Ford to Impose Non-Negotiable Pricing on EV Sales as Part of Model E Plan(macheforum.com)
macheforum.com
Ford to Impose Non-Negotiable Pricing on EV Sales as Part of Model E Plan
https://www.macheforum.com/site/threads/ford-to-impose-non-negotiable-pricing-on-ev-sales-as-part-of-model-e-division-plan.15168/
139 comments
This is the only way they can compete with Tesla and other direct-to-consumer EV manufacturers. Glad to see Ford doing this. As a Tesla owner, I’d be open to buying a Ford EV but have no interest in dealer markup or the dealer buying scenario.
If you're willing to wait, ordering a Ford EV online isn't much like buying from a dealer. They're involved, but it feels only incidentally. Of course, if you're not willing to wait, the "price" is dealer markup and the usual experience.
Ordering online doesn't guarantee you a non-dealership experience. There's no stopping them from adding a $5,000 "market adjustment" to the price of the car you ordered online 9 months prior when you go to pick it up. You cannot force them to sell it at MSRP. This has happened to people that ordered Mach-E's, multiple times.
If they change the price last minute can you renege on your side of the deal and get your money back and cancel?
yes but then you're out time. So they lost nothing because they can sell the car but you lost time.
This is sort point for me. I once custom ordered a BMW with the exact options I wanted. Made a downpayment. Waited 3 months for it to arrive taking the bus to work and getting rides home from friends. It arrived at the dealer and they sold it someone else and then told me I could order another if I wanted. You can probably imagine the rage I felt.
This is sort point for me. I once custom ordered a BMW with the exact options I wanted. Made a downpayment. Waited 3 months for it to arrive taking the bus to work and getting rides home from friends. It arrived at the dealer and they sold it someone else and then told me I could order another if I wanted. You can probably imagine the rage I felt.
You'd have only put down a refundable deposit with Ford, which the dealership can apply to your purchase, or you can get it refunded by Ford. You have no contractual relationship with the dealer, nor any ownership interest in the car, which is why the dealership that does now own the freshly delivered car is able to demand more money for it.
Yes, the deposits are generally refundable. The dealer will take your car and sell it to someone else at $10k over MSRP. Someday when supply is less tight they won't have that leverage, but it's a seller's market right now.
Some dealers won't do this, but you'll need to put in some work to find them.
Some dealers won't do this, but you'll need to put in some work to find them.
yeah but you go to the back of the line for another one at a different dealership who hopefully won't screw you.
Good question. I'm interested to know the answer as well.
sounds like enough of a reason just to buy a Tesla.
Buying a Tesla comes with its own set of problems, like the inability to test drive the car before paying for it, and some of the worst initial quality in the industry -- which means you really should want to test drive it before buying it. Once it's yours, the complete absence of an independent dealer network means you're fully at Tesla's whim for repairing those defects. They will often say "it's within spec" and refuse. Plus, "just buy a Tesla" comes with a price premium that's more than any "market adjustment" at even the shadiest dealer for most other EVs. What buyers of EVs from traditional makes are doing is keeping tabs of what dealerships are applying those underhanded markups and simply not sending their online orders there.
This was my thought as well. Tesla doesn’t have a truck. When they have a truck equivalent to the Ford Lightning it’ll be 2x as much and lack fundamental features. That alone cuts Tesla out of a huge market segment. Their sedans are barely price competitive on the low end and quality seems worse than early Hyundais. They have cool features but also seem to not be ideal vehicles by any means.
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Not all dealers are doing that.
Unless Tesla has no appealing or useful options for you. If I need a little goofy sedan I might take a look at Tesla. I need trucks and real vehicles though.
Right now Tesla is coasting on VC and IPO and being early entrant innovator. The bitch slap of truth that is automotive manufacturing and marketing is about to land it's hand. Ford understands that bitch slap better than anyone.
Right now Tesla is coasting on VC and IPO and being early entrant innovator. The bitch slap of truth that is automotive manufacturing and marketing is about to land it's hand. Ford understands that bitch slap better than anyone.
Ford does not understand infotainment or charging experience.
Tesla literally ship with AMD Ryzen CPUs, while other manufacturers still can't even get CPUs. They got 8 cameras, 4 of which you can watch live....anytime on your mobile phone. The supercharger experience sets a standard that no 3rd party comes close to reaching. The supercharger network itself gives Tesla customers the ability to confidently travel and easily charge - fast.
I actually test drove a Mach-E and a Model Y. Ford was straight up trying to rip me off, and made the whole experience really off-putting. On top of that, the Ford dealers literally had no idea what they were doing, or any of the facts. There is no passion in it.
Tesla is all passion. Every Tesla employee wakes up to do one thing; make the world's best EV. Ford (and every other legacy) is trying to change engines in an airplane midflight while trying to learn how to build EV's.
It isn't for the lack of trying - in any area, that Tesla isn't the best at something. Tesla has the smartest people in the room/industry. Their energy and focus is on AI, scaling up manufacturing, battery tech, charging tech, etc. They spend nothing on marketing, and get more free press and word of mouth than any brand but Apple.
Marketing like legacy car companies comes off as desperate and thirsty. Just listen to the two CEO; Ford CEO will play buzzword bingo and talk high level corporate empty-speak. Elon Musk will talk to you about the challenges in battery manufacturing, the nuances of the minutia of building these amazing vehicles. Elon Musk will sleep on the factory floor to get it done. What other CEO has slept on the factory floor?
The man is not without his defects, but literally consider his life accomplishments; PayPal, Tesla, SpaceX, tunnel digging because why not, solar panels, residential utility scale battery storage, 30000 "gas stations" around the world.
Literally Ford can't even build vehicles right now. Like production down. Assembly stopped. Tesla is pumping out EV faster than ever before. And Elon Musk is trying to fly rockets to Mars in his spare time.
I respect the history of the legacy's; but they are simply not in a strong position. Musk won. His cars are the cool ones everyone wants.
It isn't that Ford has crazy demand; they have no production. Same as Rivian, etc. It markets well to say Ford/Rivian deliveries of EV are way out to 2024 - but has to be taken in context that they are struggling to produce 50k EV a year.
Tesla has the proven product. Literally no one knows how well a Rivian or Lucid will hold up, or what defects will haunt their early buyers. There isn't enough data out there yet. Same for the Mach-E. Tesla has 10yrs of data for customers to look at; and Tesla has what feels like a 100yr head start...
Tesla literally ship with AMD Ryzen CPUs, while other manufacturers still can't even get CPUs. They got 8 cameras, 4 of which you can watch live....anytime on your mobile phone. The supercharger experience sets a standard that no 3rd party comes close to reaching. The supercharger network itself gives Tesla customers the ability to confidently travel and easily charge - fast.
I actually test drove a Mach-E and a Model Y. Ford was straight up trying to rip me off, and made the whole experience really off-putting. On top of that, the Ford dealers literally had no idea what they were doing, or any of the facts. There is no passion in it.
Tesla is all passion. Every Tesla employee wakes up to do one thing; make the world's best EV. Ford (and every other legacy) is trying to change engines in an airplane midflight while trying to learn how to build EV's.
It isn't for the lack of trying - in any area, that Tesla isn't the best at something. Tesla has the smartest people in the room/industry. Their energy and focus is on AI, scaling up manufacturing, battery tech, charging tech, etc. They spend nothing on marketing, and get more free press and word of mouth than any brand but Apple.
Marketing like legacy car companies comes off as desperate and thirsty. Just listen to the two CEO; Ford CEO will play buzzword bingo and talk high level corporate empty-speak. Elon Musk will talk to you about the challenges in battery manufacturing, the nuances of the minutia of building these amazing vehicles. Elon Musk will sleep on the factory floor to get it done. What other CEO has slept on the factory floor?
The man is not without his defects, but literally consider his life accomplishments; PayPal, Tesla, SpaceX, tunnel digging because why not, solar panels, residential utility scale battery storage, 30000 "gas stations" around the world.
Literally Ford can't even build vehicles right now. Like production down. Assembly stopped. Tesla is pumping out EV faster than ever before. And Elon Musk is trying to fly rockets to Mars in his spare time.
I respect the history of the legacy's; but they are simply not in a strong position. Musk won. His cars are the cool ones everyone wants.
It isn't that Ford has crazy demand; they have no production. Same as Rivian, etc. It markets well to say Ford/Rivian deliveries of EV are way out to 2024 - but has to be taken in context that they are struggling to produce 50k EV a year.
Tesla has the proven product. Literally no one knows how well a Rivian or Lucid will hold up, or what defects will haunt their early buyers. There isn't enough data out there yet. Same for the Mach-E. Tesla has 10yrs of data for customers to look at; and Tesla has what feels like a 100yr head start...
This reads like bad ad copy or like an adolescent is writing a paper while binging on sugar.
>> The man is not without his defects, but literally consider his life accomplishments; PayPal, Tesla, SpaceX, tunnel digging because why not, solar panels, residential utility scale battery storage, 30000 "gas stations" around the world.
So, let's check list, shall we?
Paypal, wasn't him (at least not even close to the level of what people think)
Tesla, there Elon had to sue to get the title of founder
SpaceX, at least as much Shotwell than him
Tunnel digging, well ever herd of subways?
Solar panels and residential solar, one isn't even noticeable in terms of market share, the other had to be bailed out by Tesla (did I mention some strange corporate governance and financial links between tesla and SpaceX around that time? And that the bailed solar company was owned by his cousin?)
30k "gas stations, impressive... Just ask BP or Exxon how many they have. Credit where credit is due so, Tesla did build the first true charging network. The first, not the only one.
And let's not pretend SpaceX will be the first to reach Mars.
So, let's check list, shall we?
Paypal, wasn't him (at least not even close to the level of what people think)
Tesla, there Elon had to sue to get the title of founder
SpaceX, at least as much Shotwell than him
Tunnel digging, well ever herd of subways?
Solar panels and residential solar, one isn't even noticeable in terms of market share, the other had to be bailed out by Tesla (did I mention some strange corporate governance and financial links between tesla and SpaceX around that time? And that the bailed solar company was owned by his cousin?)
30k "gas stations, impressive... Just ask BP or Exxon how many they have. Credit where credit is due so, Tesla did build the first true charging network. The first, not the only one.
And let's not pretend SpaceX will be the first to reach Mars.
> SpaceX, at least as much Shotwell than him
SpaceX without Elon would still have been SpaceX, SpaceX without Gwynne Shotwell would have been another Blue Origin.
SpaceX without Elon would still have been SpaceX, SpaceX without Gwynne Shotwell would have been another Blue Origin.
Do you work for Tesla, are you a shareholder, or just really into the company?
Ford came down hard on dealers who "market adjusted" preorders, and that practice should have been halted for a while now. I think it even made HN.
This was not my experience. I put a reservation down on a F150 Lightning, and a few hours later I got a phone call on my cell phone from a pushy sales person at the dealership, trying to convince me to choose something that's available now rather than waiting.
I ended up canceling my reservation.
I ended up canceling my reservation.
Tesla's no-dealership model has been an unmitigated disaster. I have never heard of any other company making people wait months for repairs, nor have I heard of any other company repeatedly making delivery estimates that are wrong by months, nor have I heard of any other company delivering cars over a year after they were paid for.
> I have never heard of any other company making people wait months for repairs,
This is sadly quite common right now. If you own any vehicle with Tesla production levels, it's possible there's a shortage of certain parts for it.
This is sadly quite common right now. If you own any vehicle with Tesla production levels, it's possible there's a shortage of certain parts for it.
Alternatively, you don't have a listing on Tesla's site saying that a car costs $40k, and then when you call them up to buy it, they say they are adding a "$25k dealer premium", so you can have it for $65k. That's what actually happened to me when I was about to buy a rav4 prime a year ago. So instead I just went and bought a model Y for $50k, and am extremely happy with it. And also blacklisted Larry H Miller from ever getting my business again. But I guess I haven't had to deal with repairs, so maybe things will get worse.
Is the model a disaster, or is Tesla's implementation of it a disaster? Or is Tesla's implementation of it given the confines they were working under a disaster? If you look at Rivian and Lucid, their performance in this space hasn't exactly been stellar either.
You are absolutely correct that these things typically do not happen with the major car manufacturers, and that Tesla needs to get its act together. But it is worth considering the other car manufacturers have been doing it at scale for a much longer time often with better understood materials and technology.
People often ask "What are the other carmakers going to do to compete?" and this is exactly one of those things that they'll bring to the table.
You are absolutely correct that these things typically do not happen with the major car manufacturers, and that Tesla needs to get its act together. But it is worth considering the other car manufacturers have been doing it at scale for a much longer time often with better understood materials and technology.
People often ask "What are the other carmakers going to do to compete?" and this is exactly one of those things that they'll bring to the table.
Weird I got my Tesla within a month delivered to my place. Looks great and drives great no issues so far. Definitely prefer this to going into a dealership.
Everyone is different, I guess. I loved the experience. Placed the order, got an email, set up the bank transfer, they called me exactly one time to confirm the delivery time, then dropped off the car. I spent less time[1] buying my Model Y than I have on some products from Amazon.
The opinion and memery about this brand is just unbelievable. Cars are big and complicated devices and selling them is equally complicated, and I'm sure there are people who have bad experience buying them, as is basically inevitable. But the overwhelming majority of owners think it's great.
[1] If you don't count the incessant, obsessive checking to see what the current delivery estimate is, of course.
The opinion and memery about this brand is just unbelievable. Cars are big and complicated devices and selling them is equally complicated, and I'm sure there are people who have bad experience buying them, as is basically inevitable. But the overwhelming majority of owners think it's great.
[1] If you don't count the incessant, obsessive checking to see what the current delivery estimate is, of course.
>But the overwhelming majority of owners think it's great.
I don't care at all what the overwhelming majority of owners think. Maybe 95% of customers are happy to have saved a few hours in a dealership, but when the 5% are without a car for six months that's pretty cold comfort.
The problems I am discussing are very serious. It is not enough for them to be uncommon; they must be unheard of.
I don't care at all what the overwhelming majority of owners think. Maybe 95% of customers are happy to have saved a few hours in a dealership, but when the 5% are without a car for six months that's pretty cold comfort.
The problems I am discussing are very serious. It is not enough for them to be uncommon; they must be unheard of.
Compare that to the competition:
- No one I know likes going to the dealership.. so that's close to a 100% dissatisfaction rate for a dealership experience, compared to 5% for Tesla.
No one I know likes wearing a seatbelt.
You still get the markup, Tesla just does it directly.
That’s a good thing. Buyers are able to know the exact price without having to waste hours driving to a dealership and haggling.
>> You still get the markup, Tesla just does it directly.
> That’s a good thing. Buyers are able to know the exact price without having to waste hours driving to a dealership and haggling.
Your comment doesn't address the point about markup at all. Knowing an "exact" with a higher markup doesn't seem live much of a good thing to me.
> That’s a good thing. Buyers are able to know the exact price without having to waste hours driving to a dealership and haggling.
Your comment doesn't address the point about markup at all. Knowing an "exact" with a higher markup doesn't seem live much of a good thing to me.
At the very least, its better if the excess markup goes to the entity which can reinvest that into additional production to eventually saturate demand, rather than a middleman who adds no value but collects rent on regulatory capture (see: Texas laws banning non-dealerships like Tesla from selling cars unless they allow local rich families in the state to collect their rent)
> At the very least, its better if the excess markup goes to the entity which can reinvest that into additional production to eventually saturate demand, rather than a middleman who adds no value but collects rent on regulatory capture (see: Texas laws banning non-dealerships like Tesla from selling cars unless they allow local rich families in the state to collect their rent)
I'm not so sure. You're giving a rather tendentious account of the practice, and I'm pretty skeptical of handwaving "regulatory capture" as justification to get rid of regulation some corporation dislikes. As far as I understand, the dealership system was meant to engineer more competition into the auto market [1], and frankly I prefer something like that than giving more control to larger companies.
[1] And that passes the smell test, at least. A dealership is buying in bulk and can probably be assumed to be more savvy in negotiating with the manufacturer than a private consumer. And putting those dealerships in competition with each other should put downward pressure on prices.
I'm not so sure. You're giving a rather tendentious account of the practice, and I'm pretty skeptical of handwaving "regulatory capture" as justification to get rid of regulation some corporation dislikes. As far as I understand, the dealership system was meant to engineer more competition into the auto market [1], and frankly I prefer something like that than giving more control to larger companies.
[1] And that passes the smell test, at least. A dealership is buying in bulk and can probably be assumed to be more savvy in negotiating with the manufacturer than a private consumer. And putting those dealerships in competition with each other should put downward pressure on prices.
You're basically asking: Does the dealer's negotiation reduce prices to consumers more than their cuts increase it. I don't think so, at least not for Tesla.
I'm pretty pessimistic on this. For one, middlemen traditionally increase costs, due to the reduction in inefficiency and well, their cut. Furthermore there already exists a competition layer at the manufacturer level.
In the supply constrained world, this is even more so, as middleman will happily arbitrage prices upwards (see GPU scalpers), meaning that they get to extract value, while providing minimal service of their own.
I'm pretty pessimistic on this. For one, middlemen traditionally increase costs, due to the reduction in inefficiency and well, their cut. Furthermore there already exists a competition layer at the manufacturer level.
In the supply constrained world, this is even more so, as middleman will happily arbitrage prices upwards (see GPU scalpers), meaning that they get to extract value, while providing minimal service of their own.
> You're basically asking: Does the dealer's negotiation reduce prices to consumers more than their cuts increase it. I don't think so, at least not for Tesla.
What do you mean "at least not for Tesla." Don't they famously lack dealers, so there's no point of comparison for them?
> as middleman will happily arbitrage prices upwards (see GPU scalpers)
That's certainly true for some middlemen, but I don't think that can be generalized into a rule. Naively, some people think that everyone in a market should act like price gougers, but that's obviously not true, and I don't think the the reason is that there's something special about being the original manufacturer.
What do you mean "at least not for Tesla." Don't they famously lack dealers, so there's no point of comparison for them?
> as middleman will happily arbitrage prices upwards (see GPU scalpers)
That's certainly true for some middlemen, but I don't think that can be generalized into a rule. Naively, some people think that everyone in a market should act like price gougers, but that's obviously not true, and I don't think the the reason is that there's something special about being the original manufacturer.
My mental image of Tesla was that it was supply constrained. This argument probably doesn't apply if this has changed. However, if the assumptions hold, then traditionally middlemen arbitrage prices upwards in times of scarcity.
Or perhaps I'm just bitter about the GPU shortages, who knows.
Or perhaps I'm just bitter about the GPU shortages, who knows.
But you still know what price you're going to pay ahead of time.
With dealers anymore, they make you hustle to get some of that markup knocked off, then once you think the negotiation is over, you're tossed into the next stage of the negotiation gauntlet.
I'd rather know up front that I'm going to pay $50,000 for a vehicle, rather than think I'm going to pay $40,000, then upon arriving at the dealership, find out the market price is $55,000, which goes down to $45,000 after negotiation, and after all that, have to deal with finance secretly adding $10k in options and fucking around with interest rates.
With dealers anymore, they make you hustle to get some of that markup knocked off, then once you think the negotiation is over, you're tossed into the next stage of the negotiation gauntlet.
I'd rather know up front that I'm going to pay $50,000 for a vehicle, rather than think I'm going to pay $40,000, then upon arriving at the dealership, find out the market price is $55,000, which goes down to $45,000 after negotiation, and after all that, have to deal with finance secretly adding $10k in options and fucking around with interest rates.
With Tesla you pay MSRP. With any other car you pay MSRP plus whatever the dealer wants to charge. I sincerely doubt that OP was referring to MSRP profit margin.
> With any other car you pay MSRP plus whatever the dealer wants to charge.
That's obviously not true. I've never paid MSRP for a car and I've never bought a Tesla.
With Teslas, you pay MSRP. With any other car you pay whatever the dealer wants to charge, which is usually dealer cost plus some markup, which is usually less than MSRP. On some rare occasions you can even buy a car for at or below dealer cost.
That's obviously not true. I've never paid MSRP for a car and I've never bought a Tesla.
With Teslas, you pay MSRP. With any other car you pay whatever the dealer wants to charge, which is usually dealer cost plus some markup, which is usually less than MSRP. On some rare occasions you can even buy a car for at or below dealer cost.
>That's obviously not true. I've never paid MSRP for a car and I've never bought a Tesla.
You obviously haven't tried to buy a car during the pandemic.
You obviously haven't tried to buy a car during the pandemic.
This seems good for Ford not necessarily good for prices. A customer order is lower cost to the manufacturer and dealer as the vehicle doesn't need to be in inventory.
Thus, you can sometimes get a lower price by ordering from the factory (dealer is passing along this savings) than buying from inventory. Not to mention this also eliminates price competition amongst dealers. Some dealers take a loss on sales to earn manufacturer incentives.
Service however is where they make money, and as time progresses and cars are more software based and self-repair becomes impossible - total cost of ownership goes up.
Thus, you can sometimes get a lower price by ordering from the factory (dealer is passing along this savings) than buying from inventory. Not to mention this also eliminates price competition amongst dealers. Some dealers take a loss on sales to earn manufacturer incentives.
Service however is where they make money, and as time progresses and cars are more software based and self-repair becomes impossible - total cost of ownership goes up.
This is a good point. Service costs for Teslas are outrageous. Though, to be fair, Teslas appear to require far less servicing. Because of this, I've seen estimates that they actually end up costing around the same as gas cars, annualised. People are going to have to think very hard about the servicing costs when they purchase cars in future, because that cost is often extremely opaque. I don't have much faith that the average consumer will consider this at all. If so, it's very easy to imagine a future in which the upfront cost of EVs is below manufacturing cost, but the ongoing subscriptions and servicing are where manufacturers make their profit.
> Ford envisions a new process that will result in a non-negotiable price for EVs and rely on customer orders, rather than dealer inventories
It's worth noting that Ford was one of the major automakers who funded the lobbying effort against the very Tesla model they now seek to join.
It's worth noting that Ford was one of the major automakers who funded the lobbying effort against the very Tesla model they now seek to join.
You have your history exactly backwards.
Ford and GM tried to cut the dealerships out of the equation several decades ago, and dealerships banded together in many states to lobby for legislation barring automakers from directly selling to customers.
BTW: you link to the NADA wikipedia page and claim that they represent the major automakers. They do not. They represent dealerships that sell cars made by the major automakers. The major automakers are not members of NADA.
Ford and GM tried to cut the dealerships out of the equation several decades ago, and dealerships banded together in many states to lobby for legislation barring automakers from directly selling to customers.
BTW: you link to the NADA wikipedia page and claim that they represent the major automakers. They do not. They represent dealerships that sell cars made by the major automakers. The major automakers are not members of NADA.
I think you replied to the wrong comment.
Do you have a general source? I know in many places it's the dealerships themselves contributing to some PAC that advocates for banning it, eg. Oklahoma HB 3994, but I haven't heard of Ford directly doing this. If anything, Ford has locked themselves into the dealership model via historically partnering with them, so now and forever they have to share profit margin with them while Tesla is able to enjoy the full 29% of their automotive gross margins[0].
0: https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Updat...
0: https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Updat...
In the United States, direct manufacturer auto sales are prohibited in many states by franchise laws requiring that new cars be sold only by independent dealers [1].
This source provides some historical context as to where the franchise laws originated from, albeit, I cannot find anything that directly links Ford to my original assertion [2].
The National Automobile Dealers Association (NADA) is responsible for representing 16,500 dealerships across the nation. While NADA abstracts away the ties between dealers and automakers, the vast majority of NADA participants are the legacy/typical automakers [3].
[1] https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes
[2] https://www.cato.org/regulation/summer-2014/tesla-car-dealer...
[3] https://en.wikipedia.org/wiki/National_Automobile_Dealers_As...
This source provides some historical context as to where the franchise laws originated from, albeit, I cannot find anything that directly links Ford to my original assertion [2].
The National Automobile Dealers Association (NADA) is responsible for representing 16,500 dealerships across the nation. While NADA abstracts away the ties between dealers and automakers, the vast majority of NADA participants are the legacy/typical automakers [3].
[1] https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes
[2] https://www.cato.org/regulation/summer-2014/tesla-car-dealer...
[3] https://en.wikipedia.org/wiki/National_Automobile_Dealers_As...
Those franchise laws were written by and lobbied for by the dealership associations in direct response to Ford and GM dabbling in company-owned stores in the 1990s. They were not pushed for by Ford but against Ford, to make it illegal for Ford to directly compete with its franchisees.
> the vast majority of NADA participants are the legacy/typical automakers
I don’t see where in [3] this is supported. NADA is an association of dealerships not auto makers. I think there might be some confusion between say Ford the auto manufacturer and a franchise Ford dealership.
I don’t see where in [3] this is supported. NADA is an association of dealerships not auto makers. I think there might be some confusion between say Ford the auto manufacturer and a franchise Ford dealership.
The lobbying organization of dealers, NADA, actually stopped publishing profit numbers for the first time in the nearly decade I've been watching. [0] It can't help their lobbying effort with data that makes them look bad.
I consider that pretty telling of the markups they have been getting during the pandemic.
[0] https://www.nada.org/nadadata/
I consider that pretty telling of the markups they have been getting during the pandemic.
[0] https://www.nada.org/nadadata/
I recently took delivery of a Mustang Mach-E GT, having ordered it online. There are still some "opportunities" for a dealer to "add value", but Ford has it pretty well streamlined, and it was not hugely different from the process of ordering our Tesla Model 3. The biggest stressor was being uncertain of whether the dealership would try to screw me. Which is a low bar, to be sure. I hope Ford can also adopt Tesla's remote service model (or force dealers to offer it).
Tesla has stopped doing the mobile service thing(at least in our area). Used to be able to get a mobile appointment at a cost, this time I couldn't even get them to come out to swap a battery(much less an LTE upgrade).
If they can't provide service I'll be going to other brands that's have a larger service network.
If they can't provide service I'll be going to other brands that's have a larger service network.
Weirdly enough I'm currently going through my first maintenance request with Tesla and despite me living 15 min from the service center they scheduled a mobile service appointment. I was totally expecting them to ask me to bring it in.
Yep, we used to have it and I'd happily pay but went ~2 months checking the app with no appointments other than a 3 hour one-way trip across a ferry.
The app does a pretty poor job of not allowing you to specify issues outside of the standard flow. I could have called a service center but between how hard it was to source a 12v battery independently(I know it's a deep-cycle battery but still!) and high mileage I just don't think it's a car for us any more.
The app does a pretty poor job of not allowing you to specify issues outside of the standard flow. I could have called a service center but between how hard it was to source a 12v battery independently(I know it's a deep-cycle battery but still!) and high mileage I just don't think it's a car for us any more.
I just double checked and Mobile Service is still available in my area. I could actually get an appointment 2 days from now.
One thing to note though is that not all repairs are mobile serviceable. For example, when my Model 3 needed its front control arm replaced part of that service involves doing an alignment. The Mobile Techs aren't going to be able to do that one.
One thing to note though is that not all repairs are mobile serviceable. For example, when my Model 3 needed its front control arm replaced part of that service involves doing an alignment. The Mobile Techs aren't going to be able to do that one.
I had mobile service come out to my car literally last week. It just depends on availability of technicians and the municipality. They're aggressively hiring for the role however, so it might be a temporary thing.
I assume 12v battery, not the big one?
Yup, the really frustrating part is you can't even order parts. It's easy enough to replace but I just couldn't source it.
I just bought an after market 12v lithium battery: https://www.ohmmu.com/
Shouldn't have to replace it for a long time (if ever) and seems to work fine. More expensive than lead acid but more convenient than service appointment for a 12v battery.
Shouldn't have to replace it for a long time (if ever) and seems to work fine. More expensive than lead acid but more convenient than service appointment for a 12v battery.
Maybe they are learning that any hot vehicle made by Ford, Chevy, or even Hyundai is an absolute joke to purchase. Focus RS? Hell I was trying to buy a Fiesta ST and the dealer treated it like it was a Shelby signed by Carrol himself. I had to call so many dealers to buy a Honda Accord at MSRP last year and not get the seat protector, nitrogen tires..., tint, wheel locks that do fuck all, etc.
Dealer margins on the cars themselves are actually super thin* - they make their money on optional add-ons plus service
* unless the car we're talking about is _really_ expensive
* unless the car we're talking about is _really_ expensive
Historically true, but not true during the pandemic. Dealers are relishing the supply constraints and charging significantly above MSRP.
I’d happily get in line to buy a particular car at MSRP directly from the manufacturer. If I won’t get it for a few months that’s fine. I will not overpay a dealer.
I’d happily get in line to buy a particular car at MSRP directly from the manufacturer. If I won’t get it for a few months that’s fine. I will not overpay a dealer.
The cars the GP is talking about haven't been in production for years. The Focus RS ended production in 18, while the Fiesta ST held on for another year. And I can say that '19 was the best year in recent memory to purchase a vehicle.
Cars like that are weird though. Some dealers dump them for a steep discount, since they don't sell in volume, can sit for multiple model years, and bring in a lot of tire kickers, while some lock them up in a showroom and ask 30% over market value for them.
Cars like that are weird though. Some dealers dump them for a steep discount, since they don't sell in volume, can sit for multiple model years, and bring in a lot of tire kickers, while some lock them up in a showroom and ask 30% over market value for them.
Since all the comments I've seen thus far have been anti-dealership, I thought I should provide one single solitary reason for dealerships. Before I do- I've never worked at a dealership, or a car company, nor owned a car, nor have I driven a car in over twenty years, so I have almost no skin in this game other than my wife and I bought a car last year.
The one thing dealerships do is that they do have a very slight incentive to address issues related to recalls. This is because dealerships are incentivized to do recalls because these service calls are covered by their agreements with the manufacturer as an independent entity, where as a company owned site would not be.
It could then be argued that dealerships provide some level of accountability to manufactures to be independent in reporting defects.
I think this is a weak argument and does not justify the existence of dealerships, but it is a real argument nonetheless, even if it's not sufficient to justify its own existence.
The one thing dealerships do is that they do have a very slight incentive to address issues related to recalls. This is because dealerships are incentivized to do recalls because these service calls are covered by their agreements with the manufacturer as an independent entity, where as a company owned site would not be.
It could then be argued that dealerships provide some level of accountability to manufactures to be independent in reporting defects.
I think this is a weak argument and does not justify the existence of dealerships, but it is a real argument nonetheless, even if it's not sufficient to justify its own existence.
I like that dealerships exist for maintenance and browsing. They’re fine for used car sales. I think they have a place.
It’s the games they play with new cars, especially popular/hard to get models like EVs or the new Bronco that make people hate them.
I think things would work better if the brands owned/ran the dealerships. But I don’t know we can get there from here, at least with traditional cars.
EVs may give brands leverage to change the rules. But dealerships may fight back with more regulations from friendly state governments.
I bought a Mach E in part because I knew the dealers existed. They’re not perfect, but they’re there.
It’s the games they play with new cars, especially popular/hard to get models like EVs or the new Bronco that make people hate them.
I think things would work better if the brands owned/ran the dealerships. But I don’t know we can get there from here, at least with traditional cars.
EVs may give brands leverage to change the rules. But dealerships may fight back with more regulations from friendly state governments.
I bought a Mach E in part because I knew the dealers existed. They’re not perfect, but they’re there.
I think this is a bug of the system, not a feature. Manufacturers and Dealerships have a co-dependent relationship where manufacturers provide a franchised business and the supply of a very unique product and dealerships provide distribution/footprint, last mile logistics and support.
This is where Tesla has an incredible position. They can invest in becoming a logistics company in every possible part of the chain and maximize value at every point.
The other manufacturers have to undo their dealership footprint which is predicated on a +60 year relationship. That divorce will eat alive most classic manufacturers and will permanently block them from making good progress in direct to consumer.
This is what being disrupted looks like.
This is where Tesla has an incredible position. They can invest in becoming a logistics company in every possible part of the chain and maximize value at every point.
The other manufacturers have to undo their dealership footprint which is predicated on a +60 year relationship. That divorce will eat alive most classic manufacturers and will permanently block them from making good progress in direct to consumer.
This is what being disrupted looks like.
The reviews of Tesla‘s support system I‘ve seen in recent years let me come to a different conclusion: If the manufacturer is tight on money or resources, then customers will wait an excessive amount of time to get their issues fixed. Those manufacturers might also stop requiring yearly inspections and let the customer decide when to do them - you can look at that as efficiency („EVs just don’t need as much maintenance“ - which I agree with, I own an EV), but you could also call it a shortcoming in their ability to come up with a proper servicing infrastructure.
In many ways the big disruption is that EVs require orders of magnitude less service than ICE vehicles.
In the case of Tesla, their gains in reliability are directly transformed into a lesser demand for servicing. Once they get into a inflection point with their fit and finish quality they will likely become less dependent on having a traditional service infrastructure. Instead they can double down on more unorthodox models like mobile service.
Traditional manufacturers, in particular Japanese manufacturers, already achieved peak reliability in ICE vehicles. But even with that, they still need to have a service and maintenance footprint because their cars still break.
The average-reliability EV breaks way less than the top-reliability ICE, so you really need way less service infrastructure if you only sell EVs.
In the case of Tesla, their gains in reliability are directly transformed into a lesser demand for servicing. Once they get into a inflection point with their fit and finish quality they will likely become less dependent on having a traditional service infrastructure. Instead they can double down on more unorthodox models like mobile service.
Traditional manufacturers, in particular Japanese manufacturers, already achieved peak reliability in ICE vehicles. But even with that, they still need to have a service and maintenance footprint because their cars still break.
The average-reliability EV breaks way less than the top-reliability ICE, so you really need way less service infrastructure if you only sell EVs.
> EVs require orders of magnitude less service than ICE vehicles
I think not. I have a Hyundai Ioniq, and I still have to change tires 2x a year, fill up wiper fluid, change the pollen filter, get AC/heatpump fluids checked. I had to get an axle boot repaired for 200€ - these things happen to any car. EVs (even Teslas) also have a conventional car battery for backup power - this will die every 4-5 years. People might key your car, or bump into you. If you own a „Monday“ Tesla, chances are you‘ll spend more time at a garage in the first few years than a gasoline Kia or Toyota.
Will you spend less on maintenance? Very likely. An order of magnitude less? Highly unlikely!
I think not. I have a Hyundai Ioniq, and I still have to change tires 2x a year, fill up wiper fluid, change the pollen filter, get AC/heatpump fluids checked. I had to get an axle boot repaired for 200€ - these things happen to any car. EVs (even Teslas) also have a conventional car battery for backup power - this will die every 4-5 years. People might key your car, or bump into you. If you own a „Monday“ Tesla, chances are you‘ll spend more time at a garage in the first few years than a gasoline Kia or Toyota.
Will you spend less on maintenance? Very likely. An order of magnitude less? Highly unlikely!
This is the way things are moving anyway with used car sites like Carvana, Shift, etc. offering non-negotiable pricing.
A welcome change as there’s no reason to charge different prices for the same product in the same state, same county and sometimes even the same town.
A welcome change as there’s no reason to charge different prices for the same product in the same state, same county and sometimes even the same town.
As I remember that was part of the sales pitch for the Saturn brand.
This doesn't mean that the idea itself is a bad one, or that it will never succeed. Saturn isn't the only brand to try this -- Scion did as well.
Tesla has a few major advantages. First, they aren't tied to a dealership network. Second, since they sell online, they can dynamically change pricing with demand, something Saturn and Scion couldn't really figure out.
Tesla has a few major advantages. First, they aren't tied to a dealership network. Second, since they sell online, they can dynamically change pricing with demand, something Saturn and Scion couldn't really figure out.
Oh I totally agree. Despite Saturn eventually failing the fixed pricing was extremely popular the whole time it was offered (can’t remember if they gave up). I’d be happy to have it with my next car.
One of the first models of the non-negotiable car sale was carmax. They always said it was non-negotiable, but if you looked at their sales the actual selling prices were often slightly lower than the list price. So, “non” negotiable.
> there’s no reason to charge different prices for the same product in the same state, same county and sometimes even the same town
There is, and that reason is that you want to charge the maximum amount that the customer will pay. And different customers have different maximums.
Airlines are the kings of a low-margin industry being incredibly aggressive about optimizing pricing, and the exact same ticket will cost you wildly different amounts through different sales channels, on different days, etc.
There is, and that reason is that you want to charge the maximum amount that the customer will pay. And different customers have different maximums.
Airlines are the kings of a low-margin industry being incredibly aggressive about optimizing pricing, and the exact same ticket will cost you wildly different amounts through different sales channels, on different days, etc.
As a customer, I find these type of sale strategies absolutely exhausting. I hate booking flights for this reason. I find a fair price, try to coordinate time off, accommodation, my partner's schedule, and then I go to book and... the price has doubled. Ok, cancel that plan, I'll search for alternatives and wait a few days to see if the prices improve. Ok, there's a deal again, but I'll need to shift things by a week. I'll just make that adjustment to my schedule and get confirmation, go to book, and... the prices have changed again.
For another example, I'm thinking about buying a laptop this month. Companies like Lenovo completely turn me off with their $4,500 prices minus $2,450 in "eCoupons". Another pain point is manufacturers that give different prices for the identical laptop configuration, simply because I started the customization wizard with different base models. I have no respect for these companies as they waste my time. I like the Apple pricing approach. I can feel confident making a purchase at any moment, because I know their prices don't fluctuate weekly, and they're not going to have a 30% off coupon code a month after launch that makes me feel like a fool.
For another example, I'm thinking about buying a laptop this month. Companies like Lenovo completely turn me off with their $4,500 prices minus $2,450 in "eCoupons". Another pain point is manufacturers that give different prices for the identical laptop configuration, simply because I started the customization wizard with different base models. I have no respect for these companies as they waste my time. I like the Apple pricing approach. I can feel confident making a purchase at any moment, because I know their prices don't fluctuate weekly, and they're not going to have a 30% off coupon code a month after launch that makes me feel like a fool.
How is this a bad thing? I hate having to go to dealers to buy a car, they will actively change pricing every opportunity. It’s wretched.
The last couple of times I asked for the exact amount for the car, told them I was getting a cashiers check for that amount, got said check, and then left if they tried to change the price afterwards.
The last couple of times I asked for the exact amount for the car, told them I was getting a cashiers check for that amount, got said check, and then left if they tried to change the price afterwards.
Should do it for all models. The new Ford Bronco is in high demand with low supply. Some dealerships are adding anywhere up to 40k on top of the MSRP as a “market adjustment”.
Why not charge the market rate to remove the shortage ?
They get sued.
This happened with the SRT Viper. Dodge overestimated prices in the first year of new model production, so they dropped MSRP by like 15k the next year. Owners sued successfully to get $15k back.
Now these $80k cars are selling for ~$150-250k. People who purchase Vipers made out like bandits.
This happened with the SRT Viper. Dodge overestimated prices in the first year of new model production, so they dropped MSRP by like 15k the next year. Owners sued successfully to get $15k back.
Now these $80k cars are selling for ~$150-250k. People who purchase Vipers made out like bandits.
Well in the manufactures case they aren't making any of the extra margin, they would be better off knowing there is increased demand and making more of that particular model.
There is little incentive for them to do so.
It takes a lot of money and time to spin up a new production line, and you don't really effect total sales that much... as someone willing to spend an extra $50k for a C8 Corvette or a Bronco will also happily pay sticker and wait 12-18 months.
It takes a lot of money and time to spin up a new production line, and you don't really effect total sales that much... as someone willing to spend an extra $50k for a C8 Corvette or a Bronco will also happily pay sticker and wait 12-18 months.
Yah, I just about died when I saw the $40k dealer markup on the ford raptor a couple years ago. It was a hard NO on my side at that point. I guess post cov19 with all the shortages there is an economic argument for it, but in the past you would think ford/etc would be more than happy to eat chevy/toyota/etc's market share if their dealers weren't playing games with the retail values of these cars, because in may locations the same company owns a whole bunch of dealerships for different companies.
Buddy of mine, ~15 years ago, bought a couple cars by spamming the sales department via email what he was looking for in a 1000 mile radius then playing them against each other. I tried it to a lesser extend a few year after that though and they basically weren't playing ball.
There is a reason a lot of auto communities call them the "stealership" and then post their $1200 radiator replacement quotes.
Buddy of mine, ~15 years ago, bought a couple cars by spamming the sales department via email what he was looking for in a 1000 mile radius then playing them against each other. I tried it to a lesser extend a few year after that though and they basically weren't playing ball.
There is a reason a lot of auto communities call them the "stealership" and then post their $1200 radiator replacement quotes.
It's about time. I hope it carries over to all cars. Having to negotiate a car's price is such a waste of time and resources. I always feel like I got ripped off after a car purchase.
I went to CarMax so I could pay a sticker price I found acceptable without that feeling of having been tricked. Carvana is similar I believe.
This made me think of the Saturn GM brand in the 90s, which made the "no haggle" price and salespeople NOT working on commission a refreshing proposition.
Yeah, I barely remember my dad buying a Saturn in the 90's and he bought a Tesla for similar reasons just before all this craziness started. I'm looking forward to buying a car in the next couple years since these sales models have popped up like Tesla, Ford's, Carvana, etc.
Anybody else get the feeling that some business savvy al gore replicant terminator might have travelled back in time and infiltrated ford.
This is fantastic news and a sign that Ford is taking EVs and competition seriously.
Once this change is implemented, what will the experience at "dealership" be like for customers? I can't help wonder if they'll be met with deep resentment and frustration. Just a bunch of "deadbeats" coming in stealing dealers' time and money preventing them from selling "real" cars and trucks that have predictable kickbacks, incentives, add-ons, service-costs, etc.
As if the experience isn't horrible enough, I can only imagine what it will be like in the near term as these employees' livelihoods as they know (or expect it) are in jeopardy.
(owner of a Ford Explorer, VW eGolf and Tesla stock)
Once this change is implemented, what will the experience at "dealership" be like for customers? I can't help wonder if they'll be met with deep resentment and frustration. Just a bunch of "deadbeats" coming in stealing dealers' time and money preventing them from selling "real" cars and trucks that have predictable kickbacks, incentives, add-ons, service-costs, etc.
As if the experience isn't horrible enough, I can only imagine what it will be like in the near term as these employees' livelihoods as they know (or expect it) are in jeopardy.
(owner of a Ford Explorer, VW eGolf and Tesla stock)
That’s good ripoff pricing at the dealer is a problem.
Where I think this comes from: the F150 is currently the most sought after consumer truck on the market. You cannot get a new one at the dealer. To help the process Ford has set up a way to order them online directly from them. The process isn’t ideal but you generally get the VIN assigned, get notifications of when it’s manufactured, etc. and then eventually delivered. Due to the stupid high demand for these they say that the direct sales like this work and work well. Electric vehicles are similarly hot so they might as well repeat the process and even improve it.
What value do you think dealerships provide?
Political. Dealerships are an invention of government. Look into the history of auto manufacturers and their relationship with US states.
Also, I predict Ford is going to experience some legal difficulties with this. States govern the operation of dealerships, including pricing regulations, and they are not uniform. The dealers themselves are not powerless either, some being large, well heeled enterprises and associations that have fought and won against manufacturers.
Also, I predict Ford is going to experience some legal difficulties with this. States govern the operation of dealerships, including pricing regulations, and they are not uniform. The dealers themselves are not powerless either, some being large, well heeled enterprises and associations that have fought and won against manufacturers.
Interesting history here: https://driving.ca/auto-news/news/rearview-mirror-the-evolut...
I imagine that's why they split into two separate companies. They can run the electric business much like Tesla as a competitor to their ICE business and let it slowly die with the dealerships.
Many dealers sell products from more than one manufacturer. That affordance is the result of legal battles fought and won by dealerships. There will be few incumbent Ford dealers that won't also sell Ford's electric products, legal fictions notwithstanding.
While it is true that Tesla has managed to operate under a double standard, I suspect the entry of traditional manufacturers and dealerships into the all electric market will lead to some resolutions of that. That story is still being written.
While it is true that Tesla has managed to operate under a double standard, I suspect the entry of traditional manufacturers and dealerships into the all electric market will lead to some resolutions of that. That story is still being written.
> There will be few incumbent Ford dealers that won't also sell Ford's electric products
Assuming it's an option. The Ford electric company could go the same route as Tesla and dealerships would have the same recourse they have now against Tesla, because it's a new company.
Assuming it's an option. The Ford electric company could go the same route as Tesla and dealerships would have the same recourse they have now against Tesla, because it's a new company.
> The Ford electric company could go the same route as Tesla
They can try. Unlike Tesla there is a vast number of incumbent Ford dealers with the political pull and legal resources within their states to contest such a scheme.
They can try. Unlike Tesla there is a vast number of incumbent Ford dealers with the political pull and legal resources within their states to contest such a scheme.
As a Californian I have specific consumer protections when buying from dealers that I wouldn’t have when buying direct from the manufacturer. If nothing else, they are a manageable-size target for individual litigation.
As I understood it, historically the primary value dealerships provided is when the automakers had a glut of supplies that they needed to get off the books to make quarterly sales targets for Wall Street. They could stuff the dealership channel with all that excess inventory and count it as sold. [1]
With EVs and the current semiconductor shortage, batteries/semis are in short supply and so production volumes are lower than demand, so there isn't a use case for dealerships that's apparent.
Once EVs mature and excess inventory builds up and has to sit on the books of the automakers and depreciate on the lot waiting for buyers - the dealership model will look more interesting. The bean counters will then team up with marketing department to (re)introduce independent dealerships under a different branded customer UX name.
[1] Chrysler adds dealer incentives to clear stock https://www.nbcnews.com/id/wbna12691116
With EVs and the current semiconductor shortage, batteries/semis are in short supply and so production volumes are lower than demand, so there isn't a use case for dealerships that's apparent.
Once EVs mature and excess inventory builds up and has to sit on the books of the automakers and depreciate on the lot waiting for buyers - the dealership model will look more interesting. The bean counters will then team up with marketing department to (re)introduce independent dealerships under a different branded customer UX name.
[1] Chrysler adds dealer incentives to clear stock https://www.nbcnews.com/id/wbna12691116
who else is going to explain the value of paint sealant and an extended warranty?
As someone who has actually done the job, paint sealant absolutely has utility, but the bottle of paint sealant costs $20, and you apply very little of it to each vehicle. I got paid like $9 to actually apply it (it took very little time). So while it has utility, the consumer is absolutely being ripped off.
Well the robo callers have the extended warranty market covered.
Test drives?
I don’t get how people buy a car without trying it
I don’t get how people buy a car without trying it
Tesla doesn't have dealerships in the traditional sense (aka third party places where you can buy the cars), and you can totally test drive their cars. You just show up to their storefront or gallery, express interest, and they let you test drive them.
I think the GP here means test drive the particular vehicle you're buying, not just some other vehicle of the same make & model (and possibly, but possibly not, trim level).
With Tesla, the most you can do is refuse delivery, but you won't get to drive it before you do that...
GP's not wrong, but as someone who only started driving frequently well into my 30s, I've personally never had the "I must kick the tires" mentality -- and Tesla's at-the-time "7-day return policy" helped a lot with concerns about a lemon.
With Tesla, the most you can do is refuse delivery, but you won't get to drive it before you do that...
GP's not wrong, but as someone who only started driving frequently well into my 30s, I've personally never had the "I must kick the tires" mentality -- and Tesla's at-the-time "7-day return policy" helped a lot with concerns about a lemon.
Most states (maybe all?) have a common 3-day "regret" clause for many types of transactions, including car buying, mortgages, etc. So you can, in many cases, still 'take delivery' and then if you change your mind in 72 hours, you can return it. Again, I forget if all states have a similar set of laws for this or only a subset.
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The same way people buy a phone without trying it. Electric cars will be appliances. Some will pay premium for Tesla like for Apple, and others will find that Hyundai's are a good bang for buck too.
I bought my past 2 cars without test drives, relied solely on internet research and reviews.
Haven't been disappointed yet. But then, I drive a car for transportation, not for a driving experience.
Haven't been disappointed yet. But then, I drive a car for transportation, not for a driving experience.
I figure the car companies would provide enough pictures and dimensions to make a test drive unnecessary, at least for me. The seats are adjustable, and I never have a problem fitting into the various rental cars that I've driven.
I just want to know if it will fit a double bass.
I just want to know if it will fit a double bass.
Because of the reputation. I've bought two cars without driving them first.
Various companies offer very easy returns or various other forms of testing directly.
carvana, carmax and tesla all give you an option to return in a certain timeframe no questions asked. on paper anyway.
Serious answer: buffering. Right now, cars are undersupplied and so dealerships seem like a waste. But in times of excess inventory, dealerships guarantee that every market has a supply of cars available for shopping and testing on local lots, and guarantee the manufacturer a less "bursty" revenue stream.
That doesn't justify their existence in a world where cross-continent orders over the internet are possible. But historically they've had a real role to play.
That doesn't justify their existence in a world where cross-continent orders over the internet are possible. But historically they've had a real role to play.
Agree - I recently bought a vehicle (jeep) out of state. Did everything from pricing, sale, logistics, and delivery over email. It was fantastic!
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Capital by financing cost of stores, repair shop and whatnot.
Training for boiler room salesmen.
Interesting to note that I can't find that paragraph in the WSJ from Friday, even when looking at the writers articles. He wrote one article about the Ford EV split on Friday but made no mention of dealer changes. https://www.wsj.com/articles/ford-creates-electric-vehicle-g...
The franchise dealer model in the USA maybe coming to an end. “Existing franchise dealers have a fundamental conflict of interest between selling gasoline cars, which constitute the vast majority of their business, and selling the new technology of electric cars,” CEO Elon Musk writes on Tesla’s site. “It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business.” Tesla also points out that its prices are fixed, and its salespeople are paid primarily on salary, not commission. “Customers will never be rushed into a purchase, haggle over the price of the car, wonder if they could get a better deal across town, or puzzle over confusing add-on products, like GAP insurance or rust-proofing.”We think that it’s absolutely critical that we have a direct relationship with our customers,” Todd Maron, Tesla general counsel, said “We look at our stores as educational centers. There are all these questions people have; we view our salespeople as teachers who can patiently answer them.”
The only real conflict of interest is that dealer service centers are often the profit centers of most dealerships, so a 50% maintenance cost reduction[0] will likely translate to declining revenues for the dealerships.
0: https://www.transportation.gov/rural/ev/toolkit/ev-benefits-...
0: https://www.transportation.gov/rural/ev/toolkit/ev-benefits-...
Tesla claims they operate their service centers at cost and the goal is that they are explicitly not a profit center. This is why so many dealerships are disincentivized to sell EVs however. Less maintenance (due to less physical moving parts. No fan belt, no fly wheel, no alternator, no pistons, etc) means less service that can be marked up. The recommended service on tesla's best sellers (the model 3 and model y) is only every two years.
Tesla claims a lot of things that end up being...less than 100% true.
Eventually, this policy, if it succeeds, will lead to generic-brand cars. Big discount retailers will be selling store-brand cars, perceived as slightly inferior, for a little less than the brand-name manufacturer prices, perhaps purchased by the retailers under confidential deals from the same manufacturers selling the premium cars, or perhaps made by very low-wage manufacturers who do only final assembly and obtain components/assemblies from the same suppliers who supply the brand-name makers. It works for soda pop and corn flakes, and people gotta have cars.
I'm not seeing any off-brand Teslas sold at Wallmart. I think this is a bad take.
When I wrote, "Succeeds," I meant becomes a standard practice of all the major car manufacturers. It is the elimination of some forms of price competition that will drive the development of other forms of the same. Maybe etsy and alibaba will start selling automobiles, or maybe you will be able to assemble your own car from legos; maybe the dealers or manufacturers will be able to offer bargain seekers discounts on open-box or previously returned vehicles, or free floor-mats, or inflated values on their trade-ins, or special financing, etc. Those cars aren't going to sell themselves.