In 2019, many car experts claimed that Tesla made a big mistake by deciding to only sell cars online, arguing that no matter what bad feelings people have about dealers, it is crucial to the car trade.
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But this strategy, adopted by Tesla CEO Elon Musk, which combines direct sales with a limited number of dealers and service centers, seems to prove the experts wrong. The company dominates the booming electric car market, although other car manufacturers are struggling to sell cars due to lack of microchips.
Tesla’s approach, which has been copied by young electric car manufacturers such as Rivian and Lucid Motors, could ultimately have major consequences for the automotive industry. Most car manufacturers and dealers currently have large profits, as the lack of new cars has driven up the prices of both new and used cars. Still, they may adopt some of the changes Tesla introduced to appeal to customers who have become accustomed to buying cars online.
People who have traded in traditional cars for electric vehicles manufactured by Tesla and other manufacturers said they were happy with the online shopping experience and would consider buying their future cars in the same way.
Rachel Ryan, who lives near Los Angeles, said buying a Tesla Model Y in 2021 was “the easiest thing in her life.” “I bought it when my husband was at work. When he got home, I told him he would never drive my van again. »
Mme Ryan said the only service issue she encountered was a nail-punctured tire. “Tesla came to my house to fix it,” she said. For questions I have, just send an email and they will be on site within minutes. »
All types of cars
Buying online is a plus for people who want to buy a Tesla, Rivian or Lucid car whose customers can only buy online and directly from the manufacturer. But buying cars online appeals to a large portion of all car buyers, even those who buy gasoline-powered cars through dealers, said Michelle Krebs, executive analyst at Cox Automotive.
Our data shows that consumers want to do more of the process online, but most do not want to completely eliminate the visit to the retailer. They just want the retailer experience to be different – focused on the product, the product features and a test drive.
She said some retailers began digitizing all or part of the buying process in the early days of the coronavirus pandemic, when showrooms closed like other retailers. In Europe, some car manufacturers have gone even further. Daimler, Volkswagen and Volvo sell cars directly to consumers or have announced plans to do so.
American manufacturers also want to make big changes. Ford CEO Jim Farley told an investor conference this month that the automaker’s distribution and advertising costs per capita car was about $ 2,000 higher than Tesla’s. Sir. Farley said Ford would only sell electric cars online at non-negotiable prices without having to have a large inventory of cars at dealerships.
He added that dealers would continue to be important, but that they should become more “specialized”. He compared what is happening in the automotive industry to retail, where the advent of Amazon has forced established retailers to sell more online and use physical stores in new ways.
“It’s a bit like what happened between Amazon and Target,” said Mr. Farley. The target could have disappeared, but it did not. They quickly built an e-commerce platform and they use their physical stores to offer groceries and make returns much easier than with Amazon. »
Established car manufacturers will hardly get rid of dealers for another reason: State laws often require them to sell cars through franchise dealers and can make it difficult or impossible for car manufacturers to trade directly with customers.
Tesla lobbied state legislators to change car sales laws and won many places to allow the company and other automakers that have never had dealers to sell cars directly to customers.
The National Automobile Dealers Association (NADA), which represents dealers, has long opposed direct car sales and has urged lawmakers to require Tesla to use dealers, arguing that dealers are vital to the auto industry and local economies. They also said Tesla’s approach was far less convenient for car buyers and owners.
“Franchise dealers are absolutely critical to the widespread use of electric vehicles in the United States,” NADA spokesman Jared Allen said in an email. And as more traditional automakers enter the electric vehicle market, “selling effectively to these mass market customers requires leveraging – not rejecting – the existing network of franchise dealers,” he said. he adds.
“We are the face of the automaker in every small town in America,” former union president Bill Fox told AutoGuide.com in 2015.
Dealers are not the only ones criticizing Tesla. Some Tesla owners complain that it can be a ordeal to repair or fix their car’s problems.
The automaker operates about 160 service centers in the United States, far fewer than more established companies – Chevrolet, for example, has more than 3,000 dealers nationwide. Tesla is required to send a technician to customers’ homes for minor repairs, but major problems should be handled by service center mechanics.
James Klafehn from Ithaca, NY, hosts a YouTube channel dedicated to electric vehicles and related topics. He bought a Tesla in 2019 and posted videos documenting how difficult it was to get various issues fixed as he lives hours away from a Tesla service center.
In a video from October 2019, he was devastated by problems with his Model X sports utility vehicle, which had a hole in a panel and a tear in a door profile. “I’m not thrilled with the idea of making this video. I dreaded it and hoped something positive would happen,” he said. “Unfortunately, five weeks after the acquisition of the Model X, Tesla’s service experience was very poor.”
Tesla did not respond to a request for comment.
Other owners, who live far from Tesla’s service centers, say distance has not been an issue. This can be explained by the fact that electric cars tend to require less maintenance than petrol-powered vehicles.
Other new electric car manufacturers, such as Rivian and Lucid, have even fewer showrooms and service centers than Tesla. Rivian has 19 in the US and Lucid has only 10 (7 more are expected to open this year). It has not deterred tens of thousands of people from ordering cars from the two companies.
Like Tesla, both automakers offer to send technicians to customers’ homes for minor repairs, saying major repairs will be performed at service centers. To allay the fears of buyers who believe that more mechanical work may turn out to be tedious, Lucid goes so far as to promise free transportation to the nearest car service center in need of major repairs.
This article was originally published in New York Times.