NC Becomes Latest State to Threaten Tesla's Direct Sales to Customers
May 14, 2013 11:33 AM
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Bill sponsor received $8,000 in campaign donations from the North Carolina Automobile Dealers Association
Living in the
Research Triangle Park
(RTP) area of North Carolina, which I nickname Silicon Valley East, I quite frequently see Tesla Model S sedans and Roadsters silently cruising down city streets and interstates. However, the North Carolina Senate Commerce Committee unanimously approved a measure that would make it
illegal for Tesla Motors to sell vehicles directly to customers
without the ever-present "middleman" in new car transactions: car dealerships.
Not surprisingly, the NC Automobile Dealers Association (which represents North Carolina's franchised car dealership) is behind this latest stab at Tesla. But according to NC ADA President Robert Glasser, this isn't an attack specifically aimed at Tesla. Glasser notes that the precedent Tesla has set for direct sales could set into motion a chain of events that would topple the entire dealership model of business.
“We care about the franchise system,” said Glaser. “The whole point of the retail system is to protect the consumer.”
Of course, Tesla Motors sees things quite differently. “They’re trying to insulate the dealer franchise model from any competition,” said Diarmuid O’Connell, Tesla’s VP of Corporate and Business Development. “It’s a protectionist move to lock down the market so we have to go through the middleman – the dealer – to sell our cars.”
And here's an interesting tidbit that shines a whole new light on the story.
reports that Sen. Tom Apodaca, the Republican sponsor of the bill, received $8,000 in campaign donations (the maximum allowed by state law) from the NC ADA.
It's pretty clear to see why dealerships are shaking in their boots at the prospect of Tesla (and other auto manufacturers) selling directly to customers. Tesla managed to deliver a whopping
4,750 Model S sedans to customers during the month of April
. Compared to other luxury sedans that also dance in the $70,000 to $100,000+ price range, the Model S outpaced monthly sales of the Audi A8 (1,462 units), BMW 7-Series (2,338), Lexus LS (2,860) and Mercedes S Class (3,077).
Tesla Model S
Tesla has sold 80 Model S sedans in North Carolina and has an additional 60 orders in queue from residents. The overwhelming majority of those sales have come via the internet.
And one could argue that an electric vehicle like the Model S needs less attention from dealerships due to the much lower maintenance needs of the electric motor and battery pack. Quite simply, there is potentially less to go wrong with a Model S compared to BMW 750i with its twin-turbocharged V8 and 8-speed automatic transmission.
Despite this new speed bump in Tesla's road to electric vehicle proliferation, the company has been showered with a wealth of good news in the past week. Last week, Tesla reported its
first profit in its ten years of existence
gave the Model S a
near perfect rating
: 99 out of 100 possible points.
stock is up 57 percent
since its quarterly earnings were released last Thursday to just under $90/share.
This article is over a month old, voting and posting comments is disabled
5/14/2013 8:31:57 PM
I bought the very first Nissan GT-R in Houston in 2008 for MSRP, a car that had way more appeal and demand than the ZL1. Sure, most people paid over sticker at first, but I didn't because I shopped around and scored a deal. That is how the free market works. If everyone just settled and bought products for the price they were told then the free market would fail, but consumers care about price and do shop around and price rises and falls accordingly.
Th ZL1 is a specialty car, if that dealer was able to mark up ALL of their inventory then obviously something would be amiss. It is not a monopoly when one product is prices over the
retail price, it is the market correcting itself. If dealers can sell the ZL for that markup it is because that is what buyers are willing to pay because it has high demand and a low supply.
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