
The Tesla Approach to Distributing and Servicing Cars - is74
http://www.teslamotors.com/blog/tesla-approach-distributing-and-servicing-cars
======
Gring
"The Product Specialists (...) goal and the sole metric of their success is to
have you enjoy the experience of visiting so much that you look forward to
returning again."

This is not the experience I had. Walked into a Tesla store, said I want to
test drive a Roadster. Salesman went into that profiling mode that all car
salesmen do constantly and no customer likes, asking me all kinds of questions
to find out how much I earn. Since my answers didn't please him, he told me I
could test drive it for $300 for half a day - essentially renting it.

I won't be going back.

~~~
enraged_camel
Makes sense. They probably get a lot of people who pretend to be buyers just
to be able to test-drive a Tesla. Since such people don't end up buying one
(as they cannot afford it), letting them test-drive serves no purpose other
than wasting the dealer's time, and setting a $300 fee helps weed them out.
Note that most high-end car dealers do this.

Another way to think about it is this: if you were a serious buyer, i.e. the
type who can spend a tens of grand on a car, then a $300 fee would be pocket
change for you. In all likelihood, it would count towards the purchase of the
car if you decided to buy one. But declining to pay the fee basically confirms
their suspicion that you were _not_ a serious buyer and were there simply to
satisfy your curiosity.

~~~
aeturnum
I think this view is misguided. Apple would be foolish to make you prove that
you could buy an iPad before letting you play with one, and the same holds
true for Tesla. They need to overcome widespread skepticism about purely
electric cars, and a large part of that is exposing everyone they can to their
cars.

Sure, give preferencial treatment to people who have the money to buy one, but
let everyone try them out.

~~~
sbierwagen
An iPad costs a couple hundred bucks, and is _tiny_. A Tesla Roadster costs
tens of thousands, requires a full-time employee to babysit it during a test-
drive, has to be insured, and fills a room.

You're not comparing apples to oranges. You're comparing a paper airplane to a
747.

~~~
marcamillion
Not to mention that most Apple devices can't harm anyone else - i.e. there is
no third-party liability that Apple may have to assume (or buy insurance to
cover) if you (a free 'test driver') harms someone else with their test
product.

This $300 is definitely not unreasonable.

------
sbierwagen

      In case your eye skipped over the “for free” part, I would  
      like to emphasize that again – owning a Supercharger 
      enabled Model S really does mean free long distance travel 
      forever on our high speed charging network.
    

I really wish they'd stop saying this. They're essentially committing to
building a nationwide electric car charging infrastructure for $nodollars, and
never charging customers to use it, ever.

Which means either

    
    
      A.) They're not going to build more than 30 charging stations.
      B.) They're all going to be significantly far away from population 
          centers, and used only for interstate travel.
    

No matter what, a Tesla car is going to be spending 99.9% of its time charging
at home or at work.

~~~
rikf
Dont forget that even traditional gas stations make most of their profit from
convenience store/restaurants.

~~~
fijal
I would actually be very interested in a citation for this.

~~~
krschultz
It's 100% true. My uncle owns a fairly large gas/service station. The profit
from gas sales effectively paid the rent for the service station. He paid all
of his employees (and himself) with money coming from the car repair business.
The gas pumps were irrelevant to his own profit, but required a lot of
hassle/wasted time.

About 2 or 3 years ago he bought a larger building, hired more mechanics, and
didn't build gas pumps. They're just not worth the hassle.

For perspective, the credit card companies made more money per gallon than he
did as the gas station owner.

------
ericdykstra
Of course vested interests in old industries will do whatever they can to
block innovation. We're seeing it with all major industry disruptions. It used
to be enough for the vested interests to write laws to block out, limit, or
otherwise hinder additional traditional competitors (taxi medallions,
ridiculous license requirements for florists[1], etc).

Now we're seeing these same groups try to initiate and bring in new laws to
stop competition that is truly an innovative take on an industry. Such as the
Uber amendment[2] that was to be written and voted on in less than 24 hours,
or cease and desist notices being sent to Lyft and SideCar, telling them to
shelve their business while they investigate whether or not they are doing
something illegal[3].

Entrenched industries with connections to governments, and governments making
tax revenue from these entrenched businesses both have a huge incentive to get
old laws enforced past their original intent (which were often written for the
sole purpose of protecting those entrenched businesses anyway) and new laws
written and passed to shut this down.

However, these truly innovative companies are filling a need that the old ones
don't. That's why there are more Uber black cars in SF than there were black
cars in traditional services before Uber[4]. These companies that are pushing
society forward have so much momentum and support from the communities using
them that lawmakers are better served listening to the people than ignoring
them.

I have no doubt that Elon Musk and Tesla will be able to disrupt the car-
buying market by selling direct to customers. Maybe we'll see another startup
come along and piggyback off of their success by selling other cars direct,
blatantly ignoring the protectionist laws, and consumers rally behind them to
get the laws changed.

I don't know where the future lies in the auto industry, but I do know that
innovation and forward progress won't be stopped in the long run, no matter
how many road blocks there are. I have huge respect for all of these companies
that are not only working on doing the incredibly hard task of creating and
trying to sustain a company, but having to fight much larger corporations at
the same time.

1\.
[http://abcnews.go.com/WNT/story?id=131571&page=1](http://abcnews.go.com/WNT/story?id=131571&page=1)

2\. [http://blog.uber.com/2012/07/09/strike-down-the-minimum-
fare...](http://blog.uber.com/2012/07/09/strike-down-the-minimum-fare/)

3\.
[http://thesidecarblog.files.wordpress.com/2012/10/sidecar_cp...](http://thesidecarblog.files.wordpress.com/2012/10/sidecar_cpuc_c-d.jpg)

4\. From Travis Kalanick's talk at Startup School

~~~
tptacek
It's an amusing sleight of hand to equate Tesla's run-in with franchise law to
Uber's run-in with taxi licensing.

Franchise laws are the product of decades of overlapping private/public
enforcement of contractual issues between dealers and manufacturers. It seems
clear on the face of it that Tesla should in no way be encumbered by the
arrangements made between General Motors and its dealers, because Tesla never
had dealers to pull the rug out from under. And this is notwithstanding the
fact that encoding and enforcing agreements between dealers and manufacturers
should have been the province of contract law, not statutes.

Taxi regulations serve legitimate purposes beyond enforcing agreements. For
instance: in many states, it's difficult to get a job driving taxis or even
black cars with a suspension on your record, because the licenses are held by
parent companies who are liable to lose them if a driver causes an incident.

Loud arguments declaiming the insanity of applying taxi regulations to a
service as excellent as Uber also tend not to engage with the real argument,
which is, "what do we do when there are 10 Ubers, and drivers can hop between
them?"

You can believe that there are valid reasons to regulate cabs and black cars,
or you can not believe that. But it's intellectually dishonest to lump that
question in with franchise laws and licenses for florists.

~~~
ericdykstra
The point of my post wasn't to say that types of laws that companies are using
to litigate against Uber and Tesla are equal in every way, and I don't
appreciate you insinuating that I'm intentionally misleading people.

My overall point is that vested interests in many industries are using old
laws and regulations to litigate against disruptive companies in their
respective industries with the intention of stopping the disruptive company,
and where those laws aren't sufficient, they are trying to pass new ones. And
that despite this effort from vested interests (often times, government
included), I believe that the true innovators will persevere.

Is there something about that you disagree with? I'm not sure what the point
of your reply is.

~~~
tptacek
I think my comment was pretty clear:

Incumbents in the automotive industry are trying to abuse existing laws to
harm or extract rents from Tesla, but should and probably will ultimately fail
to do that, because the purpose of those laws is orthogonal to what Tesla is
doing.

Incumbents in the taxi/livery business are wielding their regulations against
Uber. But their claims are not as specious. They are encumbered by legitimate
regulation, and Uber is in part profiting from regulatory arbitrage. Even if
they didn't want to throw up hurdles to Uber, they more or less have to lobby
to have their regs enforced on Uber, or else be structurally disadvantaged.

This is a distinction you failed to draw in your comment, which drew a circle
around "florist licenses", Uber, and franchise laws and claimed they were all
part of the same phenomenon. No, they aren't.

~~~
AVTizzle
"...the purpose of those laws is orthogonal..." "...their claims are not as
specious..."

Those claims aren't yours to make. How legitimate or illegitimate any given
law is in a given circumstance is arguable and subjective. Thus the court
system, lawyers, and the entire judicial branch.

Eric's point - that these cases are all part of the same phenomenon - makes
complete sense. Incumbents trying to leverage power to stifle innovation from
a new generation of companies. It's simple enough, I don't even see what there
is to argue.

~~~
ubernostrum
_It's simple enough, I don't even see what there is to argue._

What there is to argue is that there are industries where regulation serves no
purpose other than to stifle competition, and there are industries where
regulation serves the purpose of actually protecting people.

Taxi licensing is an example of the latter.

And in general, as much as HN loves the narrative of "plucky disruptive
hackers vs. evil entrenched interests", it is fundamentally not right for a
company to "disrupt" by skirting laws and regulations that competitors are
required to obey. It is also unsurprising that competitors raise an unholy
stink when that happens, and _you_ would do exactly the same if placed in that
situation.

~~~
AVTizzle
1\. Your claim re: Taxi licensing... Without exception, every de facto law is
in place to "protect people". Whether or not that's the case is for the
lawyers to argue and for the court to decide.

2\. I can't argue that I wouldn't complain if I was an entrenched incumbent.
Luckily for me I guess that's not the case.

It's just my opinion, but as I see it, it's fair enough to classify all the
aforementioned cases as examples of analog regulations in a digital world. New
digital players taking advantage of the latest technology, and old players
taking advantage of yesterday's laws.

------
uladzislau
The whole approach seems very much alike to Apple Retail stores strategy. High
foot traffic locations, product specialists working not on commission, a lot
of service centres - Tesla "Genius" bars. Applying proven working strategy in
a different industry is a very smart move from Tesla. I see no reason why it
wouldn't work.

~~~
lumberjack
>I see no reason why it wouldn't work.

The highest end Apple products are still affordable by most people. Sure it
might be an expensive investment but definitely affordable. So with great
marketing they managed to get not only the previous Apple fans but also
managed to convince most people that the markup for an Apple iSomething is
worth it.

I don't know if the same thing is feasible for Tesla cars which are definitely
not affordable by most people. Also, the same marketing techniques might not
work for the demographic that would buy a Tesla.

~~~
capex
If you start looking at cars from the affordance point of view, all luxury
cars would lose a huge sales percentage. Getting a brand out there in
competition with the likes of BMW and Mercedes is no easy task, and these
retail outlets would help people make up their minds about where they want to
spend their life savings.

------
salimmadjd
I admire Musk and tesla. However, I see two paths for them and none are good.

A - fully-electric cars are still too early and will get crushed by hybrids or
more efficient diesel/fossil fuel cars. Tesla becomes irrelevent.

B - fully-electric is all the rage, and every brand will have one. Tesla will
become the victims of their own success.

I'm going to assume many of you are going to disagree with me. Mainly because
we come from a world with a much different customer acquisition models.

For most people, if they had a choice they would buy a trusted car brand.
Would you buy an Honda/Acura, Toyota/Lexus, Mercedes, etc with dealership in
every corner or an unknown car called tesla? Also, unlike niche companies like
Ferrari/Lamborghini that have brand and performance appeal, tesla doesn't
provide anything unique. For the same price point, there are far better cars,
than the original lotus-based Tesla. To that point, what's their beachhead?

~~~
marshallp
Tesla are the Apple of cars. Elon Musk is the new Steve Jobs. The other car
companies will have non-tech retards as ceo's and will always be playing
catch-up. Tesla only has to fear techie's like google or apple itself entering
the space.

~~~
salimmadjd
Althiugh agree with the visionary status of Musk. But, your comment speaks to
my point directly regarding the differing customer acquisition models. Apple's
growth comes from entering an emerging market. Very different than the car
industry. The emerging market of the car industry started with another
visionary, Henry Ford.

~~~
wmf
Ah yes. "If smartphones turn out to be the future, people will probably just
buy them from existing phone brands that they trust, like Nokia or Motorola."
— a lot of people in 2007

~~~
qu4z-2
For what it's worth, I have a Motorola smartphone, and I certainly wouldn't
trade it in for an iPhone.

The point I'm trying to make is that that the prediction is correct assuming
"people" refers mostly to the people making the predictions. Or... people tend
to project their ways of thinking, and likes and dislikes, onto other people.

------
OldSchool
He certainly presents a calm and thoughtful reply to dealerships, which they
will certainly ignore. I can't see how Tesla can expect to afford free
supercharger stations forever though.

Maybe there are more failures that I'm not aware of, but generally I've
noticed that full-size franchise automotive dealerships tend to last forever
and are somehow tremendously profitable for their owners despite what looks
like a tiny margin between "factory invoice" and what people pay for a new
car.

These are wealthy, highly profitable legacy businesses and no doubt they're
going to go out fighting any disruptors in court.

Next up, someone please give us the killer app that disrupts and dismantles
the real estate racket and their 6% commissions...

~~~
w1ntermute
> I can't see how Tesla can expect to afford free supercharger stations
> forever though.

Because they sell more power back into the grid than they use up. I'm guessing
they'll just add more solar panels (a fixed cost) as the number of charging
stations at a given Supercharger goes up.

~~~
brk
_Because they sell more power back into the grid than they use up._

That doesn't make sense. The breakeven point for a solar panel is around 10
years (assuming you're using it solely for your own power generation purposes,
that is how long it takes for the panel to "pay for itself" in offset
electricity costs).

The charging stations are there to charge vehicles. To keep them breakeven on
power (forget about land/rent/taxes/maintenance) they would need a _field_ of
solar panels.

Hardly seems like a logical approach.

My guess is more that they will sell "upgrades" to the vehicles, they
mentioned the large touchscreen and upgradability in the article. Perhaps
certain future software enhancements will be paid, in order to generate some
residual revenues.

~~~
gknoy
There are more ways to generate solar power than with solar panels.
Presumably, they could invest in solar power plants. Heck, the highly
illuminated towers of a solar power plant can be seen for miles, and could
even be used for publicity: "Free power beacons on the road for Tesla cars..."

~~~
sbierwagen
Solar concentrating thermal plants only work in direct sunlight, and their
mirrors don't like to be dirty. They're not terribly commercially attractive
outside the Mojave.

------
ck2
Weren't cars advertised and sold in malls for years? This is just returning to
that tradition.

You can clearly see the dealership in the mall in the Blues Brothers for
example (" _The new Oldsmobiles are in early this year!_ ")

~~~
dsk2012
Car manufacturers can certainly setup mall stores to advertise their cars, but
the customer will still need to buy through a dealer.

~~~
ams6110
Likewise a dealer could set up a showroom in a mall.

------
tlb
Musk says, "It is impossible for [dealers] to explain the advantages of going
electric without simultaneously undermining their traditional business." But
every other technology introduced, from the electric starter in the 1910s to
hybrids in the 2000s, has gone through the same process. Chevrolet dealers
have explained the advantages of and sold 24000 Volts in the US.

~~~
marcamillion
Right...and have sold tens of millions of gasoline cars.

For the attention that is required to encourage people to take a leap from
gasoline to electric, it makes more sense for them to focus on their own
stores - rather than working with third party dealers.

That's why Apple has their own stores too.

Look how that has worked out. Most profitable retail space on the planet, by
square feet.

------
stretchwithme
The conflict of interest argument is bogus. There's no conflict of interest
between a dealer selling small cars and large cars. Or between those quipped
with automatic transmissions and manual transmissions.

A more valid reason is that car companies should be able to sell their
products anyway they like. The purpose of government is not to hand out
protected status to existing merchants.

Of course, I can't pretend that government isn't already giving Tesla a lot of
handouts.

------
namank
Why is it called Model S? Any play on the Model T?

~~~
_delirium
I'm not sure they've given an official reason, but it's the mass-market sedan
adaptation of the Tesla Roadster, so I believe playing off both the Model T
(mass-produced consumer car) and S=sedan.

------
Bud
We really need some federal legal action to make sure that Tesla is not
impeded. In my opinion, aggressive action of this kind would be far more
valuable than previous efforts to invest in, say, questionable solar-panel
companies.

