Unlike other carmakers, Tesla doesn’t use franchise dealerships and instead owns and operates all of its stores. here are the five reasons why Tesla Doesn’t use dealerships.
Electric Cars (EVs) Don’t Benefit Dealers
There’s a fundamental problem with dealerships for Tesla. dealers wouldn’t benefit from selling them. but Tesla being low volume in the beginning. a dealer would have to start by selling Tesla’s alongside other brands before opening a dedicated store.
This creates a small problem. if a prospect walked into a dealership that had ten models are ICE, but only one was electric. it would be like having a vegan option in a steakhouse. when selling the advantages of an electric car, you must undersell everything else.
Unless a customer only wanted a Tesla, it would make no sense for a salesperson to explain the benefits if it had to undermine its other car models in the inventory.
Full Control of Customer Experience
Dealers make most of the profits from service. but electric cars, especially the Tesla vehicle models require a lot less maintenance. plus, Tesla enables its cars to be updated over the air.
When the Model 3 launched, there was a problem with its ABS affecting braking performance. but the Tesla engineers fixed this ABS problem in Tesla Model 3 with an over-the-air update. owners just had to update the vehicle software and the problem was fixed in no time. if that were any other car, the manufacturer would have to recall all the vehicles and pay the dealer to fix them. and human labor is not cheap.
Since dealers are owned and operated by a third party, the manufacturer has little control over who’s in charge and ultimately the entire experience. each store has a different owner with different processes on how things like customers are greeted, how test drives are conducted, or how negotiations are handled. each dealer even has its unique website.
by owning all of its stores Tesla has complete control. it does the hiring the firing and ultimately every store of all is the same procedures. and there’s only one website.
Dealers are a Costly Middleman
Dealerships got their dealership nickname for a reason. it’s a middleman that takes us bigger profit as it possibly can. they’re very profitable and the staff is well paid. the car salesperson averages $48,000 a year in the US .the sales manager averages over $100k a year. and the general manager trumps all of that and of course, there’s an owner who gets the biggest cut of all. at Tesla, the salespeople get about $35,000 or in the store manager only about $70k. since Tesla owns its stores no middleman is making a profit. thus giving it an extra cost advantage over the competition.
One Price for All
Tesla believes that everyone who buys their car should pay the same price. even if you’re an employee, there’s known let me ask my manager price or only for today price. it’s one price. when you go to the website what you see is what you get. for other cars getting a final price isn’t very easy. you have to negotiate or call multiple dealerships and get multiple quotes. in fact, it’s so difficult that a company called true car was formed which is just another middleman to help people get a final price of a car. it’s kind of silly.
Tesla Stores Don’t Need to Compete with Others
The last reason is that Tesla stores don’t compete with each other. honestly, there is no such competitor to run with Tesla.
Ask a Honda dealer who its number-one competitor is, and it will tell you that it’s the next closest Honda dealership. not the Toyota or Ford dealership across the street. shoppers these days know what they want so dealers have to compete to earn their business. in the end, the salesperson is trained on how to make deals today rather than on product explanation.
At a Tesla store priority, one is educating customers. since each store is owned by Tesla and since salespeople are paid hourly it doesn’t matter what store the customer buys the car at. this alleviates a lot of the pressure experienced at dealerships and a lot of customers appreciate this. it’s why it’s so much easier to visit a Tesla store versus a dealer.
