Tesla Motors, Elon Musk’s electric car company, is seeking to redefine the automotive industry in more ways than just producing the most advanced emission-free vehicles on the road. The company is well known for its advanced technology in high powered mobile batteries, a network of ‘supercharger’ stations to quickly recharge a Tesla vehicle during long trips, (somewhat controversial) autonomous driver aids, and recently solar power storage for people’s homes. Less widely known is the company’s sales model which is completely different than any other automotive manufacturer’s in the country.
The traditional sales model for cars is a network of independent dealers that contract with certain manufacturers who sell cars to them wholesale. The dealers have full control over pricing, financing and incentives while generally providing maintenance services as well. These vast dealer networks are generally loather by consumers who find the process of purchasing a new car to be somewhere between a hassle and a nightmare. Contrary to all industry trends, Tesla has engaged in a direct sales method, where customers can only purchase a new Tesla from the company’s website. The only brick-and-mortar facilities the company owns are small stores, generally located in shopping malls in high-income areas, where a prospective buyer can go to see the car, learn about it from the company’s agents, and even schedule test drives. However, these stores are not engaged in closing deals, but function more as marketing and brand awareness. This is a fantastic example of the rise of non-sales selling. No orders are taken, no deals are closed, but these stores and the employees who work there are instrumental in selling the idea of Tesla as a company and the merits of its vehicles to consumers.
The elimination of a traditional dealer network is appealing to many consumers, especially the technologically-inclined demographic interested in purchasing a new Model S sedan, Model X crossover, or upcoming Model 3 compact. Buyers generally report a hassle free process and appreciate not needing to deal with competing dealer incentives and car salespeople, who for right or wrong posses a stereotype of being pushy and abrasive.
Unfortunately, most of the news regarding Tesla’s revolutionary car buying experience has focused on legal battles and lobbyists rather than the success and popularity of the model. Some states have passed laws that have effectively outlawed selling Tesla vehicles within their boarders by requiring automotive companies to sell through their dealer networks. So far, Musk and his company have stuck to their guns and eaten any lost profits from restricted selling protocols. Interestingly, but not at all surprisingly, these restrictions have been heavily supported and lobbied for by independent dealers and General Motors, a company that seems to believe in resorting to political influence, straw-man advertising, and according to Al Oppenheiser, chief engineer for the current-generation Camaro, a top to bottom guiding principle in the company “to beat the s*** out of anything that Ford puts on the road” will prove to be a sustainable method for selling cars in today’s environment.
It is only appropriate to praise Tesla for its commitment not only to designing and building undeniably groundbreaking and high quality vehicles but also for its resolve in finding a sales process that spares its customers from the hassle of dealing with dealers pushing to meet quotas, providing poor service, and marking up prices in order to profit on the margins. They have developed and implemented a system unlike any other manufacturer which focuses on providing the best buying experience for the people who will decide if the (currently quite unprofitable) company will become economically viable. Now about that Model 3 concept that promises to make Tesla’s EV technology to those otherwise considering a fully loaded Honda Accord, in addition to current offerings which compete with the likes of a BMW 7-series or Porsche Cayenne…
BoweryJE22
I am not a huge car person and my knowledge lack in the area. This was a really interesting and informative post. Great work!
Wow, this is actually fascinating. I’m encouraged to hear that Tesla isn’t budging on their resolve. It doesn’t surprise me that they are revolutionizing both industries at once–heck, as long as you’re going big, you may as well go bold. Their unwillingness to be swayed by political opposition and red tape communicates their genuine desire to serve customers–they obviously believe in the value of eliminating the pain of the middle-man, and that dedication to a mission is going to powerfully benefit their brand value.