Tag Archives: Tesla

Tesla Motors: Attacked by Dealers on Multiple Fronts

by Katie Fink –

While Tesla Motors is not the only electric vehicle (EV) manufacturer, the company may be the most effective in terms of gaining publicity for itself as it attempts to transform an industry.

The Tesla Model S
The Tesla Model S
Credit: Tesla Motors

Named after Nikola Tesla, the father of alternating current, Tesla Motors launched in July of 2003 and has since delivered over 15,000 electric vehicles to eager customers in over 31 countries. Its initial model, the Roadster, was released in 2008 and was the first litium-ion battery-powered, highway-capable all-electric vehicle in mass production in the United States. Production of Tesla’s second model, the Model S, began in June of 2012 as a more accessible full-sized sedan and alternative to the Roadster.

Exceptional Quality

Tesla made a splash in the EV market not only because its CEO, Elon Musk, is a founder of famous entrepreneurial ventures including PayPal, Space X and Solar City, but also because of the high quality standards and innovative business model Tesla has established.

Consumer Reports recently rated the Tesla Model S a 99 out of 100 in innovation, performance, and attention to detail (a 99 is the highest score available for a car). Indeed, the Model S easily topped direct luxury competitors such as the Porche Panamera and the Fisker Karma, another luxury electric vehicle.

The Model S is also noted by Consumer Reports as the most practical electric car on the market with its 85-kWh lithium-ion battery that is capable of taking the car 200 miles before needing a charge. Its closest competitors in terms of range are the Ford Focus Electric and Nissan Leaf, which require more frequent charges with ranges between 75 and 80 miles, respectively.

Even with the longest range of any other electric vehicle, Tesla recognized the need for charging infrastructure for long distance driving. To solve this problem, the company has installed 21 Supercharging stations, some incorporating solar photovoltaics, between cities along well-traveled highways.

Charging stations are clustered in 6 groups, in the following cities and towns:

  • Northwest: Centralia, WA; Burlington, WA; and Woodburn, OR, all on I-5
  • California: I-15, I-105, I-5, US Route 50, Fremont Blvd, and 101 in Barstow, Los Angeles, Tejon Ranch, Buellton, Atascadero, Harris Ranch, Gilroy, Fremont, and Folsom
  • Texas: Waco and San Marcos are connected by I-35
  • Midwest: Rockford, IL and Normal, IL
  • Florida: Port St. Lucie and Fort Myers
  • Northeast: Milford, CT; Darien, CT; and Newark, DE are all along i-95.

While it is technically possible to recharge a Tesla at any charging station, regardless of brand, it is currently impossible to drive from coast to coast using only Tesla Supercharging Stations. Tesla anticipates that by 2015 every Supercharging Station will be within driving range of another for more, near seamless recharging. A map indicates current and planned charging stations.

These stations can provide half a charge in 20 minutes and are free for all equipped Model S vehicles for the lifetime of the car.

Attacks from Conventional Dealers

Tesla has come under attack by conventional auto dealers and dealer organizations for everything from misleading advertising to accusations of breaking the law.

Specifically, Tesla has drawn dealers’ ire as it has refused to adopt the traditional automobile franchise route, choosing instead to sell direct to consumer, just as Apple has done, and succeeded, in the consumer technology market with its retail stores.

Tesla claims it must do this because car buyers are uncomfortable with pushy salesmen, and dealers tend to be prejudiced against electric cars due to the longer sale cycle and education required with each customer. However, many dealers see this direct-to-consumer approach as a direct threat to their existence.

lndeed, through what are known as franchise laws, many states have rules forbidding carmakers from selling their cars directly to buyers. Instead, all vehicle sales must go through a licensed dealership franchise. Originally these laws were developed because of the capital-intensive nature of storing, marketing, and servicing cars and to address dealer concerns about foreign manufacturers overtaking American brands. However, Tesla points out, because of the franchise system, distribution makes up about 30% of a car’s final price, making car buying more expensive for consumers than buying direct from the factory.

Illegal in Texas

State laws that protect dealerships from competing with manufacturers have challenged Tesla’s expansion and car dealership associations in New York and Massachusetts have threatened to sue Tesla for selling their wares directly to the customer. Because of these policies, anti-Tesla legislation is pending in North Carolina, Colorado, and Virginia. In the State of Texas, the sale of Tesla vehicles has been outlawed completely under the Texas Occupations Code (TEX OC. CODE ANN. § 2301.476).

To overcome this law, Tesla is proposing a bill in Texas, SB 1659/HB 3351, aimed at creating a loophole to the franchise laws allowing all-electric or battery-powered vehicles to be sold directly to Texas consumers.

However, automobile dealers have no intention of allowing a loophole to be created. According to Bill Wolters, the president of the Texas Automobile Dealers Association, “If we made an exception for everybody that showed up in the legislature, before long the integrity of the entire franchise system is in peril.”

Accusations of Misleading or Deceptive Advertising

In August, Tesla’s Model S achieved the best safety rating of any car ever tested after the National Highway Traffic Safety Administration (NHTSA). The organization awarded the car a 5-star rating not only in overall safety, but also in every subcategory. One reason the Model S is considered so safe is because it lacks a gasoline engine block. The space that would normally hold the engine is used as a second trunk, providing a longer “crumple zone,” to better absorb high-speed impacts from the front. Among other safety features, a double bumper in the rear of the car helps prevent permanently disabling injuries and protects third row passengers.

While only 1% of cars earn an overall rating of 5-stars for safety, Tesla reported that the Model S’s Vehicle Safety Score achieved better than perfect score of 5.4 stars, a new record for the NHTSA. The NHTSA has said it does not rate automobiles with ratings above a 5 and automobile industry observers have called Teslas claims misleading.

Other car dealers are crying foul about the company’s money saving claims. California New Car Dealers Association (CNCDA) is recently claimed that Tesla’s advertising makes misleading statements about the money savings potential of owning an electric car. The CNCDA is petitioning the California DMV to investigate Tesla’s practices and states that Tesla makes sweeping claims about tax credits and other benefits that do not apply to many people.

Regardless of the complaints from insiders, as Tesla prepares to release its Model X, the company’s answer to the SUV, in 2014 the company is setting the bar high for car manufacturers and has many people rooting for it.

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