Tesla's Next Auto-Dealer Battleground State: Georgia

cartechboy (2660665) writes [Elon] Musk and Tesla's biggest hurdle in the U.S. has been bypassing conventional dealerships and selling directly to customers. This concept is something that's illegal in many states thanks to a nationwide patchwork of decades-old franchise laws. Tesla's latest battle is taking place in Georgia where dealers allege that the start-up company is in violation of the state's franchise laws. Not surprisingly, Tesla's fighting back. To sell cars in Georgia, Tesla had to agree to sell fewer than 150 vehicles directly to consumers in the state. Last week the Georgia Automobile Dealers Association complained that Tesla sold 173 vehicles. Tesla hasn't publicly commented on how many vehicles it has sold in Georgia. We've seen time and time again how this story ends, and the writing is clearly on the wall for this case. Another bit of writing on the wall, though, as reported by the L.A. Times, is that recent electric car sales in the U.S. have been stagnant.

So much for less government regulation

[smooth wombat]

Isn't Georgia one of those states where a majority of the folks rail against government intrusion and regulations into the private sector?

Must be nice to talk out of both sides of your mouth. Maybe they should get a gig as a sideshow freak.

Re:They are stagnant

[GodInHell]

One of the other articles on the L.A. times is reporting that "U.S. auto sales surge in August to month's highest level in years [latimes.com]" so - it's lies, damn lies and statistics time. Electric car sales fell 0.1% as a proportion of total car sales during a period that included the car sales at the "highest level in years."

Consider also that Tesla is still on back-order status and they are gearing up to release two new models of cars. Other than the Tesla, only Nissan has a pure electric generally available on the market - the Leaf - which sold over 120,000 cars last year. See, Wikipedia [wikipedia.org]. Ford's focus is also out there, but only in select markets.

Shorter: there's only one mass-market electric car on the market. The Tesla Model S, while definitely a beautiful car, doesn't have the production volume to compete in a market share battle - that's not Tesla's bag - yet. The "stagnation" story is more of the knee-jerk car guy rejection of electrics that has been bouncing around in the media for 30 years now.

Re:What is the Tesla strategy?

[hansoloaf]

Because: 1) Dealers sell more than one brand. They will steer the buyers towards other brands if the buyer is hesitant about Tesla. Dealers don't care about one brand loyalty - just want to sell as many as possible in a month. 2) Dealers will definitely try to sell more gas cars as they break down more frequently and the $$$ for dealers is the service dept. They barely make a profit in the sales dept. 3) Tesla has a specific idea on how to do customer experience. Dealers are the worst in this category. Tesla wants to avoid this.

Re:They are stagnant

[MMC Monster]

In other words, electric car sales are stagnant because of a supply problem, not a demand one. They can't produce more cars and they essentially are sold out months in advance.

As a proud owner of a Tesla (6 months and 15K miles so far), I can't imagine buying a non-electric car in the future. I live on the east coast and the supercharger network is built out around me well enough that I don't have any range anxiety at all.

Several friends are looking to see how I do this winter before putting money down themselves. A couple others already put down a ridiculous amount to be on the list to buy a Tesla Model X when it finally hits production.

Dealers should be concerned. If the big auto manufacturers go the Tesla way, dealers won't be making much in service contracts in the future.

Re:Franchise laws = Racket laws

[bigpat]

Originally they were not bad laws, back when there was only 1 or 2 car manufacturers who did not really have to compete, and when there were not many mechanic shops. Now the laws are really just a way to pay middlemen who pay lawmakers.

I think that is probably backwards. These laws would obviously tend to help larger car companies exclude competition. Like many issues of regulatory capture I would deduce that these state franchise laws were actually bought and paid for by big companies like GM, Ford and Chrysler in order to ensure that all those smaller car companies that didn't have robust dealership networks would either be forced out of business or forced to sell out to the big three. It took some serious capital investment and many years to set up dealer networks for Toyota, Honda and other foreign car companies. But they had the backing of their respective countries and large consumer base at home to leverage. Make no mistake these laws may have been passed at the behest of the local dealers, but those dealers were working from the same game plan as the big three.

Re:They are stagnant

[AaronW]

I agree with you. I'm also the owner of a Tesla (18 months, 19K miles). Tesla is constrained by batteries. They can't make them fast enough. There's also a huge demand for the model X with thousands of pre-orders yet it is sight unseen. This is from a company that does no advertizing other than their showrooms.