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Tesla continues fight for direct retail business model

Despite its short life, Tesla Motors was more or less successful with its business model of avoiding the franchised dealers and selling directly to consumers. How ever, as it seams according to the last development of the situation, this way is no more secure for Tesla and for other startups. In fact, the next company to try direct sales in the U.S. will face a much tougher fight thanks to the dust Tesla raised up in its battles.

Estate of Michigan, continues with its ban on direct sales in 2014, and fully denied Tesla’s request for a dealer license last month after negotiations failed.  In Missouri, a dealer license is granted to Tesla, with explanation that it had been granted in violation of the state’s franchise laws. Tesla had applied to be its own franchisee. However, in Missouri is prohibited renewing or giving any licenses to manufacturers.

Besides, it is expected that some of the 23 states in which Tesla is allowed to sell directly reconsideration of their openness in light of the higher-volume, lower-cost Model 3 and subsequent Model Y crossover.

For some years Lawmakers in U.S. are placed between two different views of dealers’ participation in an electric-car market. On one side are dealer groups and other defenders of the franchise system who are on the stand the state franchise laws should apply equally to all manufacturers.

Tesla’s point of view is that position for electric vehicles producers is unsustainable because traditional franchise is traditional franchises would put its electric cars at an unfair disadvantage. EV producer is suspicious that dealers offering multiple brands would rather conduct buyers to gasoline vehicles, because its better for their business.

Not surviving, developing, or evolving into a hybrid?

With its first 2 models Tesla had narrow audience and relatively low volume wasn’t troubled dealer groups.  But Tesla’s next round of models, the Model 3 and Model Y, that would cost $35,000, and be produced in hundreds of thousands, could change that.

To achieve the volume needed to make those products successful and profitable, Tesla will need wide retail and service network as it can provide, and its own. Dealer groups and legacy automakers, especially GM, which has its own long-range EV debuting late this year, are concerned what will happened if a wider consumers will get used to the idea of buying a car without a middleman, no matter who is the producer .

With markets off-limits, and other potential problems, Tesla is continuing its battle. Last month, EV maker filed the lawsuit against Michigan officials in federal court, due to the prohibition on direct sales as protectionist and unconstitutional.

No matter what Tesla will do on Court, it is still unclear how its business model will develop, or even is it going to survive as it is at the moment, or evolve into a hybrid of direct and franchised sales. Many dealership groups and associations across the country have made it clear they’d love the opportunity to sell Tesla cars. According to the company officials EV maker has no plans to adopt any other business model, even though that critics and supporters, both think it’s inevitable.

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