This post is dedicated to my dad. I learned today that my dad is fascinated by Tesla and has been following the question of whether Tesla is a technology company or a car company. In a sense its both (The amount of patents that Tesla has for the model s is around 150). The companies straight to consumer business style has not made dealers happy. Currently car Dealers in four states are in lawsuits attempting to prevent Tesla from owning sites to sell its vehicles under the belief that giants of the industry would begin to do the same putting the dealers out of business.
The dealers are arguing that they are protecting consumers and some people agree. In North Carolina the state senate unanimously agreed to prevent Tesla from selling straight to consumers. If Tesla secures straight to consumer avenues that the precedent for other car companies to the same emerges. However, its interesting to consider the argument that Tesla isn’t a car company but a technology company. In a way its not easy to argue against a company producing cars with buckets of technology not available on any other model. In the end of the day though the truth is apparent. Tesla is a car company because they are producing cars. If GM tomorrow started selling mangos it would still be a car company too.
So do you think Tesla should be allowed to do this, sell directly to the consumer? I argued in my first post that state regulation forbidding car companies from selling direct to consumer should be abolished because it causes unneeded third party inefficiencies. The only reason these regulations exist is to guarantee the state tax revenue from dealerships (but these taxes could be levied on the
So do you think Tesla should be allowed to do this, sell directly to the consumer? I argued in my first post that state regulation forbidding car companies from selling direct to consumer should be abolished because it causes unneeded third party inefficiencies. The only reason these regulations exist is to guarantee the state tax revenue from dealerships (but these taxes could be levied on the company-owned dealerships.
Read or re-read the handouts from Dicke on why dealerships arose. Today service requirements are less, but providing repairs is still crucial (and electric car purchasers would certainly want to know how that would be handled). Then there’s carrying inventory, taking trade-ins, providing financing – this aren’t trivial issues. If Tesla wants to move to higher volume sales, then I don’t think it can get by without an ability to provide this bundle, and we’ve seen that even a smart, entrepreneurial person such as Scott Simons at Valley Honda has a lot to juggle. The history of “the factory” trying to run dealerships directly is one of repeated, unmitigated failure.
But technology? — yes, Tesla has lots of patents but so does every car company, 150 is not a large number. I don’t think Tesla has anything extraordinary in its vehicles, all companies come up with innovations, and those that can be reverse engineered get patented. Remember, Tesla isn’t the first all-electric car on the road, several others developed cars but were unable to come up with capital to see them through to initial sales – Bright Automotive, Fisker, and others. Don’t forget too that Nissan has an all-electric car, as does Mitsubishi. GM has the Volt, which is already an old design (an is an extended range vehicle, with a gasoline motor that runs a generator but doesn’t drive wheels). We’ll see what’s next for GM in a year or two, when the Volt is due for a replacement.