We have theorized before about the reason Tesla Motors have chosen to sell cars in their own stores instead of using regular car dealerships. As it turns out, Tesla co-founder Martin Eberhard addressed the issue in a 2007 seminar that he gave at the Stanford Technology Venture Program.
Here’s a transcript of the answer he gave to an enquiring student:
The way that cars are sold today is through franchises. And in every single state in the country, the automobile franchises are protected by a very special class of laws. Here in California, there are automobile franchise laws that apply to car dealers and nobody else.
These were created a long time ago when the only way that Ford and General Motors could sell a car is that guy in a plaid suit that would sell to your mom or your grandma or whatever. And that was a deal they cut with the devil: they basically gave away the right to sell their cars forever.
The way the laws work, if we ever sell a franchise to anybody, it’s all over, you can never take it back. If you own a Ford dealership, Ford can not come in to your territory and put a dealership in. Your children have the legal right to inherit that leadership in perpetuity. They can never take it back. They can’t buy you out. They can’t make overture to buy you out. They can’t mess with your financing. Nothing they can do. About the only way they can get your dealership back from you is if you commit some felony. Then, they can come and take it back.
So we’ve decided to sell the cars directly to our customers. And we’re opening stores gradually, slowly as we can afford to around the country to sell the cars and service them. We’re setting up service network to bring our own parts in there. And it’s difficult and it’s expensive but it’s cheaper and easier than sell to an existing franchise. It’s not pretty, but it’s what we have to do.
Wow, this is one more reason why GM, Ford & Chrysler are so crippled: they can’t control their own sell channels.
No comments:
Post a Comment