Tesla And US Car Dealers Enter Into War
Posted: May 28, 2013 by Maja Johnson
Car manufacturers like Ford, Toyota and Mercedes sell their cars to car dealers. Car dealers then sell the cars to the general public. Basically, this is how cars are sold in North America. Each step brings another markup that's passed on to the consumer.
When Tesla decided they did not want to sell their cars to dealers but directly to the public, they opened the Pandora's Box of the car world. Car dealers in the US are furious. Now, every car dealer across the country is trying to get Tesla banned from selling cars.
What Tesla is offering to users is very simple. The company owns around 37 showrooms in the US. People can go to these showrooms, see the car, test drive it and if they decide to buy it, they can buy it at the standard Tesla price. Car service is also available at Tesla owned garages.
However, car dealers are opposed and they have taken legal actions to fight the new Tesla model. Texas became the first state where Tesla was banned from selling cars directly to people. The President of the Texas Automobile Dealers Association, Bill Wolters, claimed that Tesla's actions would undermine the franchising car business in the USA. Could this become a car dealers worst nightmare? If Tesla can sell on their own, what will stop other brands from selling their own cars? Tesla's employees that are located in Texas can show the cars to potential customers, but are not allowed to take them on a test drive, or mention the price. This ban in Texas is mainly due to the closeness that car dealers have with the Government.
Both parties are stating that they are fighting to protect the buyers. The car dealers raised issues such as repair shops, owned exclusively by Tesla, could lead to a monopoly. Additionally, if the company went out of business, the garages would be closed as well. Currently, few mechanics are equipped to fix electric cars.
So far, North Carolina is the only other state besides Texas taking a legal stance to stop Tesla and revoke its selling rights.