Tesla Refutes Dealership Model At FTC Auto Distribution Workshop

Tesla Motors wants to sell their vehicles directly to consumers. There have been rumors that the automaker will eventually pursue a hybrid dealer distribution model, however for the time being, they are firmly set on direct consumer sales.

Tesla Motors argued their right to sell directly to consumers in Washington D.C. at an FTC “auto distribution,” workshop Jan. 19. Tesla Motors General Council, Todd Maron, spoke on behalf of the automaker about why the automaker doesn’t sell their vehicles though dealerships.

According to BuzzFeed, Maron provided the following reasons as to why Tesla right now doesn’t make use of a dealership network:

Dealership Locations. Tesla has a different location strategy than dealers.

Inventory Differences. Tesla builds cars when they’re ordered.

Different Sales Strategies. Tesla sales can take hours of education.

Different Profit Models. No Insurance, Financing or F&I products to sell.

Different Advertising Strategy. Tesla doesn’t advertise.

Tesla argues direct sales keeps prices lower than they would be if they sold though dealers since they say dealers simply mark up the price.

Tesla all vehicles should be electric, so they wouldn’t want to share a lot with gas-powered machines.

Maron also said General Motors is the reason for the franchise dealer system. Speaking at the FTC workshop Maron said, “With respect to General Motors, their position boils down to this: Because they voluntarily chose generations ago to use a certain business model, [the company feels] everyone that comes after should be required as a matter of law to use the same model.”

On the other side of the argument was MaryAnn Keller, managing partner of Maryann Keller & Associates and recent speaker at DrivingSales Presidents Club. Keller told the FTC audience, “There are simply costs associated with the distribution of objects that weigh 4,000 pounds, occupy 50 square feet of space and are sold to consumers with varying needs including trade-ins, credit issues, etcetera. What promoters of the direct sales model fail to recognize is that same-brand dealers vigorously compete with each other for the benefit of consumers.”

Tesla appears to have dug in their heels against selling though dealerships. Do you think they will ever change their mind and work with dealers? If Tesla did decide to work with dealers, would you want to sell Tesla vehicles at your store?