Unlike typical dealers, Tesla has a network of "stores" and "retail stores." While reservations can be made for a new Model S or Roadster at the retail store, Tesla says other versions of the store merely direct potential customers to make their reservation online. Most of these boutique-style stores are in shopping malls, and Tesla asserts that they are not sales facilities. It's an assertion with which traditional auto dealers are taking issue.

Dealers associations and networks across the country are doubling down their efforts to make Tesla's OEM showroom network illegal. Tesla has opened 17 stores in 10 states, as well as the District of Columbia.

Dealership associations contend Tesla's notion that sales are not made at these stores, stating that the showroom experience is still part of the sales process. To that end, dealer groups across the country have embarked in legal battles with the electric carmaker. The Illinois Secretary of State has informed Tesla that it is illegal to list CEO Elon Musk as the owner of its Chicago store. The Greater New York Automobile Dealers Association is looking into legal options against Telsa's Westchester store, as well as two others in New York. In Massachusetts, the opening of a store in the suburban Natick Mall is having its legality challenged by the dealer association in that state. California has laws in place that allow for a manufacturer to run its own dealership, as long as it is not within 10 miles of an existing dealer. That practice caught the ire of Chrysler dealers when the American automaker opened its own multi-brand showroom near downtown Los Angeles.

Tesla says the way that its stores are run are unique to each location. According to George Blankenship, Tesla's VP of sales, "If we can't be a dealer in a mall, we won't do reservations on-site. We tell people where to go on our website to make a reservation." Blankenship is the former Apple retail guru and the mind behind the Apple Stores – an experience Tesla hopes to recreate in its own sales network. In the eyes of many dealers, that is a threat to their own dealership model. As Tesla seeks to open more stores in more states, this is unlikely to be the end of the pushback against the electric automaker.


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  • 179 Comments
      PheelACCD
      • 2 Years Ago
      The dealership experience takes out the joy of buying a new car. I'm all for manufacturers taking back the helm so we can enjoy nice, clean dealership without shady sales people.
      diffrunt
      • 2 Years Ago
      over the years ( not lately ) I have wrenched in several dealerships. I like Elon's approach.
      Polly Prissy Pants
      • 2 Years Ago
      This is what happens when big business is allowed to make the laws. There was never a democratic majority in favor of these laws, just a bunch of businessmen funneling payoffs to those willing to do their bidding. And here's a tip for the dealers: If your business model involves making things as difficult as possible for the customer, your days are numbered.
      desinerd1
      • 2 Years Ago
      If Apple, AT&T, Verizon, Sprint, can have their own stores as well as franchises/resellers, why not car companies?
        Val
        • 2 Years Ago
        @desinerd1
        because car dealers have "special" needs...
      Kumar
      • 2 Years Ago
      The laws that were lobbied for by auto dealers won't go down easily. There is a lot of money out there to keep them in place. For the most part, the industry hasn't caught up with the internet. In a similar industry, realtors have been fighting to keep their 'commission' in place. In Indiana, they had laws enacted to keep them at a certain percentage right when cut rate agencies began moving into the market (right before the Recession mind you). A good place to start would be lawsuits demanding that factories be able to sell the models they produce direct to consumers. It would be a boon to the states hosting these plants, even if the nearby dealers get the shaft.
      Autoblogist
      • 2 Years Ago
      And this is why dealerships are looked at so favorably......
      MONTEGOD7SS
      • 2 Years Ago
      My heart breaks for these poor dealerships and their desire to not evolve past the way things were done the last 100 years.
      tump
      • 2 Years Ago
      What I want to know is how somebody can rant against the UAW, etc., and be pro- dealer cartels and artificial (some would say illegal) dealer protections. This is a damned scam and you're the victim. Compete or dissolve.
      ccdae5
      • 2 Years Ago
      Dealerships are a racket, I won't even visit one of the new ones that look like palaces, I know they're prices are too high to pay for the expensive building.
        Drakkon
        • 2 Years Ago
        @ccdae5
        My business sells to oil dealers. Many times they own all four stations at an intersection. The Phillips, a Conoco, a Mobil and and BP. Same company...
      Matt
      • 2 Years Ago
      I know some people will politically disagree with this but I think the federal government constitutionally can make a law that says that car companies can sell their own cars (There is clearly interstate commerce going on). So if we want the automotive industry to run more efficiently (from producer directly to consumer), create a law that does that. Yeah, we'll lose some jobs since dealerships may go out of business, but we'll also create most likely the same amount of jobs as automakers hire people to take over the sales. SOMETIMES, things on the state level are just not as efficient as 1 law
        turbomonkey2k
        • 2 Years Ago
        @Matt
        Lame, the federal government has no place in this. At the end of the day any car maker that produces in volume knows that demand can be met in greater volumes if others are distributing the product. The manufacturer knows it's in their best interest to not be in competition with its direct customers(dealers.) That's why you can't show up at Chrysler HQ with checkbook ready to negotiate a selling price of a new Viper. Face it. They DON'T WANT TO DEAL WITH YOU. The Manufacturer isn't really interested in selling you a car unless you're going to buy hundreds or thousands at a time.
          icemilkcoffee
          • 2 Years Ago
          @turbomonkey2k
          \" At the end of the day any car maker that produces in volume knows that demand can be met in greater volumes if others are distributing the product. \" Yeah- that\'s why Apple has been such a failure with its Apple stores, right?
          turbomonkey2k
          • 2 Years Ago
          @turbomonkey2k
          When did I say it shouldn't be up to Tesla? Hell, if they want to be the sole distributor of their product then Go for it but they will never grow with a model like that. This has been tried in the past and usually fails. Sure there are exceptions but they're few and far between. With all that said, should franchisees be protected? Let's face it. If I sell you a franchise you as the franchisee should have some expectation of territorial exclusivity. A franchise has value, right? If I put another franchise or company store in close enough proximity to yours to impact your sales then I have damaged the value of your franchise. Essentially that is what the law is there to protect although it's also good business sense not to compete with yourself.
      johnnythemoney
      • 2 Years Ago
      Let me consider these steps: - johnnythemoney visits an automaker's website - he checks the car he likes - configures the car he likes - he now knows everything required to buy the car: price, options, specs, finance, he even checked on the internet what other buyers think of it after a few months of ownership (10-15 years ago he would have checked as many magazines as possible, and asked friends of friends) - walks to a dealer to buy the car - finds out the seller doesn't know what he's talking about, or is trying to sell smoke for a 5.000 $ premium - leaves the dealer with a contract in his pocket just because it's the only way he can buy his beloved new car Show me just one option who doesn't involve visiting a dealer with unprepared and shady sellers and I'll grab it! Hyundai got a great idea with the Equus program, even if they didn't really have a choice. I'm fine with it, but I know people not completely cool spending 50k $ on a car and then servicing it at the same dealer where his daughter small funky car is taken care of (unless that's Jaguar, Porsche, etc, you got it, wait, they don't sell small funky cars!). What is Tesla doing here? Taking you in the process of showing you a product in a place where they won't make you sing anything. Awesome. And if you're lazy, I'm pretty sure they can teach you how to configure your car on the web. If you think about it, Tesla's customers have two characteristics: - they don't need to configure a lot, the cars are pretty much as they come - they surely know how to buy on the internet and how to avoid a dealer Tesla VS Stealerships 1 - 0
      Miami996
      • 2 Years Ago
      Screw stealerships I hope I live to see the day they crumble
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