Tesla is forcing the car industry to rethink how it sells cars

In 2019, many car experts said that Tesla was making a big mistake when it decided to sell cars only online, arguing that the bad feelings people had at dealerships were essential to the car business.

But Elon Musk, Tesla’s CEO, took the strategy, and combining direct sales with a limited number of stores and service centers, seems to be proving that opponents are wrong. The company’s manufacturers dominate the growing electric car market, though others are struggling to sell cars because of a shortage of computer chips.

Tesla’s views, copied by other young automakers like Rivian and Lucid Motors, could eventually have major implications for the automotive industry. Most carmakers and car dealers are making big profits right now because the shortage of new cars has raised prices for both new and used cars. However, car companies and dealers may accept some of the changes introduced by Tesla to win over buyers who are accustomed to buying cars online.

Those who exchanged regular cars in exchange for electric vehicles made by Tesla and the new company said they were happy with the experience and said they would think about buying cars in the same way in the future.

“The easiest, craziest easy purchase of my life,” said Rachel Ryan, who lives near Los Angeles in 2021 about the purchase of a Tesla Model Y. “I bought it while my husband was at work,” she added. “When he got home, I told him he wouldn’t drive my minivan anymore.”

Madam. Ryan said the only problem with the service was the puncture of the tire by a nail. “Tesla came to my house to fix it,” he said. “Any questions I have, I just send them an email, and they’re there in a few minutes.”

Buying online is essential for people who want to buy an electric car made by Tesla, Rivian or Lucid, whose customers can only buy it online and directly from the manufacturer. But online car shopping attracts a large proportion of all car buyers, including those who buy motorized combustion cars through dealerships, said Michelle Krebs, an executive analyst at Cox Automotive.

“Our data shows that consumers want to do more processes online, but most don’t want to completely eliminate the visit from vendors,” Ms. said Krebs. “They wanted the vendor’s experience to be something else, focused on the product, the product features, and a test driver.”

He said some dealers began digitizing part or all of the purchasing process in the early days of the coronavirus pandemic, when exhibitors closed like other retail businesses. In Europe, some motorists have gone even further. Daimler, Volkswagen and Volvo are selling cars directly to consumers or have announced their intention to do so.

U.S. automakers have also said they want to make big changes. Ford Motor CEO Jim Farley said at an investor conference this month that the company’s distribution and advertising costs were about $ 2,000 per car higher than Tesla’s. Sir. Farley said Ford only wanted to sell electric cars online at bargain prices, without maintaining a large inventory of cars at dealerships.

He added that dealerships would remain important but would be “more specialized”. He compared what was happening in the auto industry to the retail business, where the rise of Amazon forced retailers to sell more on the Internet and use physical stores in new ways.

“It’s kind of like what happened between Amazon and Target,” Mr. said Farley. “Target might have disappeared, but they didn’t. They went into an e-commerce platform and then used their physical store to add food and make returns much easier than Amazon. ”

Established automakers are unlikely to eliminate dealerships for another reason: State law often requires them to sell their cars through franchised dealers, and it can be difficult or impossible for automakers to deal directly with customers.

Tesla has lobbied state lawmakers to change the laws governing car sales, and in many places it has gotten lawmakers to sell cars directly to customers to companies and other automakers who have not had a dealership.

But in some states like Texas, where Tesla is now headquartered and has a factory, the company has struggled to persuade lawmakers to change laws and regulations that favor dealers. For example, Texas offers a $ 2,500 rebate to people who buy electric vehicles, but Teslas buyers are not eligible because these cars are not sold by franchised dealers.

The National Association of Car Dealers, which represents dealers, has long opposed direct car sales and called on lawmakers to demand the use of Tesla dealers, which are essential for car dealerships and the local economy. They also said that Tesla’s approach is much less convenient for car buyers and owners.

“We are the face of the manufacturer in every small town in America,” former president of the association Bill Fox told AutoGuide.com in 2015.

The sellers’ association did not respond to a request.

It’s not just salespeople who have criticized Tesla. Some Tesla owners complain that fixing or fixing problems with cars can be a calvary.

The carmaker has about 160 service centers in the United States, which is much less than the more established companies; Chevrolet, for example, has more than 3,000 dealerships nationwide. Tesla is committed to sending a technician to customer homes to make minor repairs, but bigger problems need to be fixed by service center mechanics.

James Klafehn of Ithaca, NY, has a YouTube channel that focuses on electric vehicles and related topics. He bought a Tesla in 2019 and has released videos documenting how difficult it has been to solve various problems as he lives several hours from a Tesla service center.

In an October 2019 video, he was stern about his problems with his Model X sports utility vehicle, including a hole in a panel and an indentation in the door handle. “I’m not excited about making this video. I’m afraid something positive is going to happen,” he said.

Tesla did not respond to a request for comment.

Other owners who live far from Tesla service centers say distance has not been an issue. This may be because electric cars require less maintenance than combustion engine vehicles.

Bill McGuire, editor of Mac’s Motor City Garage, a website for car enthusiasts, said he drove 99 miles from his home in Toledo, Ohio, Clarkston, Mich., To test at a Tesla store and then chose his own. car at a Tesla service center in Columbus, Ohio.

“My first car was an online shopping experience; it was a bit of a surprise and above all a pleasant one,” said Mr. said McGuir. “Some may want their hands a lot more.”

The only problem he found with his Model 3 was the condensation in the taillights. A Tesla technician was sitting, and the backlights were changed in his garage.

Other young electric car companies, such as Rivian and Lucid, have even fewer showrooms and service centers than Tesla. Rivian has 19 in the U.S., and Lucid has just 10, and will open seven more this year. This does not exclude the fact that you have thousands of people booking cars made by both companies.

Like Tesla, the two automakers offer to send technicians to their customers’ homes to make minor repairs, and they say large repairs will be handled at service centers. To dispel the fear that it could be a major mechanical job for buyers, Lucid has come to promise free transportation to the nearest service center for cars in need of major repairs.

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