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May 20, 2015

Someone break out the Ouija board, we need Mr. Tesla, STAT!

Tesla is the Apple of electric vehicles and power management. They build specific things, they work together and nobody HAS to be a middle man to purchase an Apple brand electronic device. Apple lets that happen to distribute their products, but could probably automate retail right out of the picture.

Tesla on the other hand, would have to lower their profit margin to make the cars, that are arguably expensive for everyday consumers, reasonably expensive for the market. Additionally, Tesla would have to manufacture cars in larger quantities and run the risk of not selling a 2015 version within the 2015 fiscal/calendar year. An expensive task, and one that doesn’t make sense to Tesla.

So, in comes someone with apparently no grasp of what Tesla is, and who Tesla was and when both of these existed in time:

Democratic state Rep. Senfronia Thompson criticized the company by saying that “it would have been wiser if Mr. Tesla had sat down with the car dealers first.” But there is no “Mr. Tesla” involved in the company, which is named after the late inventor Nikola Tesla and is founded and run by Elon Musk.

I guess Elon Musk has to wear yet another hat and inform the state Rep that Tesla, the company isn’t the Tesla the person that needs to come and talk to middle men and form some sort of deal that will ultimately cost Tesla [the company] their ability to get their product out in a timely and cost effective just-in-time method instead of what car dealerships are used to, which is bulk manufacturing and then inventory management.

It just seems that in the age of the Internet, those who don’t adapt will die off and when I can see and purchase with greater information distribution and less pressure and time waste by doing it online, why would I want to mess with a dealership and its internal politics when all I want is a reliable car without the sales lot spin and pressure. My last car purchase took hours longer than it should have and ultimate came down to me just dropping the price that I knew the car should sell for onto the table and saying “that’s it.” I got the car.

Internal politics you say? Well, it’ll fall into the category of fiscal management, but really it is just manufacturers being required to use middlemen(and women) to distribute a vehicle.

A car dealer orders vehicles from the manufacturer for inventory and pays interest (called flooring or floorplanning). Dealer holdbacks are a system of payments made by the manufacturers to their dealers.[2] The holdback payments assist the dealer’s ability to stock their inventory of vehicles and improves the profitability of dealers. Typically the holdback amount is around 1% to 3% of the vehicles’ manufactures suggested retail price (MSRP).[3] Hold-back is usually not a negotiable part of the price a consumer would pay for the vehicle, but dealers will “give up” the dealer holdback to get rid of a car that has been sitting in its inventory for a long time or if the additional sale will bring them up to the manufacturer’s additional incentive payments for reaching unit bonus targets.[4] The holdback was originally designed to help offset the cost the new car dealer has for paying interest on the money that is borrowed to keep the car in inventory, but is in effect lowering the dealer’s gross profit, and thus the sales commissions paid to employees.[5] The holdback allows dealerships to promote at or near invoice-price sales and still achieve comfortable profits on such transactions.[5]

– Wikipedia ( Car Dealerships in the United States )

 

I don’t own a Tesla. I’d like to, but for my location the infrastructure isn’t there. One day, probably closer to my retirement, I’ll own a Tesla. Hopefully by then some serious battery innovation will take place. With the Tesla Powerwall now in existence, I’m thinking our next house will be grid free. At $3500 a wall, I think 2-4 of them would enable me to remove the house from all cables except for High Speed Internet and I hope that Google Fiber comes rolling in soon.

Competition is key, and when you sell one product and can successfully deliver said product without the need of a distribution system like a dealership, then you shouldn’t be forced to incur costs. For a business-minded state like Texas, this should have been a no-brainer. But, I guess everyone likes to cherry pick their argument. I can’t count how many times I’ve run across the path of a Texas business person who says “The government needs to stay out of the way!” but I guess thats only true until it impacts a vocal group who aren’t getting a piece of the action.

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