Petition to allow sales of EV's directly to consumers‏

[vetboy45]

Some of you may be familiar with the fact that Tesla has not only created a car that could change the industry forever, they are also attempting to change the way electric vehicles are sold. Traditionally, manufacturers were required to sell their cars through dealers. This requires training a large sales force and setting up franchises etc. All of that takes time and money, the two things a start-up doesn't ever have enough of. It has become increasingly clear that there is very little support for the electric car coming from traditional manufacturers. In fact, they are attempting to stop Tesla from selling their cars in certain states citing these laws as the reason. We need to make sure that those who want to make a change have the best chance we can give them. There is a petition over at the white house to allow manufacturers to sell directly to consumers, cutting out the middle man and increasing their chances of success. http://tinyurl.com/bvcmgjw .

Please sign the petition if you think it's time for a change.

 

[mountaineer]

Auto dealers are very powerful politically—they are often pillars of the community and their sales-tax revenues are locally very significant—so it's hard to imagine a preemptive federal solution. This will be fought out state-by-state. Most states have franchise laws saying that if an OEM ever sells one car through a dealer it must thereafter sell every car through dealers. Some states have even more restrictive laws. It appears the Supreme Court has so far not disturbed these arrangements. Tesla has been careful never to sell a car through a "dealer" (actually it's only a display gallery where no discussion of sales, prices, transactions, etc is allowed) in states with such restrictions. I presume they'll be doing a lot of lobbying and litigation. But their product is profitable to sell the way they sell it, whereas most autos sold by dealers are breakeven or loss-leaders, and the dealers make their money on parts and maintenance (and formerly perhaps on finance).

 

[vetboy45]

Auto dealers are very powerful politically—they are often pillars of the community and their sales-tax revenues are locally very significant—so it's hard to imagine a preemptive federal solution. This will be fought out state-by-state. Most states have franchise laws saying that if an OEM ever sells one car through a dealer it must thereafter sell every car through dealers. Some states have even more restrictive laws. It appears the Supreme Court has so far not disturbed these arrangements. Tesla has been careful never to sell a car through a "dealer" (actually it's only a display gallery where no discussion of sales, prices, transactions, etc is allowed) in states with such restrictions. I presume they'll be doing a lot of lobbying and litigation. But their product is profitable to sell the way they sell it, whereas most autos sold by dealers are breakeven or loss-leaders, and the dealers make their money on parts and maintenance (and formerly perhaps on finance).

I think you really hit the nail on the head with your response. I've never been one to let someone else's position of power stop me so I think it's worth trying. I believe that the loss of maintenance revenue is exactly why a lot of dealers are either discouraging or not promoting their EV's. They're trying to decide how to recoup the revenue. I guess that explains why they will push hybrids over EVs as well. Having recently purchased a tesla and a FFE, the experience with the Tesla was far superior. Here's the price that everyone pays so get the upgrades you can or want vs some negotiation after which, no matter how good a price you may get, you'll feel like they got one over on you.

 

[WindPowered]

Having recently purchased a tesla and a FFE, the experience with the Tesla was far superior. Here's the price that everyone pays so get the upgrades you can or want vs some negotiation after which, no matter how good a price you may get, you'll feel like they got one over on you.

But why would you feel that way? With the existing dealership system, I can shop around to lots of different dealers until I get a price/deal that I find fair.

With the direct sales system, it's take it or leave it.

I'm not for or against either model really, but each has its own pros and cons.


WP

 

[WattsUp]

With the existing dealership system, I can shop around to lots of different dealers until I get a price/deal that I find fair.

With the direct sales system, it's take it or leave it.

I agree, but somehow the dealer system tends to create a much slimier breed of "people" to deal with.

 

[vetboy45]

But why would you feel that way? With the existing dealership system, I can shop around to lots of different dealers until I get a price/deal that I find fair.

With the direct sales system, it's take it or leave it.

I'm not for or against either model really, but each has its own pros and cons.


WP

I just feel that at this point the dealers are a useless middle man trying to get their cut. EVs just require a lot less maintenance so one of the main functions of a dealer is becoming obsolete. The manufacturer gets the same price for each vehicle of a certain model but the consumer pays different prices based on how savvy they are at negotiation? Why not just cut out the middle man and pay the manufacturer what the dealer pays? There is no guarantee that they would keep the charges that low but they would have to determine a price that would maximize sales while maximizing profits.

 

[WindPowered]

 
 
Again, I'm not for or against either position, but since you've taken the direct sales approach, I'll take the dealership model just to offer a counter view.

I just feel that at this point the dealers are a useless middle man trying to get their cut. EVs just require a lot less maintenance so one of the main functions of a dealer is becoming obsolete.

But even electric cars still need maintenance. And who's going to do that? Is the manufacturer going to set up service centers? And is everything there also one universal price? What if I don't like that price?

And how is the cost of setting up and running the service center going to be paid for? You can bet the cost is passed on to the consumer, just like a regular dealership.

So in effect, the service center will be "taking a cut" just like the dealership did, or the manufacturer will roll the cost into the vehicle itself. But either way you're still paying for it.

The manufacturer gets the same price for each vehicle of a certain model but the consumer pays different prices based on how savvy they are at negotiation?

Yes, this is true, but this is also true with everything else you do in life. Your house or apartment, your grocery shopping, heck even your cable TV bill. I don't see a problem with having a choice of where to buy.

Why not just cut out the middle man and pay the manufacturer what the dealer pays? There is no guarantee that they would keep the charges that low but they would have to determine a price that would maximize sales while maximizing profits.

You've presented both sides here, so I won't elaborate too much except to say that you're hoping competition will keep the cost down.

So I ask you, which model has more competition? The model where a handful of manufacturers own everything top to bottom, or the system where thousands of dealers are competing with each other, even amongst the exact same brand?

In summary, the cost of doing business is still there with either model and that cost will be paid for by the consumer, but one model offers less incentive to keep costs down (i.e. competition).


WP

 

[WattsUp]

I don't think this is an "all or nothing" question (one model vs. the other). Both models can and should be allowed to exist. They can compete with each other.

The real question would seem to be: Is it ultimately anti-competitive to have a law prohibiting car manufacturers from selling directly?

In my opinion: Yes. If manufacturer A prefers to distribute and service their cars through a network of dealerships, that should be allowed. But, if manufacturer B prefers to compete with that approach using direct sales, that should be allowed as well. The consumer can and should have the freedom to decide which approach they prefer. Having a law which curtails this freedom would seem to benefit only the car dealerships.

Imagine if food makers were prohibited by law from selling directly to the consumer, and could only sell through specific grocery stores. Nobody would stand for that. Some consumers prefer to buy directly, in return for cost savings and simplicity. Others prefer the store, and are willing to pay the store's overhead, in return for convenience and selection.