Tesla’s $60,000-plus electric car is a terrible idea – as a commercially viable consumer product. But the way Tesla sells (well, tries to sell) its cars is a fantastic idea. A revolutionary idea. And so, a very dangerous idea. To the entrenched interests.
You know – car dealers.
Here’s why:
Tesla does not have dealerships. Not in the traditional sense, at least. There are no franchises. You want a Tesla? You just buy one – directly, from Tesla the company. Go online, pick what you want – and place your order. That’s it. There is no “middle man” – in the words of Tesla Vice President Diarmuid O’Connell. And thus, no mark-up. No salesman’s commission. No “dealer prep.” No “advertising fees.” No bullshit. At least, not insofar as the transaction is concerned. You buy a Tesla the same way you buy an iPad.
This has made the National Automobile Dealers Association (NADA), the political lobby for car dealerships, angrier than a wet tomcat. NADA has sicced the lawyers on Tesla for daring to simply sell cars directly to consumers. They regard this as an affront – a crime – that must be enjoined by state lawmakers.
In North Carolina, a bill in the works would make it illegal to sell a car online. Can you imagine that? The black clad ninjas may be headed Tesla’s way – not for ripping off taxpayers by forcing them to subsidize the making of economically untenable electric cars – but for how they are sold.
In some states – Texas, for instance – laws prohibit “factory-owned” dealerships. Tesla’s lawyers have been trying to end-run this, but so far no luck. Virginia has a similar law on the books, which it used to deny the company a license to open a direct-to-the-consumer store there, too.
The dealer organizations say this all about – wait for it – protecting consumers. That franchised dealerships are essential because without them, customers would not have the “support” they need. “Buying an iPad is not buying a car,” NADA’s David Hyatt told NPR.
And of course, he’s right. When you buy an iPad, you don’t have to haggle over its price or negotiate a maze of complicated terms and conditions designed to separate you from as much of your money as possible – the entire process maestro’d by a professional sharpie who knows his business like Al Capone knew his business. Car salesmen are not there to “help” you. They are there to make a living off you. Some do provide a service in that they explain the car’s features and so on. But the bottom line is they have a vested interest that’s not in your best interests because of the way the system is structured. If it were not for the commission model – if salesmen were salaried employees whose paycheck did not directly depend on selling you a car – then NADA’s complaint would be less obnoxious, perhaps.
But only somewhat less obnoxious.
After all, why is it any business of the Goon Squad – you know, the government and its bullyboys – how you buy a car? Or how Tesla – or anyone else – sells the thing? Provided there’s no theft or fraud, provided it is a free exchange between consenting parties, it ought to be none of the Goon Squad’s business at all. Why can’t there be both franchised dealers – for those who prefer to do business that way – and direct-to-customer operations like Tesla? Why not, in other words, allow the free market to do its thing? If the franchised dealership system is better – for customers – it will be just fine. If Tesla’s idea stinks, it will sink.
