Why the Tesla Sales Model is Bad for Local Economies

There is a bit of misguided loyalty driving popular opinions surrounding the Tesla vs dealers war. It’s easy to take the side of Tesla, which wants to be able to sell its vehicles directly to consumers rather than to adopt the franchise model associated with the American car industry for decades.

Many consumers believe that it’s a superior model, that cutting out the middle man is the best way to get a good deal on a car, and eliminating the hassle of car dealerships that have to make profits of their own is the way to go. Unfortunately, this is a short-sighted perspective.

Dealerships are part of the local communities. They are part of a free-market economy that drives jobs and revenues within these communities. Having the manufacturers sell directly to consumers is a way to centralize the revenue base and pull against the competitive nature of the car business. Dealers competing with other dealers allows for a much stronger opportunity for consumers to get a good deal, but that’s not possible with the Tesla model.

With all of that said, it’s not to say that the Tesla model couldn’t work… for them. As Tammy Darvish from Darcars said, “Our issue is not with Tesla itself, it’s with the model.”

This model should work well for Tesla and its niche. The thing that scares dealerships the most (and that should scare consumers as well) is if the model spreads to other manufacturers. That could spell doom for franchise dealers for those manufacturers, changing the way that companies do business and bringing about a non-competitive model. As has been seen with companies like Saturn, this model simply doesn’t work.

Washington State sent a bill that shoudl be considered an ideal model for other states. In essence, it allows Tesla to run their model while limiting the ability for others to do the same. It protects the current model without limiting Tesla.

According the The Malay Mail Online:

It was a welcome win for Tesla after setbacks in Arizona, New Jersey and Texas, where state officials have blocked the start-up from selling directly to consumers. But auto dealers were happy with the outcome as well, because the bill carved an exception for Tesla while strengthening rules that require other automakers to sell through their stores.

Read More: The Maiay Mail Online