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5 Reasons Why Tesla Doesn't Use Dealerships

it's been a really tough year for Tesla

Elon Musk called it the worst year in

his career after having to sleep in the

factory working 100-hour weeks to solve

model 3 production issues who was you

that or Tesla died it all paid off

though Tesla reported a record earnings

report in October and it made its third

ever quarterly profit but unlike the

other quarters at 312 million this was a

big profit this marked a turning point

Tesla delivered over fifty six thousand

model series making it the top-selling

sedan in US by revenue by sales volume

it was fifth the model 3 is an amazing

car but another factor driving its

success a direct-to-consumer sales

process unlike other car makers Tesla

doesn't use franchise dealerships and

instead owns and operates all of its

stores here are five reasons why there's

a fundamental problem with dealerships

for Tesla viewers wouldn't benefit from

selling them but Tesla being low volume

in the beginning a dealer would have to

start by selling Tesla's alongside other

brands before opening a dedicated store

this creates a small problem if a

prospect walked into a dealership that

had ten models but only one was electric

it would be like having a vegan option

in a steakhouse when selling the

advantages of an electric car you must

under selling else unless a customer

only wanted a Tesla it would make no

sense for a salesperson to explain the

benefits if it had to undermine its nine

other models inventory a second problem

is that dealers make most of the profits

from service and electric cars require a

lot less maintenance Plus Tesla enables

its cars to be updated over the air when

model 3 launched there was a problem

with its ABS system affecting braking

performance but is simple over-the-air

update fixed it if that were any other

car the manufacturer would have to

recall all the vehicles and pay the

dealer to fix them and human labor is

not cheap

since dealers are owned and operated by

a third party the manufacturer has

little control over who's in charge and

ultimately the entire experience each

store has a different owner with

different processes on how things like

customers are greeted how test drives

are conducted or how negotiations are

handled each dealer even has its own

unique website by owning all of its

stores Tesla has complete control it

does the hiring the firing and

ultimately every store of all is the

same procedures and there's only one

website dealerships got their dealership

nickname for a reason it's a middleman

that takes us bigger profit as it

possibly can

they're very profitable and the staff

are well paid the car salesperson

averages 48,000 a year in the US the

sales manager averages over a hundred K

a year and the general manager trumps

all of that and of course there's an

owner who gets the biggest cut of all at

Tesla the salespeople get about thirty

to forty K or in the store manager only

about 70 K since Tesla owns its stores

there's no middleman taking profit thus

giving it an extra cost advantage over

the competition Tesla believes that

everyone who buys their car should pay

the same price even if you're an

employee

there's known let me ask my manager

price or only for today price it's one

price when you go to the website what

you see is what you get for other cars

getting a final prices and very easy you

have to negotiate or call multiple

dealerships and get multiple quotes in

fact it's so difficult that a company

called true car was formed which is

basically just another middleman to help

people get final price of a car it's

kind of silly the last reason is that

Tesla stores don't really compete with

each other ask a Honda dealer who its

number-one competitor is and it will

tell you that it's the next closest

Honda dealership not the Toyota or Ford

dealership across the street shoppers

these days know what they want so

dealers have to compete in order to earn

their business in the end the

salesperson is trained on how to make

deals today rather than on product

explanation at a Tesla store priority

one is educating customers since each

store is owned by Tesla and since

salespeople are paid by hourly it

doesn't really matter what store the

customer buys the car at this alleviates

a lot of the pressure experienced at

dealerships and a lot of customers

appreciate this it's why it's so much

easier to visit a Tesla store versus a

dealer and that's five reasons why Tesla

doesn't use dealerships if you guys

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