Tesla Essay

869 words - 3 pages

Business model and US automotive dealership disputes[edit]

Tesla operates stores or galleries[74] [75]-usually located in shopping malls-in 22 U.S. states and Washington DC. Customers cannot purchase vehicles from the stores,[76] [77] [78] but must order them on the Tesla Motors website instead.[79] The stores act as showrooms that allow people to learn more about Tesla Motors and its vehicles. The galleries are located in states with more restrictive dealership protection laws, which prevent discussing prices, finances, and test drives, as well as other restrictions.

Tesla's strategy of direct customer sales and owning its own stores and service centers is a significant departure from the standard dealership model currently dominating the U.S. vehicle marketplace. Tesla Motors is the only automaker that sells cars directly to consumers, with all other automakers using independently owned dealerships.[80] [81] 48 states have laws that limit or ban manufacturers from selling vehicles directly to consumers,[82] [83] [84] and even though Tesla Motors has no independent dealerships, dealership associations in multiple states have filed numerous lawsuits against Tesla Motors, trying to block the company from selling cars in some states. North Carolina and New Hampshire sided with Tesla Motors while Virginia and Texas have taken the opposite position.[85]

Texas currently has the most stringent dealership protection laws, which make purchasing a vehicle from Tesla Motors very difficult in the state. Texas requires all new cars to be purchased through third party dealerships, effectively blocking Tesla from selling cars in Texas. A resident of Texas may still purchase a vehicle from Tesla Motors, but purchasing the vehicle must be handled as an out-of-state transaction. This may result in loans with higher interest rates,[not in...

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