. The Commission cited franchise laws that prohibit car manufacturers from conducting direct sales and are required to sell through dealerships.
Tesla is fighting this ruling, arguing that these laws were originally designed to protect dealerships from manufacturers who have taken advantage of the capital resources and investment made by the dealerships who represent them.
In the ?old days?, car manufacturers welcomed dealers who put up their own money to set up showrooms and marketed their cars without any help from the car companies. When the automobile brand became popular, the manufacturers wanted to take over territories where they could make more money by eliminating the dealerships.
This caused the dealers, who put up large amounts of money to set up the infrastructure to showcase and sell the cars, to seek government help to protect them.
In the case of Tesla, the dealerships who are complaining have not carried Tesla automobiles in their showrooms.
Aside from New Jersey, this battle between Tesla and various car dealer groups are now going on in Virginia, Arizona, Maryland, Texas, and Ohio.
Imagine if this argument was used against Apple, and state politicians succeed in banning Apple from selling directly to consumers .
Apple would need to convert its Apple Stores nationwide to Dealership showrooms. More importantly, I bet those dealers would not allow us to ?hold and play? with the iPhones, iPads and Macs in these stores. I also believe that none of them would bother setting up an Apple ?Genius Bar?.
Are car dealers that threatened by Tesla?
Why shouldn’t they just opt to carry Tesla cars just like what gadget retailers did with Apple?
Or perhaps try to get a ?Tesla Dealership? instead?
One reason Automotive experts see is that Car dealers are still partial to ?gas powered cars? because they are not making much profit on car sales anymore, and are more dependent on profits earned through maintenance and repair services.
The advent of electric cars like Tesla is believed to require less maintenance and repair, which translates to lower income and profits for the dealers.
The experts predict that the car dealers are fighting a losing battle.
When the automobile industry started, the car companies sold their vehicles directly to consumers. It was only when assembly lines churned out more units to supply the growing demand that dealerships became the necessary channel to reach the markets faster.
In today’s internet connected world, however, reaching customers on a global scale is achieved instantly.
Auto experts add that if the dealers are scared of Tesla’s US$ 100,000 Dollar vehicles, they will surely scream in terror when Tesla unveils their US$ 35,000 Dollar model.
The dealers may find allies in the politicians that make the laws at the moment, but the time of electric cars is already here and it is best if they stop fighting and go with the change to survive.
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