Many show rooms closing… Now what?

[Babaron]

Many show rooms closing is the word. Does that also mean the service centers will be closing with them? If so, will Tesla be subcontracting all the service to other non Tesla Service centers ? What about the Tesla mobile truck? Will it become history too?

 

[Peteski]

There is no plan to close any service centres, quite the contrary!

 

[bob_p]

Tesla is going to increase investment in service centers and customer support, which will be easier to do with the cost savings with the store closing.

The biggest impact will be on the ability to get a test drive prior to placing an order - something we've done prior to purchasing all 3 of our Tesla vehicles - and that's something Tesla could do from their service centers or going back to a travelling test drive event.

One of the interesting aspects of this - by shifting all sales online, Tesla is completely bypassing the roadblocks the dealership lobbies have tried to use to shutdown Tesla sales. If Tesla is successful doing this (we've purchased 3 Tesla vehicles online, without a local store, because Tesla can't direct sell in Texas), they'll demonstrate how little value the dealerships actually provide during the purchase process, especially once you've eliminated the price haggling the dealerships use to give your a "good price".

Rather than spending a lot of $$$ adding new stores and supporting the current stores, at a fraction of the cost, Tesla can make improvements to their website for sales and customer support, including features like online chat or teleconference to provide better support.

In the long run, this change should be a good thing for Tesla's customers.

 

[ewoodrick]

Show rooms only have shown cars and are often are in malls. Even in a showroom, when you order a car, you do it online.

Service Centers and Delivery Centers will stay around.

 

[Babaron]

Ok. What about the law in Ohio that says no car dealership can sell cars in Ohio unless there is a brick and mortar business also located in Ohio with a physical address? Perhaps they will keep one showroom open in states like these?

 

[BridgeMojo]

Ok. What about the law in Ohio that says no car dealership can sell cars in Ohio unless there is a brick and mortar business also located in Ohio with a physical address? Perhaps they will keep one showroom open in states like these?

It seems like the wording of the law would become critical. You say "no car dealership ...." Tesla is a manufacturer, not a dealer. They have no dealerships, only store fronts. There's no third party. I think it will take a judge to parse out that language.

 

[neroden]

Ok. What about the law in Ohio that says no car dealership can sell cars in Ohio unless there is a brick and mortar business also located in Ohio with a physical address? Perhaps they will keep one showroom open in states like these?

The wording is specific. If Tesla sells a car over the Internet to a customer in Ohio, Tesla may well be selling the car "in California". And charging California sales tax. The courtesy delivery does not affect this if the title changes hands in California. (This is basically what Tesla already does in Texas.) As such, Ohio law is inapplicable!

 

[docbrown]

I'll just add, being a Texas buyer, I didn't pay CA sales tax. I paid TX sales tax. I do know that most of the steps of the transaction could not be done in Texas. Scariest part was having to pay in full before they would even ship the car from CA. But it went very smoothly, including doing a trade-in online, and just dropping it off when I picked up the Tesla at my local service center.

 

[powaking]

Its possible we may see new service centers opening as they push to increase the service aspect of the business. The other issue I see with online ordering is what about those off menu items like sunroof/pano? How will those items be addressed?

 

[Blup85]

Bought two tesla sight unseen. Have always known 10 times more than the 20 year old new recruit at the "showroom" attached to the service center. Closing the Sales office attached to the service center will mean diddly... and will make more room for the service center
High traffic areas where you want to display the vehicles make sense.. that probably wont change.

 

[jegs]

I think it's the beginning of the end of Tesla's autonomy. Sales Will suffer. They need a dealership network to scale this thing. I look for a merger, buyout or bankruptcy in the near future.

 

[BridgeMojo]

I believe they need third party authorized service badly.

In this day and age, I don't think they need third party sales at all.

 

[bob_p]

For those in states where Tesla has been able to do direct sales, I can assure you, after purchasing 3 Tesla vehicles online in Texas, that this isn't a big deal.

The sales tax is paid in the state where you accept delivery. If you accept delivery in your home state, the sales tax will be paid to that state.

If you wanted to pick up your car in California, then things get much more complicated. You have to pay the CA taxes to pick up the car, and then will likely have to pay taxes again when you register the car in your home state. We looked into that for our X purchase last summer - and decided that was a really bad idea...

The local Service Center will handle all of the delivery issues. The only big change is that you may not be able to pay them for your vehicle, and will be required to make your payment through the Tesla website or your mobile app - and not give a check to the Service Center. Otherwise, they should be able to handle everything else, including inspections, ordering license plates, sales tax, ...

Tesla will have to work out the test drive issue - because some customers will want to do a test drive before ordering or before delivery.

The process for returning a vehicle will also be challenging for Tesla. They require customers to pay for a vehicle before taking ownership. The same will be true when returning a car back to Tesla - the owner will expect to walk away with their $$ once Tesla has the vehicle, so they'll be able to go across the street and buy a vehicle from another source.

This is the direction the auto industry is going. New companies are shifting to used car sales online (like Carvana). Even our local dealerships are beginning to sell their new & used vehicles online.

The stores were a short term solution - especially useful when there were few Tesla vehicles on the road. From a business standpoint, it makes sense for Tesla to avoid the additional costs of the stores - and will put even more pressure on the other manufacturers to produce EVs competing with Tesla on price, performance, range and features.

 

[SucreTease]

The sales tax is paid in the state where you accept delivery.

Not true. It is generally paid in the state where it is registered. I picked up my Tesla in Nashville, but I live in Alabama and had to pay sales tax when I registered it in Alabama.

 

[RDoc]

My opinion on this is that the biggest issue by far is test drives. The notion of returning the car within 7 days seems like an absurd solution to me. Just to start with, what happens with any loans taken out to pay for the car? What about the registration? If you've already sold your previous car, then what?

That said, arranging a robust test drive system seems quite doable. It could be delivery or service center based for example. There are lots of independent service outfits that also sell used cars and somehow they do test drives without a huge staff.

 

[Rogue Synapse]

Many show rooms closing is the word. Does that also mean the service centers will be closing with them? If so, will Tesla be subcontracting all the service to other non Tesla Service centers ? What about the Tesla mobile truck? Will it become history too?

Babaron, is your avatar CJD? Anoxic injury? Some sort of cortical laminar necrosis going on there.

 

[Tatzi'sWorld]

I would like to know as well. Maybe we have some insider answering ...

 

[Russell]

From the Tesla blog...

"Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected. Over the next few months, we will be winding down many of our stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers."

"At the same time, we will be increasing our investment in the Tesla service system, with the goal of same-day, if not same-hour service, and with most service done by us coming to you, rather than you coming to us. Moreover, we guarantee service availability anywhere in any country in which we operate."

$35,000 Tesla Model 3 Available Now

 

[bob_p]

Not true. It is generally paid in the state where it is registered. I picked up my Tesla in Nashville, but I live in Alabama and had to pay sales tax when I registered it in Alabama.

It may be a state-by-state thing. When we checked about factory delivery for registration in Texas, we were told we would have to pay the California taxes (which are higher) before we could drive the vehicle and when I checked in Texas, and then have to pay taxes again when we registered in Texas. I don't recall the details but we decided not to do it because it would have ended up costing us a lot more $$$ (not counting the one way air fare and hotel costs for the drive back).

 

[Ostrichsak]

It may be a state-by-state thing. When we checked about factory delivery for registration in Texas, we were told we would have to pay the California taxes (which are higher) before we could drive the vehicle and when I checked in Texas, and then have to pay taxes again when we registered in Texas. I don't recall the details but we decided not to do it because it would have ended up costing us a lot more $$$ (not counting the one way air fare and hotel costs for the drive back).

I think he misunderstood and was likely explained improperly given Tesla's proven track record of advisers who don't know the most basic of concepts of which they're supposed to be experts.

When you buy out-of-state the selling dealership will collect your state sales tax on the amount you paid on your behalf. When you go to register your car back in your state you will find that what you owe (state, county & city sales tax) will be less by this amount if your DMV rep explains it properly. So you're not paying CA tax at the time of delivery but they may require a certain amount of "state tax" at the time of delivery... they just failed to explain what tax you were paying and what was happening with that money.

This is how it works in every state. You pay tax for your city, county & state if they require it and NOT that of where you bought the car from unless it happens to be in the same city, county and sate but you don't pay twice.