Tesla facing dealership challenge over its ownership of factory stores

Article by Anita Panait, on October 9, 2012

Elon Musk’s strategy to sell Tesla vehicles involves opening a number of factory stores and replicating the Apple experience in them. Tesla has successfully opened 17 factory stores 10 states and the District of Columbia, mostly in shopping malls. The electric carmaker is also set to open six more stores this fall.

However, the carmaker is facing challenges from a number of dealer associations and state regulators in at least one case. These detractors claim that Tesla's stores violate state franchise laws that prohibit factory ownership of dealerships.

Protesting dealer associations also claim that Tesla's factory stores pose unfair competition for competing dealerships.

They also claim that these stores are inconvenient for consumers who need to have their vehicles repaired. These dealers associations say that if left unchallenged, Tesla stores threaten the franchise system.

Bob O'Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association, remarked that Tesla’s factory store format, if successful, could be replicated by another carmaker which also builds electric vehicles.

O'Koniewski, described Tesla’s format as a separate system that bypasses dealers that it is “extremely problematic."

The New York State Automobile Dealers Association, on the other hand, has commissioned dealer lawyer Leonard Bellavia to write a report for an upcoming newsletter on the threat of BMW using a direct-to-consumer model to sell its upcoming i-car line of electric vehicles.

BMW has remarked that it plans to sell its i-cars through U.S. franchised dealers. Tesla, meanwhile, quipped that it is doing everything to comply with state and local laws

George Blankenship, Tesla's vice president of sales, said that the carmaker does whatever state and local laws allow them to do. Blankenship remarked that Tesla’s sales method is unique for each location.

The world’s first fully electric car, Tesla Model S, is a breakthrough in car engineering. Putting together efficiency, safety and performance, it has set a new benchmark for the 21st century car by achieving almost-perfect safety ratings, the longest range an electric car can go, and over-the-air software enhancements that keep it on top of its competitors.

Tesla Design

Created on the Tesla platform, the battery is installed on the floor. This gives the Tesla Model S a super stable center of gravity, heavily decreasing rollover risk while also improving performance and handling. In the absence of an engine, the Tesla Model S has a bigger crumple zone compared to other performance cars to absorb front end impact energy.

Safety Features

Tesla Model S belongs to the roster of the safest cars in the world. Much of its protection features is because of the one-of-a-kind electric drivetrain that is installed under the floor. Model S has an extremely low center of gravity, cutting down rollover risk. The safety record of the Model S is proven by its NHTSA and Euro NCAP 5-star safety rating together with a record of the lowest likelihood of injury to passengers when it was tested in the US.

The Model S has standard safety features like the collision warning, lane departure warning, automatic emergency braking, blind spot detection, and optional comfort features including autosteer, summon, traffic-aware cruise control, and autopark. With all of these, the Model S keeps its status as the safest vehicle on the road.

Fully Electric All Wheel Drive

Because of two motors installed at the back and at the front, Tesla Model S independently and digitally controls torque to the back and front wheels. The outcome is exemplary traction control at any condition. Different from conventional all-wheel drive cars that compromise fuel efficiency for improved traction, Tesla's Electric All Wheel Drive system enhances efficiency.

Topics: tesla, dealership

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