Possible Dealer Network In The Near Future?

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Jay79

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#1
I know this has been discussed before but with the current volume Tesla has been at and the soon to be ramp up with the Model Y what do you guys think the possibility of Tesla opening up Franchise opportunities in the next year or two. What do you guys think?
 
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BigBri

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#2
Near if not 0% chance. The business has been built from the ground up as a manufacturer to consumer model. The only thing I could see them doing is perhaps certifying dealerships for used cars. There have been some signs recently they're not overly interested in their own used cars as the volume has been pretty high from the short lease options they offered a few years ago and they've been using third parties to get rid of the cars.
 

Jay79

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#3
Near if not 0% chance. The business has been built from the ground up as a manufacturer to consumer model. The only thing I could see them doing is perhaps certifying dealerships for used cars. There have been some signs recently they're not overly interested in their own used cars as the volume has been pretty high from the short lease options they offered a few years ago and they've been using third parties to get rid of the cars.
So you think they can sell an deliver a million cars with the current method? Cause they struggled real bad with a fraction of that number.
 

TrevP

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#4
Certainly they're experiencing "delivery hell" which over time will get smoother but you also have to consider, if they go down the franchise route there's no going back if it doesn't work out.

 

Madmolecule

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#5
Either Tesla needs to determine how to add value to something or let someone els handle it. I put up with a horrendous delivery experience for an exceptional vehicle. It was nice ordering it online and not having to deal with the local dealer salesman, but right after I ordered it, I realized that I had no advocate or salesman that was going to get a commission off of my satisfaction. No one cared and everyone I spoke with, which was difficult in itself, wanted sympathy from me for how busy they were and how Tesla was a different kind of company and buying experience. If they can't become a revolutionary in delivery or service, I would prefer tp purchase my next one from Jay's Tesla Emporium and Service Center.
 

SR22pilot

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#6
I hope Tesla never allows dealerships. There was a paper out of Yale that showed how much cost a dealership model adds to the final price of a car. It isn't small. When you see that lot full of cars at a dealership think carrying cost. Think that there is a millionaire owner who wants his rich reward form the dealership. BTW, he deserves it. He risked his money to build the dealership. I just don't want to be the person contributing. Dealerships say they represent the public against the automaker. I have NEVER found that to be true. Instead I have been in the middle with the dealer saying the auto manufacturer should pay and the manufacturer saying it was a dealer issue. I am waiting for there to be enough Tesla owners in Texas that Texas politicians begin to fear them more than they fear the dealers. The perversion of capitalism by politicians who are supposed to be devoted to free markets and "let the best man win" economics sickens me.
 

SR22pilot

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#7
Either Tesla needs to determine how to add value to something or let someone els handle it. I put up with a horrendous delivery experience for an exceptional vehicle. It was nice ordering it online and not having to deal with the local dealer salesman, but right after I ordered it, I realized that I had no advocate or salesman that was going to get a commission off of my satisfaction. No one cared and everyone I spoke with, which was difficult in itself, wanted sympathy from me for how busy they were and how Tesla was a different kind of company and buying experience. If they can't become a revolutionary in delivery or service, I would prefer tp purchase my next one from Jay's Tesla Emporium and Service Center.
My experience has been the opposite. I had big headaches getting a change correctly put through but people were nice and trying. I don't see how interjecting a salesman would have helped. It never has in the past. The actual delivery experience has been wonderful (twice) with patient and caring people working hard to make things go well. Similarly the sales experience has been night and day different. The last ICE car I bought got down to me writing the owner and all upper management in the dealership to get them to honor a supposed guaranteed quote. I was lied to and when I picked up the car I was treated by one person rather rudely. When I asked to have a very small mark fixed he said no and that I had gotten a great deal and should just go. My girlfriend's car had an issue. Do you think the salesman got involved? I doubt he hardly remembers her. Ford and the dealership went back and forth pointing fingers. We picked up Kim's Tesla last night. They stayed open several hours after closing helping us and others. She says she loves the people there. Considering the crazy amount of cars being delivered vs. the size of the facility and number of employees, I am surprised how well it went. Tesla has big growing pains right now but a dealership model won't solve them.
 

Dan D

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#8
My experience has been the opposite..............Considering the crazy amount of cars being delivered vs. the size of the facility and number of employees, I am surprised how well it went. Tesla has big growing pains right now but a dealership model won't solve them.
I agree with both sides. But, like you, I had essentially a spotless order and delivery experience (aside from the 906-day wait). It would be really really nice to know, of the 125,000-ish deliveries so far, how many were THUMBS UP, and how many were THUMBS DOWN. It's a bigger poll than just this forum.
 

Jay79

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#9
I hope Tesla never allows dealerships. There was a paper out of Yale that showed how much cost a dealership model adds to the final price of a car. It isn't small. When you see that lot full of cars at a dealership think carrying cost. Think that there is a millionaire owner who wants his rich reward form the dealership. BTW, he deserves it. He risked his money to build the dealership. I just don't want to be the person contributing. Dealerships say they represent the public against the automaker. I have NEVER found that to be true. Instead I have been in the middle with the dealer saying the auto manufacturer should pay and the manufacturer saying it was a dealer issue. I am waiting for there to be enough Tesla owners in Texas that Texas politicians begin to fear them more than they fear the dealers. The perversion of capitalism by politicians who are supposed to be devoted to free markets and "let the best man win" economics sickens me.
You paid all those cost to Tesla already...lol

1. Destination Charge
2. Doc Fee
3. Minimum 1 hours to talk to someone on the phone who isn't qualified to answer your questions

Oh and absolutely 0 negotiation on price, so how is it you are okay with that.

Or, the dealership charges you those fees and in return they give you a dedicated sales staff to answer all your questions, a selection of cars to choose from on the lot with minimal delays, a car that has been detailed and not rushed at delivery ( mine was scratch to high heaven) and the possibility to get a better deal. How many people have tried to call their SC with no luck? Does anyone enjoy waiting months if not years for their cars? Now ramp up Tesla manufacturing by a factor of 10, think they can build enough SC"s to make it work?

Everyone is paying STICKER PRICE for their cars...lol I just cut a guy a deal at $600 below dealer cost, just today.

But the dealerships are the bad guys, got it ;)
 

Madmolecule

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#10
To improve delivery Tesla just bought some diesel trucking companies. This is where Elon is focusing a lot of his energy. I am not sure keeping total control of the delivery process or any processes that Telsa does not add any value too, makes since. I am currently negotiating for some company trucks with dealers and it is extremely painful. I along with everyone hate car salesmen, but Tesla just eliminated the salesman with out adding additional value or cost savings. I paid $1,000 to have my factory dented new Tesla delivery to me. This was not a good value for me. I have yet to see a Tesla employee go above and beyond. I believe the people that say it happened to them and I am confident that S/Xs got that level of treatment, but I would wager that the the majority of the hundred of thousands of 3 owners do not feel the delivery experience was exceptional and they had all the information they need prior to making a purchase of this magnitude.
 

FRC

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#12
Why do you think the nationwide dealership model has fought so hard against Tesla's direct-to-consumer model? Because they want their cut of the pie. And their cut either reduces Tesla's gross margin or increases the cost to the consumer, no way around it. Do the inconveniences of the direct-to-consumer model outweigh the abuses of the dealer model? I don't know. But time and the consumer will tell.
 

PNWmisty

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#13
Those of you who think the recent poor delivery experiences would be remedied with a dealer network need to consider the same issues would be present assuming the same astounding growth rate. Legacy dealerships have had stagnant volume and their products change slowly over time, relative to Tesla's.

No one has ever done this kind of growth rate at these volumes in the auto industry before. There will always be growing pains when hiring so many new individuals and developing procedures that can scale with exponential growth. Its not as easy as some of you like to make it sound. Our economy doesn't help with what's basically full employment and so it's not always possible to hire the best talent to achieve your goals.

Heck, it can be difficult to hire a competent electrician or plumber. Some of them mount the 14-50 outlets upside down. It's not like this is a new or difficult thing. Imagine running an organization growing and expanding at the rate of Tesla. Things will improve with time.
 

iChris93

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#14
I just cut a guy a deal at $600 below dealer cost, just today.
I'm asking because I do not know... why would you sell it $600 below dealer cost? Were you already losing money on it? Expecting to make it back in service/financing?
 

Jay79

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#15
being a shareholder, I'd rather 100% of the profit go to Tesla instead of a being shared with a dealership who could care less if they are selling a Tesla or a Chevy.
As a share holder, one would think you would care more about rapidly scaling the amount of units sold exponentially and far more exposure, rather than worrying about the the small fees. By the way, every penny of the destination fees goes right back to the OEM, they always get their money. Triumph charges us 495 for freight, we charge 500.
 
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JasonF

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#16
I would be more in favor of Tesla building a direct-to-customer delivery system, and leaving the showroom and service bays to sales and service. Forget about the old ways; we live in an era where Amazon is the biggest retailer in the world, and yet they can arrange delivery of even very large things like generators. There's no reason to think that can't be done eventually with cars.

If Tesla does need the help of an outside party for deliveries, I believe it would be better for them to partner with several logistics companies - maybe even Amazon itself.

The problem isn't that the independent dealers are the "bad guys", it's just that Tesla doesn't need help selling cars. That's what makes an independent dealer money, not delivering them. So their interests really don't line up at the moment.
 

Jay79

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#17
I'm asking because I do not know... why would you sell it $600 below dealer cost? Were you already losing money on it? Expecting to make it back in service/financing?
Because we are making room for more inventory, and by our agreement we have to carry new model year inventory even though we have the identical bike in stock already. This gives our OEM a guaranteed amount to manufacture and ship every year, plus any additional models we may order on top to have a variety of colors etc... All dealers also have a set time frame to sell their units before they start paying interest, so its in our best interest to give a great deal on certain models so we can pay them off. We are also building a customer base, this individual was a first time Triumph buyer so we rolled out the red carpet for him. We do hope he has service with us and buys parts and accessories of course.

Tesla would make the rules, and we would have to abide by them to the letter, its not a democracy.
 

Jay79

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#18
I would be more in favor of Tesla building a direct-to-customer delivery system, and leaving the showroom and service bays to sales and service. Forget about the old ways; we live in an era where Amazon is the biggest retailer in the world, and yet they can arrange delivery of even very large things like generators. There's no reason to think that can't be done eventually with cars.

If Tesla does need the help of an outside party for deliveries, I believe it would be better for them to partner with several logistics companies - maybe even Amazon itself.

The problem isn't that the independent dealers are the "bad guys", it's just that Tesla doesn't need help selling cars. That's what makes an independent dealer money, not delivering them. So their interests really don't line up at the moment.
I agree with a lot of what your saying, although I believe if Tesla could afford it, they would absolutely break their cars out to single line Tesla dealers. They can not afford to take a reduced margin currently with the enormous infrastructure plans they have. My belief is once it's economically viable, something along the lines of a single line Tesla Dealer will happen with a unique set of parameters in place.
 

SR22pilot

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#19
You paid all those cost to Tesla already...lol

1. Destination Charge
2. Doc Fee
3. Minimum 1 hours to talk to someone on the phone who isn't qualified to answer your questions

Oh and absolutely 0 negotiation on price, so how is it you are okay with that.

Or, the dealership charges you those fees and in return they give you a dedicated sales staff to answer all your questions, a selection of cars to choose from on the lot with minimal delays, a car that has been detailed and not rushed at delivery ( mine was scratch to high heaven) and the possibility to get a better deal. How many people have tried to call their SC with no luck? Does anyone enjoy waiting months if not years for their cars? Now ramp up Tesla manufacturing by a factor of 10, think they can build enough SC"s to make it work?

Everyone is paying STICKER PRICE for their cars...lol I just cut a guy a deal at $600 below dealer cost, just today.

But the dealerships are the bad guys, got it ;)
I'll start with price negotiation. I guess you prefer the bazaar model where everyone haggles. You buy something to have your friend tell you how he got it at a better price. I would like all dealers to just price the product and let me decide what I want based on price. If Tesla is too high and someone else makes a better product that is cheaper I will buy that. I had a guy in sales at a dealership tell me why I was better off looking to the dealership like an internet buyer. He said they knew those guys would shop so they had to put their best price forward. He said the locals (their neighbors) had to haggle down from sticker and rarely got as good of a price. In other words, screw you neighbor.

For a given price, X, the dealership has to take their portion. Now Tesla has to take some of that too to support their sales and delivery centers. However, there is no owner taking a big cut. In Texas, the dealership owners keep Tesla at bay by donating about $2M/year to state politicians. They didn't get that money to give away by making minimal profits. I challenge you to show me any study that shows how adding a middle man reduces costs.

TANSTAAFL A dealer can't sell below his real cost without making it up somewhere else or he goes out of business. Often the dealer cost isn't the true cost to the dealer since there are volume rebates. I do believe that most dealers sell near their cost hoping to make it up on service.

Tesla has great margins on their cars and yet no one else matches them. The closest is Jaguar but the iPace is less efficient than claimed. When there is a better value I'll go there.

I have yet to have a mainstream car salesman impress me with the knowledge of his product. I have known salesmen in other areas who were extremely knowledgeable but not mainstream cars. Ferraris yes. Chevys no.

Keeping cars on a lot is nice for the consumer. However, it isn't price efficient.

If the dealer model is so much better then let Tesla sell direct and watch Tesla fail. If the dealerships feel their model is better then let the open market decide. John Stossel commented that what is going on in Texas is either socialism or crony capitalism and he didn't know which was worse.

Dealerships are a protected class in most states. They have inheritance laws that don't apply to other businesses. It is time they be treated like any other business and that we allow open competition and get rid of special treatment laws.

For a more academic (and less emotional) discussion I suggest reading State Franchise Laws, Dealer Terminations and the Auto Crisis. It is from 2010 but goes through the history and the economics of dealerships.
 

Madmolecule

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#20
I dont think anyone is advocating for the current dealer model. Lousy taxis created Uber. The current car manufacturers and dealers created Tesla. I just think tesla should either add value to it, or leave it to someone else. This I believe will only enhance the stock value. I don’t think Tesla should mine the ore that makes the steel and aluminum in their cars because it would add no value. It has been a big learning curve for Tesla to learn to rely on their vendors in the model 3 ramp up. I think they now know they can’t do everything. I don’t like the haggling, but I would love to truly shop around and purchase the vehicle from the dealer that offers the best price and service.