Tesla Dealerships to satify Law

[SO16]

For states that have these ridiculous dealership laws blocking Tesla galleries (like Michigan), I wonder if the following is a possibility:
1. Someone start a dealership in one of these states and call it a Tesla dealership. This dealer would ONLY sell Tesla vehicles.
2. This dealer wouldn't be paid as a salary from Tesla. The earnings would be the $1,000 per car sold based on the referral program.
3. Then once Tesla is allowed to sell directly in that state, close the dealership.


Could that work? This might be a really good business to start. I'd love to open a Tesla dealership right in between GM and Ford.

 

[Johan]

No, no, no. If Tesla opened a dealership in a state with these laws, then Tesla would have conceded to the dealership model and be locked to it going forward, just like the legacy auto makers are. Don't for a minute think GM, Ford etc. wouldn't like to get out of the relationship they have with the dealers, but they can't. It's very important that Tesla never makes any kind of franchise deal with an independent dealer, anywhere.

 

[SebastianR]

Could that work? This might be a really good business to start. I'd love to open a Tesla dealership right in between GM and Ford.

Unfortunately no:

1st: Once you have a franchised dealership, all of a sudden a lot of additional states become a problem. There are roughly 3 classes of state laws out there: A) the "real American" states: here any business can compete. Franchised dealer or not, that's up to you. B) The slightly "socialist" states: if you have a franchised dealer anywhere, you can't sell any car yourself. And lastly the C) "Nanny state - big government" states: here crony capitalism and regulatory capture is preventing free market forces from working and Tesla is not allowed to sell their cars since they refuse to pay a corrupt network of middle-men. Once you start having a dealership all the B) states are off-limits to Tesla and the situation is much worse.

2nd: There are all kinds of laws that prevent coming too close to existing dealerships - so I'm not even sure you can just open a dealership smack between GM and Ford in all states.

3rd: the biggest issue I have is that a Tesla Dealership all of a sudden needs to push cars to survive: if the commission is 1000 USD per car, then they need to sell. That's the beauty of a Tesla Gallery or Tesla Store today: you can walk in, ask 10,000 questions and walk out. No high-pressure sales techniques. No "drive it off the lot now!" nonsense, none of the other things that make a regular car dealership in the US just the most unbearably hellish experience you can imagine (I lived many years in the US, even if I'm now in DK - I'm at the point of saying that just to avoid the horrible dealers in the states I would always buy a Tesla - if I had to purchase another car in the US.)

There are many more arguments but in short, I don't think it could work and even if it would work, it would be a bad solution for a horrible problem. I still can't believe that it is easier to buy an all American car in "communist" China than in "capitalist and free-market-loving" Texas.

 

[Fallenone]

Tesla is applying for dealership in MI as of right now.

No, no, no. If Tesla opened a dealership in a state with these laws, then Tesla would have conceded to the dealership model and be locked to it going forward, just like the legacy auto makers are. Don't for a minute think GM, Ford etc. wouldn't like to get out of the relationship they have with the dealers, but they can't. It's very important that Tesla never makes any kind of franchise deal with an independent dealer, anywhere.

 

[SebastianR]

Tesla is applying for dealership in MI as of right now.

Dealership license is not the same as a franchised dealership. Having a franchised dealership is the issue. The rest is fine to deal with.

 

[ItsNotAboutTheMoney]

Tesla is applying for dealership in MI as of right now.

Tesla doesn't mind being able to have its own dealership. It operates dealerships in multiple states. It's the independent franchises they avoid. "Dealer" is often used as a synonym for "independent franchised dealer".

Tesla is applying for a dealership license to operate its own dealerships specifically so that it has grounds to challenge the law in Michigan. They're probably choosing Michigan both because it's the center of US car industry and also because Michigan's laws prevent Tesla from operating service centers. I think Tesla would be satisfied with being able to have service centers.

 

[Fallenone]

Thank you SebastianR and ItsNotAboutTheMoney for clearing this up for me. Not familiar with the difference.

 

[TNEVol]

As has been discussed before, Tesla is applying for a dealership license in MI in order for it to be denied to provide legal standing to challenge the law in Court. There was a full discussion with quotes from Tesla awhile back. As to the referral idea, most states require you to have a dealers license with many requirements to sell cars on commission or anything of value. Check out California's objections to the first referral due to the person making the referral needing to be licensed as a dealer salesman.

 

[ZAKEEUS]

Could Tesla's be sold through Solar City? Would they be considered independent? That would be an awesome name, "Solar City Tesla"

 

[Jxtheone]

For states that have these ridiculous dealership laws blocking Tesla galleries (like Michigan), I wonder if the following is a possibility:
1. Someone start a dealership in one of these states and call it a Tesla dealership. This dealer would ONLY sell Tesla vehicles.
2. This dealer wouldn't be paid as a salary from Tesla. The earnings would be the $1,000 per car sold based on the referral program.
3. Then once Tesla is allowed to sell directly in that state, close the dealership.


Could that work? This might be a really good business to start. I'd love to open a Tesla dealership right in between GM and Ford.

As others have noted, this would not help.

However, what may be helpful is if someone opens up a "regular" dealership and buy 1 or 2 used teslas to have for display. Then be pretty much an advertisement outlet and learning resource for the public. Perhaps have a computer available for people to order a new tesla online. Obviously it won't make you any money, but it seems to be what other dealerships don't want and is preventing Tesla to do on their own.

 

[S'toon]

Unfortunately no:

C) "Nanny state - big government" states: here crony capitalism and regulatory capture is preventing free market forces from working and Tesla is not allowed to sell their cars since they refuse to pay a corrupt network of middle-men. Once you start having a dealership all the B) states are off-limits to Tesla and the situation is much worse.

It's funny you call them that, because they see themselves as exactly the opposite.

Just to clarify a misconception. "Socialism" doesn't mean government regulation.

- - - Updated - - -

Could Tesla's be sold through Solar City? Would they be considered independent? That would be an awesome name, "Solar City Tesla"

My apologies. I didn't get enough sleep last night.
How To Use An Apostrophe

 

[ZAKEEUS]

Well I don't have a link for spotting obvious typos and not be offended like a child.

 

[Red Sage]

OP: Suggested multiple times. States such as New Jersey specifically changed their dealership franchise law to prevent such actions. They literally doubled the prior requirements for showroom size, lot size, and staffing for showroom and service bays so as to make sure the financial outlay would be too great for a third party to take on as an affiliate of Tesla Motors. Basically, you couldn't even have a mall storefront that was vacated by Tesla Motors, then move in as a 'franchise'. They wanted to make sure that if Tesla chose a 'partner' it would have to be one of the established 'independent franchised dealerships' that were already part of the existing cabal.

Personally, I hope that Tesla Motors uses litigation at the Federal level, starting in the next few weeks, to clear up this whole situation well ahead of the launch of Model ≡. All or nothing. No need to demolish the franchise system... Just remove all the restrictions that specifically affect the prospect of Tesla Motors selling direct in every State in the nation. After all... Where is the legislation that limits the number of Apple Stores in a State? Where are the laws that insist that Windows Stores carry Apple products? Where is the outcry that Starbucks is expanding too quickly for Winchell's to keep up? Where is the injunction from Walmart, Target, and Best Buy that Microsoft should NOT be allowed to sell XBOX ONE direct? Tesla Motors can't sell direct in the Great State of Texas, but DELL Computer is based there and STILL sells direct over the internet, even though they also sell through a multitude of retail outlets.