By Stuart C. Siegel
Tesla’s electric vehicles are often described as disruptive to the motor-vehicle industry, and understandably so. The U.S.-based company’s all-electric vehicles are well designed, transparently priced and environmentally friendly, and the company is setting high standards for other car makers to follow.
Tesla’s sales model is disruptive, too. The company has never been part of the auto dealer-franchise system that is now entrenched in the modern marketplace. This direct-sales strategy has irked Virginia’s car dealer lobby, but it’s indisputably good for the car-buying public.
And that’s precisely the measure by which existing Virginia law allows for a car manufacturer to sell directly to consumers, rather than through a designated middle man. The commissioner of the Department of Motor Vehicles has the authority to allow Tesla to operate its own store in the Richmond area, and he should approve the company’s application.
Tesla already operates a store in Tysons Corner, where I serviced my all-electric Model S sedan and more recently purchased a Model X. The experience, like the car, was unlike any other I’ve encountered because the company is committed to educating customers about the vehicle and its innovative technology, rather than rushing to make a sale.
Since opening that store, Tesla has witnessed more demand elsewhere in Virginia. In a free market, a company should be able to make its own business decisions about how and where it serves its customers. Tesla wants to do so by opening a showroom and service shop in a vacant furniture store at Broad Street and Stillman Parkway. Henrico County’s Board of Supervisors has approved the company’s use of the site, and county officials recognize the potential for Tesla to help revitalize that area, bolster the local economy and create dozens of new jobs.
The Virginia Automobile Dealers Association has overreacted by trying to block Tesla’s application. The lobbying group, long known for doling out hefty campaign contributions, has been spreading false information for months in an underhanded attempt to manipulate regulators and legislators. The association even filed a lawsuit against Tesla and the DMV. The case, and every allegation made by VADA, was recently dismissed by a circuit judge in Fairfax.
VADA exists, above all else, to protect dealer franchises. Its claim that Tesla shouldn’t be allowed to sell directly to the public because independent dealers want to sell Tesla products is a clear signal that the lobbying group’s argument has crossed into fantasy.
Dealers must make a profit to stay in business. An independent dealer can’t profit off Tesla sales because few, if any, car buyers would pay a dealer’s marked-up price when they could walk out of the store and order the car for the lower, fixed price available at tesla.com. And dealers wouldn’t be able to recoup a profit on the back end through pricey service needs because, unlike a combustion-engine vehicle, a Tesla has no oil, gasoline or traditional transmission. Its battery pack carries an eight-year, unlimited-mile warranty.
Numerous studies and news reports have shown traditional car dealers offer a less satisfying consumer experience than Tesla. Some also were found to steer buyers away from electric vehicles and into gas-powered cars, even when those buyers expressed interest in purchasing an electric vehicle.
That’s particularly worrisome for a growing manufacturer such as Tesla. Its Model S has racked up industry awards, and its Model 3, a smaller sedan set to start at $35,000, will begin production next year.
Sales staff must be able to answer questions with specificity and accuracy about a Tesla’s innovative technology, batteries and warranties, charging and maintenance, and other incentives, none of which is applicable for the sale of a gas-powered vehicle.
And unlike the bigger manufacturers, Tesla doesn’t make gas-powered vehicles that customers can be diverted toward on a dealer’s lot and still record a sale. The company is exclusively focused on building powerful, stylish, electric cars, and helping consumers learn about them and find the proper model is its mission.
Industry research and Tesla’s own track record suggest the company can sell its cars more effectively, and at a lower cost, than traditional car dealers, and it can give customers the service and attention that they deserve. Hopefully that can happen soon in Richmond.
Stuart C. Siegel is a Richmond resident and Tesla owner.