On Friday, March 28, 2014, New York Governor Andrew Cuomo was able to reach agreement with Tesla Motors and New York’s car dealerships. Tesla has received lots of media attention recently due to car dealerships attempting to halt Tesla’s sales as their method of selling directly to consumers threatens the existence of the car industries middle man.
The problem dealerships have with Tesla is that they manufacture their cars and sell directly to consumers, as opposed to selling to dealers who mark up the price for their own profit and then to the consumer. This process was started as a way for car manufacturers to extend their customer base. In today’s world, however, people don’t just go to the dealership uninformed looking for a car; most people will do significant research on the web, choosing the car they want to buy before even heading to a dealership. With these advances in consumer empowerment, there is now little need for their to be a dealership; it is an outdated middle man costing the consumer more money. Car manufacturers no longer need dealerships as a form of gaining recognition and customers. Look at Tesla, for example. The company seemed to come from out of nowhere and then produced Motor Trends 2013 Car of the Year, all without using car dealerships.
In the deal reached on Friday, the groups decided that Tesla could continue selling in the state of New York at their five locations, under the agreement that Tesla would not open any additional retail outlets. The agreement works for both sides, car dealerships limiting their competition, while Tesla can continue to sell in the state. What are your thoughts on the matter? Should it be tolerated for car dealerships to interfere with Tesla’s business, especially considering Tesla is completely dedicated to make a difference in the sustainability and environmental impact of personal transportation, working towards a better world for everyone.
Sources: Wall Street Journal