Tesla Loses Direct Sales Fight In Connecticut And North Carolina

For the second year in a row, Tesla has lost its bid to sell its automobiles directly to customers in Connecticut, thanks in large part to fierce opposition from General Motors. Prospects were brighter for Tesla this year. Legislation allowing the company to open direct sales stores in Connecticut had the support of senate majority leader Bob Duff and Antonio Guerrera, co-chairman of the house transportation committee. “Tesla is prepared to make a real and lasting commitment to Connecticut,” said Will Nicholas, Tesla’s government relations manager. “We want to invest here. We want to create jobs here. And we want to serve Connecticut customers.”

But it was not to be. At the last moment, a full court press orchestrated by General Motors caused an agreement among Connecticut’s Democrat party members in the legislation fell apart. “Without an agreement I couldn’t bring it to a vote in the Senate,” said Duff, who vowed the revisit the issue next year. “New car dealers and GM are powerful lobbyists,” he said.

Representative Guerrera told the CT Post, “It was my impression that the Senate was trying to work this out among the members of the Democratic caucus. In light of the economic situations we’re enduring right now, I think that it’s a great opportunity for us to enhance a new business like Tesla to come to the state.”

Late Monday afternoon, Tesla put a new proposal on the table. In exchange for permission to sell direct to customers in Connecticut, it said it would construct a regional distribution center in the state. The facility would add 150 jobs paying between $40,000 and $100,000 a year. Each of the three proposed company stores would add another 25 good paying jobs within Connecticut. The offer came too late, however.  Senator Duff told Fox News late on Monday that Tesla could have put the proposed distribution center idea forward months ago if it was truly serious. Tesla must now wait until next year to try again in Connecticut.

Meanwhile, a similar drama is playing out in North Carolina, where once again a powerful lobby of franchise dealers is doing everything in its power to block Tesla from selling direct to customers in the Tar Heel State. According to CleanTechnica, race car driver and Tesla owner Leilani Münter submitted written testimony to North Carolina officials, pointing out that 93% of residents say they are in favor of Tesla being able to sell direct to them. But once again, it appears the dealer’s association has enough political muscle to keep legislation favorable to Tesla from passing.

What are dealers so afraid of? For one thing, they have billions of dollars invested in their franchises and are worried that Tesla will put them out of business. The truth is, Tesla very well may do precisely that. The irony is that franchise dealers have shown a stunning disinterest in selling electric cars. They are pedaling furiously to protect a business model that is out of date. Like the dinosaurs, they are already dead. They just don’t know it yet.

Chevrolet says it is working hard to get its dealers on board. But why is it like pulling teeth? Why would GM work so hard to protect people who show little or no interest in selling the products the company makes? Someone smarter than me will have to answer that question. In the meantime, Tesla is going full speed ahead with its plans to bring the Model 3 to market. It is so confident about its new car, it says it will be selling a half million cars a year by 2018 — two full years sooner than its previous expectations.

What is happening in state legislatures around the country proves beyond a doubt that most local politicians could care less about the public interest. Their only interest is in staying in power and reaping the largest campaign contributions possible. The will of the people be damned.

Sources: CT Post and CleanTechnica.  Photo credit: Leilani Münter

Musk Loses: Tesla Giving Up on Direct Sales Model

After bitter courtroom battles and a brutal stare-down of dealership lobbying groups across the country in a bid to establish a unique (in the auto industry) direct-to-customer sales model, it looks as if Elon Musk has blinked first, if his comments on Autoline Detroit last week are to be taken at face value.

“We may need a hybrid system,” explained Musk, in answer to an Autoline question about scaling up his fledgling car company. “… a combination of our own stores, and some dealer franchises.” (emphasis mine).

If it happens, it would be a stunning turnaround for both Tesla Motors and Elon Musk, who have built a rabid following and loyal customer base in part because of its radically different approach to selling cars and the transparency and customer access afforded by the lack of a franchisee/middle-man. You can read more about Musk’s apparent surrender in the article, below, which originally appeared on Cleantechnica.

Tesla Going The Way Of Franchise Dealerships? Elon Musk Hints, Yes!

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Elon Musk touting the idea of franchise Tesla dealerships? Sounds about right, doesn’t it? Wait- what!?

In a rather surprising comment — but, I guess he makes those a lot, doesn’t he? — Musk recently noted that as Tesla continues to expand it may need to utilize franchised dealerships, in addition to its Tesla Stores.

That’s a bit of a turnaround for Musk — and a bit humorous considering how hard the dealerships have been fighting against Tesla — but I guess that there’s some logic there. Once Tesla begins selling the Model X, and more importantly the Model 3, the potential is there for huge growth — perhaps a mixture of franchising and direct sales would be the right choice?

The comment was made in a recent face-to-face interview with Musk conducted by Autoline Daily’s John McElroy. Here’s McElroy’s summation of the question: “When I asked him if he could really scale up his retail model in all 50 states of the US and asked how they would handle maintenance and repairs. Musk admitted that relying exclusively on company stores probably was not enough.”

Here’s Musk’s exact words: “We may need a hybrid system, with a combination of our own stores and some dealer franchises.”

Some ambiguity there, but the comments do square up with those made by Tesla’s Legislative Director Jim Chen last year at an industry meeting.

“In a closed door regulatory meeting in fall 2013, two witnesses cited Tesla’s Legislative Director Jim Chen who told a room full of industry stakeholders Tesla only means to sell factory direct until it reaches an undefined minimum volume threshold,” Hybrid Cars notes. “At the time it was unclear whether Chen/Tesla meant such a thing, but this otherwise confirms what dealer associations have said, namely, that Tesla cannot likely grow the whole business to support Model 3 and beyond to the scale it wants with all that on its shoulders.”

With the release of the Model X fast approaching, I guess that we’ll probably find out sooner rather than later if there’s anything to these comments.

Source | Images: Autoline Detroit, Hybrid Cars, via Cleantechnica.