Tesla’s Play to Change the Auto Industry

Posted by Allan Steinmetz on 27 March 2014

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My new favorite magazine is called The Week. It is only 35 to 40 pages long and does not have a lot of advertising in it. It reminds me of the Cliff notes version of Time or Newsweek. It is a synopsis of the week’s news through the eyes of bloggers, news bureaus’ op-ed pages and newspaper reporters. Any given article is no more than a half of a page long and summarizes the topic by providing quotes by reporters/bloggers who have written on the topic over the course of the week. I like reading it undisturbed by cell phones and tablets on Saturday afternoons while sipping a hot cup of tea or occasionally a glass of white wine.

You see, during the course of my busy week I rarely have time to absorb and relax with newspapers like I used to. I’m inundated by email, texts and web browsers shouting at me delivering what they want rather than what I want to know. I find this form of reading enjoyable, meaningful and fulfilling in understanding and gaining information about the world around me.

I recently read an article about Elon Musk and Tesla. The crux of the article stated that many states have laws on the books that prevent manufacturers from marketing their automobiles directly to consumers. “State officials have raised a stink over the company's direct-sale business model, claiming it violates a state law requiring companies to sell cars through certified dealerships”. Basically, cars have to be sold and serviced through a dealer network. “But dealers say allowing direct sales "would harm consumers, limiting their ability to shop around for the best price, trade in vehicles, or obtain financing for a new car." What?

After reading the article I was really upset. Here is an innovation created by a true 21st Century innovator and the mainstream dealer establishment around us is holding us back. That would be like saying that Apple would only be allowed to sell its technology through Best Buy, Target and Walmart instead of at Apple stores or online. It makes no sense.

As a marketer, what does one do? I can think of at least 3 ideas. In the new social media savvy world that we live in, customers must become more engaged and speak up against this resistance to change. Becoming an advocate of the free market reinforces our democracy and capitalism. Second, we need to let the leaders at Tesla know that they have a strong backing of support that should strengthen their resolve to change the marketplace for the better. And lastly we should lobby the established distribution/dealer network as well as our government leaders to express our displeasure over their manipulation of the law due to money interests and lobbyists. If dealers become irrelevant, so let it be. Did we restrict car manufacturers and dealers from being established in order to protect buggy manufacturers, blacksmiths and buggy whip makers?

I may never actually buy a Tesla but just the idea that outside “protectionist dealers” could have an unfair advantage based on irrelevant laws that were put in place long ago is just something that seems to be wrong and out of date. What do you think?

 Connect with Allan on Twitter @shteinman