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  • Writer's pictureAmanda Jaffe

Tesla Wants to Bypass Car Dealership Entirely

When someone buys a car, they usually go through the process of research, test driving, negotiating with the dealer, before finally buying a new car. However, Elon Musk wants to change all of this, and dealerships are not happy about it. In many states, direct manufacturer auto sales are outlawed. Franchise laws state that cars must be sold only by independent sellers. These laws were put in place in the 1930s, when automobile manufacturers started to use independently owned dealerships to take pressure away from retail and selling and maintenance. The laws continue to be in effect and defended, even when cars can be bought online. The enforcement of the law makes sure that dealerships don’t have to compete against an automobile manufacturer opening its own dealerships. All of this means that the buyer ends up paying more because dealerships need to make a profit, and dealers are working off commission. In 2000, a study stated that a buyer would save on average $2,000 on a $26,000 car.

Elon Musk has managed to get around dealership laws in order to benefit his company and the consumer. Tesla currently has 130 stores nationwide, many of which are in shopping centers, which is not a typical place to sell cars. However, Musk does this on purpose as he calls these stores showrooms for people to learn about the company and not buy a car necessarily. In states where stores aren’t even allowed, Tesla has a traveling showroom. Then, one can buy a Tesla from their phone. Unlike the typical car buying experience where the buyer goes back and forth with the dealer on the price of the car, Tesla’s prices are non negotiable. Additionally, the Tesla showroom workers aren’t working on commission, but are there to help customers. If buying a car online isn’t good enough, Tesla offers a seven day money back guarantee. The point of all of this is to make buying a car a consumer friendly experience. There is no more haggling with the car salesman who, as soon as you come into the store, tries to sell you something. Many researchers predict car dealerships will become a thing of the past.

The way these dealerships make most of their money is not from car sales, but servicing these cars. Every car needs to be serviced, and some cars have especially expensive specific parts that only the dealership can provide. Because of this, dealerships charge a significant amount of money to service cars, and consumers have to oblige because there is no other option. Tesla cars need far less servicing because they are all electric. In turn, car dealerships keep pushing to get Tesla banned from selling in their state to try and prevent profit losses. For example, the Texas Automobile Dealers Association (TADA) has many strong political connections, and has made passing new legislation impossible. They want to make sure their dealerships profit by hurting the consumer and the environment.

Banning Tesla and in the future other electric car companies from selling directly hurts the environment because there is then a lack of access to buy these all electric vehicles. Buyers must go out of state to pick up their vehicle, one that is actually better for the environment unlike gasoline cars. The states that have promised to limit their carbon emissions and work against climate change are also the ones banning Teslas from being sold. People from organizations such as TADA prioritize putting money in their own pockets over protecting the Earth and its future.

Despite the strong lobbying by delaship organtzions, the future of buying cars is heading online and is going to be direct from car manufacturers. Shopping for cars will be just like shopping online for clothes, but maybe a bit more expensive. However, the money part will be a little different, for there is talk of using bitcoin to buy cars. Some dealerships have already started using bitcoin as a form of transaction, saying it’s a good marketing strategy. Tesla has just bought $1.5 billion in bitcoin and plans on accepting bitcoin as payment. This movement towards bitcoin and cars is changing the way cars are bought even more.

Elon Musk has made forward progress in getting Teslas sold directly to consumers; however, his battle with many states is far from over. Despite what the dealerships say, Musk is actually looking out for the consumer and the environment by selling direct. Soon, dealerships and cars salesmen will be obsolete and buying a car will be as normal as buying something off Amazon.


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