Chad - the last sentence is more referring to what I see as a prevailing attitude amongst participants in the Investor forum. I've been around long enough to look askance any time I sense "It's different this time". That is all. I definitely DO agree with you in believing most sincerely TM is happy to have other automakers dive in.
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ChadS
Last tank of gas: March 2009
Ah. Definitely agreed there. I love Tesla's mission and their cars and I HOPE they succeed; but I see many big challenges for them, including from the existing automakers.
K5ING
MegaMiler
Dealers feel threatened not only because EVs need less service, but because of Tesla's service philosophy. Here's a quote from Elon....
"I've told the Tesla service division that their job is never to make a profit," Musk said. Most auto dealerships make a large portion of their profits from the service department which, Musk pointed out, creates a conflict of interest when it comes to product quality. "I hate the idea of making money because our product broke," said Musk. "That's just wrong."
Tesla offers idiot-proof battery warranty - Apr. 26, 2013
Work meaning taking time to speak with customers. If your sales staff can take 10 min to explain the latest ICE but 30-40min to answer questions about EVs, which would you rather do if you get paid the same? Also, while service may be separate, it is part of the same dealership and if 60% or so of profits come from service which car would you rather sell assuming EVs require less service?
As noted earlier in the thread, I agree.
If the car will sell, you can sell it through dealers.
Silicon Valley Nissan dealers proudly advertise their Leafs, since their Leafs sell well. and Leafs still need some service.
I think it's reasonable for a dealership to expect a certain level of projected sales before they invest in training their sales force and stocking the vehicles.
Silicon Valley Nissan dealers have clearly crossed this level, whereas middle America Ford dealers clearly haven't.
but that's not the fault of the dealers; that's the fault of the vehicles that so far just haven't been sufficiently compelling.
Scott Ales
Member
Just my humble opinion here as a new member who is planning to pick up our S model next Thursday in Tampa.
I am a lifelong car freak. So much so that I entered the car sales industry in 1985 and never left. I have operated highline franchised stores, traded from dealer to dealer all my career, sold new cars in the 80s and 90s, chased and fortunately owned some of the most incredible cars ever produced. I now operate a website that 150 exotic dealers use every day to trade privately. So I do have some basis for making the following statements.
Dealers desire to pay for the entire overhead of the physical location with parts and service. It's referred to as "absorption", if the particular dealer is at 100% absorption the sales department becomes the profit for the dealership. If the parts and service dept. are at 50% absorption this puts an enormous amount of stress on the sales department. So, how would this work? Tesla has it right!
* No cars coming in for service that are 3-20 years old to make money on. (and remember, Mr. Musk is on record that he does not want the service centers to be "profit" centers)
* No parts to sell to none of those 3-20 year old cars.
* Electric cars have substantially less moving and wear parts. I don't know the exact ratio difference but it is certainly LESS! That means LESS revenue for the parts dept.
* Low volume for the next couple years on the sales side.
* AND MOST IMPORTANTLY, NO CONTROL!
As a career dealer guy I completely understand and agree with the Tesla distribution model. It's is yet another testimony to the brilliance behind the company and it's leaders.
I'm converted and don't even have my first car yet!
I am a lifelong car freak. So much so that I entered the car sales industry in 1985 and never left. I have operated highline franchised stores, traded from dealer to dealer all my career, sold new cars in the 80s and 90s, chased and fortunately owned some of the most incredible cars ever produced. I now operate a website that 150 exotic dealers use every day to trade privately. So I do have some basis for making the following statements.
Dealers desire to pay for the entire overhead of the physical location with parts and service. It's referred to as "absorption", if the particular dealer is at 100% absorption the sales department becomes the profit for the dealership. If the parts and service dept. are at 50% absorption this puts an enormous amount of stress on the sales department. So, how would this work? Tesla has it right!
* No cars coming in for service that are 3-20 years old to make money on. (and remember, Mr. Musk is on record that he does not want the service centers to be "profit" centers)
* No parts to sell to none of those 3-20 year old cars.
* Electric cars have substantially less moving and wear parts. I don't know the exact ratio difference but it is certainly LESS! That means LESS revenue for the parts dept.
* Low volume for the next couple years on the sales side.
* AND MOST IMPORTANTLY, NO CONTROL!
As a career dealer guy I completely understand and agree with the Tesla distribution model. It's is yet another testimony to the brilliance behind the company and it's leaders.
I'm converted and don't even have my first car yet!
I don't know, but the local Nissan dealers seem to be making it work.
San Jose CA New Nissan & Used Car Dealer | Premier Nissan
San Jose Area New and Used Nissan Cars | Stevens Creek Nissan serving Fremont, Campbell & Sunnyvale
Fremont CA's Premier Nissan of Fremont | New Nissan & Used Car Dealer in the Bay Area
If there are buyers, the dealers will sell the vehicles.
If there aren't buyers, the dealers won't sell the vehicles.
and as a group, I think we're overly hopeful about the lack of maintenance required on an EV.
roblab
Active Member
I was having trouble following the argument, but that's just me...
I do know that Nissan was, don't know if present or widespread, in CA, trying to "service" the Leafs more often by changing the brake fluid every year. And we know how much those brakes get used on an EV. It was even worse when they tried to tell you that not changing the fluid every year could cause (gulp) death!!! Of course, they know how they build 'em.
Secondly, after driving a RAV4EV for 6 years and having it serviced twice (both just because the odometer rolled over), I have to say that the maintenance concerns was not a hopeful lack. First time, they only rotated my tires. Second time they added an ounce of freon for free, plus gave it the 60K miles checks, with nothing done. There is NO comparison to ICE vehicle maintenance.
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And another price of a car every ten years in fueling it. Tesla looks better and better.
Benz
Active Member
No dealers for the Tesla EV's please.
Tesla Service Centers are a much better option.
Tesla Motors have the right approach for EV's.
Others should learn from their approach.
Tesla Service Centers are a much better option.
Tesla Motors have the right approach for EV's.
Others should learn from their approach.
Scott Ales
Member
Yes, I agree completely with the current distribution model. It is so refreshing!
I also cannot see the need for dealerships owned by various entities that may or may not have the best interest of the company in mind.
The Nissan dealers make it work because they have decades of fossil fuel burning cars to service and make money from. A stand alone Leaf dealership would never support itself.
I also cannot see the need for dealerships owned by various entities that may or may not have the best interest of the company in mind.
The Nissan dealers make it work because they have decades of fossil fuel burning cars to service and make money from. A stand alone Leaf dealership would never support itself.
yeah, it seems to work pretty well for a car buying experience in general.
The only problem is that if you need a car immediately (e.g., your previous car just got totaled), you might not want to wait for Tesla to build one for you. It seems like Tesla is addressing this problem as well, by selling the "loaner cars" out of the service centers.
I think it's a great model for buying cars. and it will be a nice model for servicing cars once the service centers actually have loaners. I'm glad Tesla is revolutionizing how you buy a car in addition to revolutionizing the battery electric vehicle.
I'm not sure how the existing entities can learn from Tesla's approach.
Regardless, I still think dealers will sell EVs if the EVs are desired by consumers.
ChadS
Last tank of gas: March 2009
That is not incorrect, but it is incomplete. Dealers move to sell EVs when they think - perceptions matter more than reality - they can make as much money doing that as they can with gas cars. (Unless the dealership has a lot of free time so there is no opportunity cost involved and they can try anything just for grins; but many dealers in that situation go out of business. All of the ones I have visited have been swamped pushing their gas cars, and most have explicitly told me that is the reason they don't want to bother with EVs). Low perceived demand is one piece of the puzzle; others have been listed so I won't list them again.
The biggest issue is that it's all circular. For well over a decade dealers and automakers have pointed to low demand as a reason to not sell EVs; but they define demand by sales - which can hardly be expected to be high when few places sell them, and some of the few that do try to talk buyers out of them. A lot of consumer resistance is based on - hey, if those newfangled cars are so great, why doesn't everybody have one? Because nobody sells one. They don't sell one because nobody buys one. A big circle that can't be broken until dealers try to sell them, or automakers figure out how to sell around the dealers. Dealers trying to sell EVs is not sufficient to guarantee success, but it is necessary.
I have been very careful to say that things are changing, this is not a problem at every dealership, and that there are ways to overcome it. But the problem of dealers being reluctant to sell EVs has always been a major issue for the industry, and still is. Most dealers still don't sell them at all.
Norbert
TSLA will win
EVs still sell less than 1%.
But for dealers it means supporting another complete technology. Why would dealers want a second technology, if it doesn't offer them any advantages? Only disadvantages? Most of them just don't want it. They don't expect overall sales to increase because of EVs. The only thing that will change their approach is if they find that they lose customers if they can't offer them EVs. But currently, they don't necessarily expect that to happen to any significant degree. They prefer to try sell them an ICE instead.
But for dealers it means supporting another complete technology. Why would dealers want a second technology, if it doesn't offer them any advantages? Only disadvantages? Most of them just don't want it. They don't expect overall sales to increase because of EVs. The only thing that will change their approach is if they find that they lose customers if they can't offer them EVs. But currently, they don't necessarily expect that to happen to any significant degree. They prefer to try sell them an ICE instead.
Benz
Active Member
Scott Ales
Member
In talking with the various dealers we have as members (over 300 of them) I have been amazed at how NONE of them understand this car and what it is capable of. There have been a few S models show up here and there in the wholesale auction lanes but to date that is very rare. At this point the real issue is less of the whole EV discussion and more about financial upside as a dealer. For instance, Audi has a new dealership being built in Orlando for $20mm! How could anyone ever support or justify that kind of investment for a stand alone Tesla dealership. At least for the next few years I do not think the viability is there and I personally hope they never have dealership facilities as we now know them. If it were attempted it would have looked exactly like Fisker. The brand would be sandwiched in with another franchise or two. With no one at the location truly understanding what the company stands for. While the car is amazing, what is equally amazing is the distribution method. It is absolutely as ground breaking as the car. And I applaud all those who have been a part of the development.
Benz
Active Member
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