Tesla’s sales model, with factory-run outlets selling directly to customers, is coming under fire while dealer groups such as NADA are citing the apparent illegality of factory-owned sales outlets.
Dealers are worried that Tesla’s method, which allows for online reservations of vehicles in addition to the shopping mall showrooms, will marginalize their way of selling vehicles. This fear was articulated by Bob O’Koniweski, executive VP of the Massachusetts State Automobile Dealers Association, who told Automotive News
“If a manufacturer sees that Tesla is successful with this kind of business model, who’s to say they don’t break out their own EV product lines and create a separate system that bypasses dealers?…It’s extremely problematic.”
Tesla has apparently bypassed existing dealer franchise laws by offering online reservations if sales cannot be conducted on site. Dealers have asked four states to conduct investigations into the legality of Tesla’s sales model. Meanwhile, the chairman of NADA issued this rather ominous statement
“Tesla may not yet recognize the value of the independent, franchised dealer system, but as its sales increase, NADA is confident it will re-examine its business model…Other companies such as Daewoo did. All companies should be complying with existing laws in the same way dealers are required to.”
Tesla has denied that it is trying to reboot the existing sales model, with George Blankenship, their VP of Sales, telling AN ”That’s the last thing on our agenda.”