Tesla Forces The Automotive Industry To Rethink How It Sells Cars

In 2019, many automotive experts said Tesla was making a serious mistake by deciding to sell cars online only, arguing that any negative feelings people had about traders were relevant to the automotive business.

But the strategy, which was adopted by Elon Musk, Tesla’s chief executive, and combines direct sales with a small number of stores and service centers, seems to prove the speakers wrong. The company dominates the fast-growing electric car market even though some manufacturers are struggling to sell cars due to a shortage of computer chips.

Tesla’s technique, which has been copied by other young electric car manufacturers like Rivian and Lucid Motors, could ultimately have a significant impact on the automotive industry. Many car manufacturers and car dealers are making huge profits right now because the shortage of new cars has increased the prices of new and used cars. Still, car companies and dealers may be forced to adopt some of the changes that Tesla has introduced to win over buyers who are accustomed to buying cars online.

People who have traded in conventional cars for electric cars manufactured by Tesla and newer companies said they were impressed with the experience and will consider buying future cars in the same way.

“The simplest purchase of my life, very simple,” Rachel Ryan, who lives near Los Angeles, said of her 2021 purchase of the Tesla Model Y. “I bought it for my husband while he was at work,” she added. “When he got home, I told him he would never drive my little car again.”

Bi. Ryan said the only problem with the service he had was a flat tire. “Tesla came to my house to fix it,” he said. “Any questions I have, I just send an email, and they respond within minutes.”

Buying online is a must for people who want to buy an electric car manufactured by Tesla, Rivian or Lucid, whose customers can only buy online and directly from the manufacturer. But buying cars online attracts a large number of all car buyers, even those who buy cars with combustion engines through retailers, said Michelle Krebs, chief analyst at Cox Automotive.

“Our data shows consumers want to do more online process but many do not want to remove the seller’s visit altogether,” she said. Krebs said. “They just wanted the vendor’s experience to be something else – product-focused, product-based and experimental.”

He said some retailers have started setting up some or all of the shopping process in the early days of the coronavirus epidemic, when the exhibition rooms were closed like other retail businesses. In Europe, other car manufacturers have gone even further. Daimler, Volkswagen and Volvo sell cars directly to consumers or have announced plans to do so.

American car manufacturers have also indicated that they would like to make major changes. Ford Motor chief executive Jim Farley said at a investors’ meeting this month that the cost of supply and advertising for the company per car was around $ 2,000 more than Tesla. Bw. Farley said Ford wanted to sell only electric vehicles online at unbeatable prices without putting a large number of cars into retailers.

He added that marketing will remain important but will have to be more “special”. He likened what is happening in the automotive industry to the retail business, where the rise of Amazon forced retailers to sell more online and use branded stores in new ways.

“It’s kind of what happened between Amazon and Target,” he said. Farley said. “The target could have left, but they did not leave. They locked themselves in an e-commerce platform, and then use their regular store to add vegetables and make revenue easier than Amazon.

Authorized automatic manufacturers are not likely to end business for another reason: Government regulations often require them to sell cars through authorized dealers and may make it difficult or impossible for automotive manufacturers to deal directly with customers.

Tesla has persuaded state legislators to change the rules governing car sales and has found lawmakers in many areas to allow companies and other car manufacturers who have never had dealers to sell cars directly to customers.

But in some states such as Texas, where Tesla now has its headquarters and factory, the company has tried to persuade lawmakers to change laws and regulations that favor businessmen. For example, Texas offers a $ 2,500 discount for people who buy electric cars, but Teslas buyers are not eligible because the cars are not sold by authorized dealers.

The National Automotive Dealers Association, which represents dealers, has long opposed direct car sales and has urged lawmakers to urge Tesla to use dealers, saying the sale is important for the automotive industry and the local economy. They also said Tesla’s approach is not very convenient for car buyers and owners.

“We are the face of a manufacturer in every small town in America,” Bill Fox, the party’s former chairman, told AutoGuide.com in 2015.

The Chamber of Commerce did not respond to a request for comment.

It is not just businessmen who have criticized Tesla. Some Tesla owners complain that repairing or repairing problems with their vehicles can be problematic.

The automobile factory operates about 160 service centers in the United States, which are much smaller than the more established companies – Chevrolet, for example, has more than 3,000 dealers across the country. Tesla promises to send a technician to customer homes for minor repairs, but major problems have to be addressed by mechanics at service centers.

James Klafehn of Ithaca, NY, is renting a YouTube channel that covers electric vehicles and related topics. He bought Tesla in 2019 and has published videos showing how difficult it has been to solve several problems because he lives several hours away from Tesla service center.

In an October 2019 video, he was grieving over the problems of his Model X sports car, which included a hole in the panels and an addition to the air conditioning door. “I’m not happy about making this video. I’ve been scared expecting something positive to happen,” he said. “Unfortunately after five weeks of ownership of the Model X, Tesla’s service experience has been very poor.”

Tesla did not respond to a request for comment.

Some owners living far from Tesla service centers say distance has not been a problem. That may be because electric vehicles require less maintenance than combustion engines.

Bill McGuire, editor-in-chief of Mac’s Motor City Garage, a car enthusiasts website, said he had driven 99 miles from his home in Toledo, Ohio, home to Clarkston, Mich., For a test at a Tesla store and later picked up his car. car at Tesla service station in Columbus, Ohio.

“It was my first experience of buying a car online – it was amazing and especially interesting,” Mr. McGuire said. “Some people may want to hold hands more.”

The only problem he faced with his Model 3 was compensating for the rear lights. Tesla sent a mechanic, and the back lights were replaced in his garage.

Some young electric car companies, such as Rivian and Lucid, have exhibition rooms and fewer service centers than Tesla. Rivian has 19 in the United States, and Lucid has only 10, with seven more scheduled to open this year. That has not stopped tens of thousands of people from storing the cars manufactured by the two companies.

Like Tesla, both car manufacturers are committed to sending technicians to customers’ homes for minor repairs and say major repairs will be done at service centers. To alleviate buyers’ fears that a major mechanical operation could be a problem, Lucid reaches the point of promising free transportation to his nearest automotive service center in need of major repairs.

Leave a Comment