July 26, 2021

Gp Delivers1

The excellent automotive artisans1

How Elon Musk and Tesla changed auto retailing

Aside from more quickly transitioning the world to EVs, Musk has long been focused on disrupting the traditional automotive retail model.

“How you buy a car and the quality of people you interact with, what their motivations are, all those things; Tesla has redefined all of that,” Howard Drake, dealer principal at California dealerships Casa de Cadillac in Sherman Oaks, Buick-GMC Sherman Oaks and Subaru Sherman Oaks, told Automotive News.

Early on, Musk said dealership salespeople, who mostly relied on commission from selling gasoline-powered vehicles, realistically couldn’t be expected to push EVs. Musk’s contempt for dealers — he labeled many as “extremely heinous” in an internal email that leaked in 2013 — has led to a number of legal battles in states challenging long-standing franchise laws.

Tesla is still fighting those battles today in Connecticut, New York and Washington state. And now it’s teaming up with rivals such as Rivian to rewrite franchise laws to benefit other EV makers.

“We support our other EV-only manufacturers and their desires to sell direct to consumers, to invest, to create jobs and to do that unfettered, as we are allowed,” Thad Kurowski, senior policy manager at Tesla, said at a hearing in Washington state this year, according to legislative committee records.

Despite legal victories elsewhere, such as Michigan, the company is still barred from selling vehicles in Texas, where it will soon open a massive assembly plant. That means Tesla will have to ship its Texas-built vehicles outside the state for Texans to buy them.

And while a number of startups have indicated they plan to adopt a Tesla-like direct-sales model, most state laws continue to prohibit established manufacturers such as Ford or GM from doing the same.

For what it’s worth, Ford executives say dealers will remain a key piece of their retail strategy even as they introduce new online sales tools. Farley used a speech at this year’s NADA Show to praise retailers for adapting to change while noting they’ll soon have many more EVs to sell.

Last month, Farley outlined a new strategy focused on two upcoming commercial EVs, the E-Transit van and F-150 Lightning pickup.

“Our dealer network,” he said, “can be a huge advantage.”

Hannah Lutz contributed to this report.