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CKNSLS

EV Transition-Can Dealers handle it?

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It seems that there are mark ups on the Mustangs upon delivery-Tesla you order and that's the price you pay.  

Edited by CKNSLS

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1 hour ago, CKNSLS said:

It seems that there are mark ups on the Mustangs upon delivery-Tesla you order and that's the price you pay.  


I haven’t seen ADMs on Mach-E yet but the reason Tesla is allowed to sell factory direct is they’re not directly challenging local dealer sales.  As that changes with more legacy mfr BEVs you better believe the dealers will sue Tesla and stop factory direct sales in most states.

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1 hour ago, CKNSLS said:

It seems that there are mark ups on the Mustangs upon delivery-Tesla you order and that's the price you pay.  


I don’t know if you have heard, but there is a chip shortage.  Vehicles are hard to come by as a result.  Ford and the Mach-E is not the only vehicle experiencing markups.  Try getting a Bronco, or a Telluride, or any number of other vehicles. Tesla is not immune to ADM, they just call it a price increase. 
 

https://electrek.co/2021/11/12/tesla-increases-model-y-prices-again-new-incentives-coming/amp/

 

Early in 2021, Tesla was selling the Model Y Long Range for just $50,000. It is now $9,000 more expensive.

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I've seen $2500 markups on Mach Es on the dealers lot, which was lower then what I saw on a Maverick in the same lot!

Anyways, Tesla raises their prices all the time as reported in the previous post. 

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On 12/5/2021 at 12:52 PM, akirby said:

As that changes with more legacy mfr BEVs you better believe the dealers will sue Tesla and stop factory direct sales in most states.


They can sue them but I think they won’t win or else they would of already halted this in many states. 

I’m not as convinced as I once was that having a dealer is as much of an advantage as it was previously.  Full disclosure I’ve worked for various OEM’s supporting dealers efforts so this is not a statement said lightly.  
 

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1 hour ago, kyle said:


They can sue them but I think they won’t win or else they would of already halted this in many states. 

I’m not as convinced as I once was that having a dealer is as much of an advantage as it was previously.  Full disclosure I’ve worked for various OEM’s supporting dealers efforts so this is not a statement said lightly.  
 


They haven’t been threatened yet by Tesla.  That will change as legacy BEV volumes (and Tesla and others) ramp up.   In Michigan they had to get a special exception.  As soon as it starts to impact the legacy dealers business they’ll be in court and they’ll win - franchise laws are crystal clear and there isn’t enough political clout at the state level to change the laws.  
 

In order for Tesla or Rivian or Lucid to get more than 200k sales requires a big capital investment in delivery and service even if they stick with online ordering.  You can get by with very minimal investment at lower volumes but not if you’re selling 500k or 1M a year.  That’s the advantage the legacy mfrs have with their existing dealer networks and delivery process.  Of course that comes with some negatives too.

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Also remember - if Tesla is allowed to sell factory direct then Ford and GM would be allowed to do it - do you think the dealers will just let that go?

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13 hours ago, akirby said:


They haven’t been threatened yet by Tesla.  That will change as legacy BEV volumes (and Tesla and others) ramp up.   In Michigan they had to get a special exception.  As soon as it starts to impact the legacy dealers business they’ll be in court and they’ll win - franchise laws are crystal clear and there isn’t enough political clout at the state level to change the laws.  
 

In order for Tesla or Rivian or Lucid to get more than 200k sales requires a big capital investment in delivery and service even if they stick with online ordering.  You can get by with very minimal investment at lower volumes but not if you’re selling 500k or 1M a year.  That’s the advantage the legacy mfrs have with their existing dealer networks and delivery process.  Of course that comes with some negatives too.


They got the exemption because if the state legislator didn't act to change the law on the books then the full law would have been tossed out allowing full OEM sales, Dealers knew this so lobbied to get the law changed to prevent OEM's from selling directly. Individual dealership are selling left and right in mid and large markets, getting 30 or 40 million today and not knowing what the future will hold is driving that. Even in small markets the days of a family run dealership are fading fast yes it might be a small town dealer, but the dealer owns 10 other small town dealers across rural areas. Big markets are seeing the public traded companies and private equity dealer groups come in a buy them all up. Yes the name might change to something that sounds local but that group might own 50 or 100+ dealerships under different local dealer names. Problem with those groups is they really don't care about service in the same way as they own everything around the area. Toss in the biggest headache for the local dealers used car pricing is Vroom and Carvana as they have decimated the used car business pricing and ability to find a customer exactly what they want in the used market.

 

One younger dealer I know is taking that and embracing that for new vehicles as he see that as the future. He will start doing new vehicle deliveries the way they do with used cars; everything is online delivery truck shows up and unloads your new car in your driveway or office. No ADMs, No crazy addons, and No hours at a dealership. 2022 he expects to make a huge push into that world, he knows however he is going to make a lot of the old traditional dealers very angry doing this.

Edited by jasonj80
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Autoline After Hours Episode 581 on December 2, 2021 addressed the question "Are dealerships doomed?". As with legacy automakers, if dealerships don't adapt quickly not only to the transition to 100% electric cars, but also to new business models for automotive retailing like what jasonj80 mentioned, they will die.

 

 

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1 hour ago, rperez817 said:

Autoline After Hours Episode 581 on December 2, 2021 addressed the question "Are dealerships doomed?". As with legacy automakers, if dealerships don't adapt quickly not only to the transition to 100% electric cars, but also to new business models for automotive retailing like what jasonj80 mentioned, they will die.

 

 

 

I really think people will eventually get tired of buying everything sitting on a couch including new houses and vehicles. It always used to be fun going window shopping and seeing products up close.

 

Living vicariously gets boring after awhile. We are human beings and built to move, touch, and feel. Nothing against new technology that makes life a little easier, but real life is cooler and healthier. No brick and mortar anymore is not a reality I would want to live in. About 25% of my exercise comes from parking far away from stores and doing lots of walking. Humans are built to walk. 

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33 minutes ago, FordBuyer said:

We are human beings and built to move, touch, and feel. Nothing against new technology that makes life a little easier, but real life is cooler and healthier. No brick and mortar anymore is not a reality I would want to live in. About 25% of my exercise comes from parking far away from stores and doing lots of walking. Humans are built to walk. 

 

Rivian has a cool concept related to this for its retail consumer experience. It operates a "Hub" in Venice Beach, California that offers education sessions about Rivian vehicles in addition to fun open-air events and activities like gardening, adventure travel workshops, play space for kids and families, etc.

 

Ordering a Rivian vehicle is still done online, no vehicle sales take place directly at the Venice Hub. Venice Hub - Spaces - Rivian

 

210929_Stella_Kalinina_Venice_0499_RX_sc210929_Stella_Kalinina_Venice_1290_RX_bf

211001_YE-RIN-MOK_ARCHITECTURE-9272-sh3_

 

 

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2 hours ago, FordBuyer said:

 

I really think people will eventually get tired of buying everything sitting on a couch including new houses and vehicles. It always used to be fun going window shopping and seeing products up close.

 

Living vicariously gets boring after awhile. We are human beings and built to move, touch, and feel. Nothing against new technology that makes life a little easier, but real life is cooler and healthier. No brick and mortar anymore is not a reality I would want to live in. About 25% of my exercise comes from parking far away from stores and doing lots of walking. Humans are built to walk. 


While I don’t disagree with you, it seems like younger generations don’t care about that stuff. 
 

plus add in the shitshow COVID has cause with society, I think a lot people rather not interact with people or have completely forgotten how to. 

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22 hours ago, FordBuyer said:

 

I really think people will eventually get tired of buying everything sitting on a couch including new houses and vehicles. It always used to be fun going window shopping and seeing products up close.

 

Living vicariously gets boring after awhile. We are human beings and built to move, touch, and feel. Nothing against new technology that makes life a little easier, but real life is cooler and healthier. No brick and mortar anymore is not a reality I would want to live in. About 25% of my exercise comes from parking far away from stores and doing lots of walking. Humans are built to walk. 

 

I know for me, there are some things I don't care about "touching and feeling" and could order online.  But I'm with you, I like seeing other things in person, up close, etc.

 

19 hours ago, silvrsvt said:


While I don’t disagree with you, it seems like younger generations don’t care about that stuff. 
 

plus add in the shitshow COVID has cause with society, I think a lot people rather not interact with people or have completely forgotten how to. 

 

Yeah, it seems like they'd rather sit on tik tok and instagram all day.  I don't get it, but shrug.

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21 hours ago, silvrsvt said:


While I don’t disagree with you, it seems like younger generations don’t care about that stuff. 
 

plus add in the shitshow COVID has cause with society, I think a lot people rather not interact with people or have completely forgotten how to. 

 

You may be right, but once young people have children and approach middle age, things change. I have friends 22 years younger than me that I have known for a long time, and see how they change over time. And they are very very tech savvy. 

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On 12/6/2021 at 9:18 PM, akirby said:

They haven’t been threatened yet by Tesla.

 

Sonic Automotive president and director Jeff Dyke said otherwise back in 2019. Nowadays, Tesla's growth since then only makes things more tenuous for both franchised new car dealerships and the legacy automakers they represent.

 

There’s no question. I mean … they’re calling out to sell well over 300,000 cars this year, they sold a lot of cars last year. I can tell you that I’ve spent a lot of time in manufacturer meetings, and five years ago, Tesla was just not even a real big topic, and today it’s the top of everybody’s board, and it needs to be.

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2 hours ago, rperez817 said:

 

Sonic Automotive president and director Jeff Dyke said otherwise back in 2019. Nowadays, Tesla's growth since then only makes things more tenuous for both franchised new car dealerships and the legacy automakers they represent.


Manufacturers aren’t the issue.  It’s local dealers.  And local dealers have not seen a dramatic drop in new car sales because of Tesla.  They’re selling all of the Mach-Es that Ford can build so it’s a non issue.

 

When legacy dealers have BEVs sitting on the lot gathering dust and Tesla and others are selling direct into their markets they’ll have Tesla and the others in court so fast it will make your head spin.

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48 minutes ago, akirby said:

Manufacturers aren’t the issue.  It’s local dealers.  And local dealers have not seen a dramatic drop in new car sales because of Tesla.  They’re selling all of the Mach-Es that Ford can build so it’s a non issue.

 

When legacy dealers have BEVs sitting on the lot gathering dust and Tesla and others are selling direct into their markets they’ll have Tesla and the others in court so fast it will make your head spin.

 

Local dealers operated by Sonic Automotive were impacted by Tesla's sales growth when Mr. Dyke made that comment in 2019. Specifically, Sonic's BMW franchises were hit hard by customers who defected to Tesla, which lowered Sonic Automotive's earnings overall in 1Q 2019. 

 

Of course, right now the supply and demand situation in the new car market means that any dealership for any brand can easily and quickly sell whatever new vehicles manufacturers send them. But that situation won't last forever, and legacy automakers and dealerships alike who refuse to embrace a 100% electric car future will become relics of history.

 

Elektrek said "It was always Tesla’s goal to light a fire under other automakers to accelerate their EV programs and going after their sales is the best way to do it." Tesla is a top priority for automakers, says BMW dealer who admits Model 3 is affecting sales - Electrek

Edited by rperez817

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On 12/5/2021 at 11:12 AM, CKNSLS said:

It seems that there are mark ups on the Mustangs upon delivery-Tesla you order and that's the price you pay.  

I think this must mostly an American thing. I haven't seen any mark up on Mach E's here in Ontario but as soon as they come into the inventory online they are gone again! 

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3 hours ago, rperez817 said:

 

Sonic Automotive president and director Jeff Dyke said otherwise back in 2019. Nowadays, Tesla's growth since then only makes things more tenuous for both franchised new car dealerships and the legacy automakers they represent.

 

 

 

 

How much of Tesla sales are domestic compared to overseas. Seems to me most of the latest growth is overseas. Tesla as of yet has only one plant in U.S. building vehicles, and Model S and X sales are stagnant at best. The Model 3 is a sedan and only the Model Y is in the sweet spot. And try to get a Model Y under $60,000 and no tax break. No wonder the Mach E sells well. 

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1 hour ago, FordBuyer said:

How much of Tesla sales are domestic compared to overseas. Seems to me most of the latest growth is overseas. Tesla as of yet has only one plant in U.S. building vehicles, and Model S and X sales are stagnant at best. The Model 3 is a sedan and only the Model Y is in the sweet spot. And try to get a Model Y under $60,000 and no tax break. No wonder the Mach E sells well. 

 

Tesla doesn't break out vehicle delivery figures by region. Based on production figures at Fremont and Gigafactory Shanghai and past trends for sales, I'd estimate half of Tesla vehicle deliveries in the first 3 quarters were to U.S. customers, and half to overseas customers. 

 

You are correct that a lot of Tesla's growth has been outside the U.S., particularly Europe and China. But Tesla has grown consistently in the U.S. and Canada markets since Q3 2019, too.

 

Mustang Mach-E sales have been better than expected, it's now the best-selling non-Tesla BEV crossover in the U.S. market. That should make Jim Farley happy.

 

tesla market share region.png

Edited by rperez817

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3 hours ago, akirby said:


Manufacturers aren’t the issue.  It’s local dealers.  And local dealers have not seen a dramatic drop in new car sales because of Tesla.  They’re selling all of the Mach-Es that Ford can build so it’s a non issue.

 

When legacy dealers have BEVs sitting on the lot gathering dust and Tesla and others are selling direct into their markets they’ll have Tesla and the others in court so fast it will make your head spin.

 

So you are saying that the dealer's don't care right now cause everything is rosy but when sales tank in maybe 9 months, so whatever the date is, they will sue Tesla in that respective state and force Tesla to stop selling in that state or what?  They will never use a dealer network and I strongly believe if the dealer network was frightened 5 years ago by Tesla, they sure as hell are now and not waiting for their sales to drop to take action. 

 

I think some states will support the dealer network and their franchise rights (more left leaning states for sure) but other's not so much. 

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48 minutes ago, kyle said:

 

So you are saying that the dealer's don't care right now cause everything is rosy but when sales tank in maybe 9 months, so whatever the date is, they will sue Tesla in that respective state and force Tesla to stop selling in that state or what?  They will never use a dealer network and I strongly believe if the dealer network was frightened 5 years ago by Tesla, they sure as hell are now and not waiting for their sales to drop to take action. 

 

I think some states will support the dealer network and their franchise rights (more left leaning states for sure) but other's not so much. 


It doesn’t matter whether states care or not.  It matters whether a dealer cares enough to file a lawsuit.  There is no way Tesla wins a lawsuit under the current laws.  
 

If they allow Tesla and others to continue then Ford could also start selling factory direct.  In what universe do you think dealers would let that happen?

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3 hours ago, akirby said:


It doesn’t matter whether states care or not.  It matters whether a dealer cares enough to file a lawsuit.  There is no way Tesla wins a lawsuit under the current laws.  
 

If they allow Tesla and others to continue then Ford could also start selling factory direct.  In what universe do you think dealers would let that happen?


not sure how this plays out but you are assuming Tesla loses that lawsuit and I’m not so sure. 
 

Ford bought up dealers in a few markets around 10 plus years ago and there was a ton of push back from their network and Ford quickly exited owning their own points. 
 

Do you think Tesla just exits certain states? I don’t see that happening and the demand is to strong for their products and others coming into the market. 
 

I would be interested to hear others that are tied to the dealer network that can comment on this that may have other thoughts.  
 

Having worked for several OEM’s in regional positions I’m aware of the strength of the dealer network and franchise laws. I’m just perplexed that there has not been a concentrated effort to address this years ago.  
 

 

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29 minutes ago, kyle said:


not sure how this plays out but you are assuming Tesla loses that lawsuit and I’m not so sure. 
 

Ford bought up dealers in a few markets around 10 plus years ago and there was a ton of push back from their network and Ford quickly exited owning their own points. 
 

Do you think Tesla just exits certain states? I don’t see that happening and the demand is to strong for their products and others coming into the market. 
 

I would be interested to hear others that are tied to the dealer network that can comment on this that may have other thoughts.  
 

Having worked for several OEM’s in regional positions I’m aware of the strength of the dealer network and franchise laws. I’m just perplexed that there has not been a concentrated effort to address this years ago.  
 

 


How does Tesla lose a lawsuit when the law clearly says that auto mfrs are prohibited from selling directly to the public?

 

I think Tesla will be forced to franchise independent dealerships if they intend to continue ramping up sales and market share, at least in most states.

 

Now I don’t think that will happen - I think Tesla will either merge or more likely just become a supplier to other mfrs and continue their other non automotive businesses.  

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9 hours ago, akirby said:


How does Tesla lose a lawsuit when the law clearly says that auto mfrs are prohibited from selling directly to the public?

 

I think Tesla will be forced to franchise independent dealerships if they intend to continue ramping up sales and market share, at least in most states.

 

Now I don’t think that will happen - I think Tesla will either merge or more likely just become a supplier to other mfrs and continue their other non automotive businesses.  

 

Interesting optics and if it was as easy as filing a lawsuit not sure why this has not already occurred and proceeded to be such a slam dunk win. 

 

I've never thought of them being a supplier to other OEM's, and would think they would find an independent dealer network first (AutoNation, Sonic, etc.) first. Many of those are public traded companies and would obviously benefit tremendously. 

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