5 ms·

Tesla Motors says car dealers are trying to hinder its sales

71 points by w1ntermute 13y ago

brownbat 13y ago
California car dealers accuse Tesla of misleading sales techniques? Is that really the best move for them? Maybe Tesla should hire Ian Ayres[1] as a consultant, give him a team to go around the country exposing misleading and aggressive sales practices at dealerships. [1] The Ian Ayres who uncovered systemic discrimination in auto sales for the Harvard Law Review: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2539&context=fss_papers http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...
- 300bps 13y ago
  Have you seen the calculator on Tesla's web site? I saw it several months ago and my reaction was that it was a load of crap. I'm a huge fan of Tesla's and the sooner car dealerships go extinct the happier I will be. But there's something wrong about that calculator. Check it out for yourself: http://www.teslamotors.com/true-cost-of-ownership http://www.teslamotors.com/true-cost-of-ownership Any reasonable person would see that page and think they can get a Tesla for $601 per month. But that's the "Effective Monthly Cost". The actual monthly cost for the lowest cost model is $980 per month for a 6 year loan. Seriously, a 6 year loan? Honestly, they don't even need to do this. The people buying a Tesla now aren't shopping for a car strictly on price and they're smart enough to not be fooled by such gimmicks.
  - zipppy 13y ago
    Not only is the number given misleading, but the factors that contribute to that misleading number are (1) questionable, and (2) unrealistic themselves.
  - LanceH 13y ago
    I don't know, "Estimated Payment" is pretty clear at $980 a month, just below effective cost.
    - nilkn 13y ago
      On that page, perhaps, but that's not shown on the main design page: http://www.teslamotors.com/models/design http://www.teslamotors.com/models/design
      - LanceH 13y ago
        It still says "effective monthly cost" versus straight up "monthly cost". Even read in the most naive light, this still more straight forward than the typical auto dealer tactics which are both more numerous and more deliberately designed to confuse. Take the typical ad for a lease of $169 a month. That could actually use an "effective monthly cost" price next to it. Once you add in the $2400 due at signing (ignoring TT&L), it's really $369 a month and much less of a bargain. Cell phones could use an effective cost instead of a their, "iphone for $99*" which just aren't the actual cost. That the effective monthly cost of a Tesla goes down due to subsidies, reduce fuel usage, and maintenance may seem strange, but is very real.
    - 300bps 13y ago
      I don't know, "Estimated Payment" is pretty clear at $980 a month I disagree. $601 per month is in bold almost-black and on my screen is about 115 pixels wide. $980 per month is in dark gray on gray, not bold and on my screen is about 82 pixels wide. In addition, the $601 per month has right under it a giant red button that says, "ORDER" which strongly conveys the idea that you are ordering a car for $601 per month. Then consider even the $980 payment is pretty silly. It's for a 6 year loan. Who gets a six year loan? My opinion is that Tesla is engaging in very misleading tactics here and it tarnishes my otherwise very high opinion of them. I guess there must be a population of people that would reject a car immediately if they saw that it cost $1,157 per month after putting 10% down on a 3.30% five year loan. I guess the person is supposed to initially think they can afford it, fall in love with it, then find a way to make the numbers work? I have no idea.
      - greedo 13y ago
        From the link below, 17% of the loans in the last quarter of 2012 were longer than 73 months... http://online.wsj.com/article/SB10001424127887323646604578403191117526644.html http://online.wsj.com/article/SB1000142412788732364660457840...
- tlb 13y ago
  https://en.wikipedia.org/wiki/Projection_bias https://en.wikipedia.org/wiki/Projection_bias People who feel guilty about something are quickest to accuse others.
deleted 13y ago
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deleted 13y ago
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scriptproof 13y ago
Tesla is the new Tucker. Hope it will be more successful.
- joezydeco 13y ago
  Tucker shipped less than 100 cars, so I think Tesla can say they are more successful than Tucker.
  - mikeyouse 13y ago
    Mostly for my own curiosity, I looked at total domestic auto sales when Tucker was producing as compared to today to get a proportion of sales for each company. Tucker closed in 1949, when about 7mm cars were sold in the US annually. [1] So Tucker's 51 cars produced, out of 7mm total leaves them with a .0007% market share. Tesla sold 2,650 cars in the US in 2012 [2], while there were 14.5mm total sold [3]. Tesla therefore had a .018% market share. Tesla is at least 25x the company Tucker was! [1] - http://en.wikipedia.org/wiki/American_automobile_industry_in_the_1950s#Production_by_year http://en.wikipedia.org/wiki/American_automobile_industry_in... [2] - http://en.wikipedia.org/wiki/Tesla_Model_S#Sales_and_markets http://en.wikipedia.org/wiki/Tesla_Model_S#Sales_and_markets [3] - http://news.thomasnet.com/IMT/2013/01/10/u-s-auto-sales-hit-5-year-high-in-2012/ http://news.thomasnet.com/IMT/2013/01/10/u-s-auto-sales-hit-...
Tarang 13y ago
Bypassing car dealers is quite important. I don't think its to to screw dealers over but to make sure margins are needed to make their car for the masses, especially being so nascent with the different parts required. I hope this is successful for the prospect of close to $0 marginal cost of travel.
- 300bps 13y ago
  I don't think its to to screw dealers over but to make sure margins are needed to make their car for the masses It's also because they're completely unneeded for many transactions. I walked into a Nissan dealership utilizing USAA pricing and a cashier's check. It still took FOUR HOURS to drive out with the car. I had to wait two hours just for the "finance guy" even though I wasn't financing anything. I threatened to leave the entire time - I still had to talk to him and he had at least 7 people in front of me in line that were financing. How refreshing would it be to research a car, test drive a car, purchase a car without all these shenanigans meant to upsell you into ridiculous things?
  - slouch 13y ago
    The only way franchises make money is on the backend and service, so the quick transaction you want is a loss for them. It's interesting, because getting you out the door without using their employee's time is probably the best way to handle you, but habits.
  - greedo 13y ago
    I bet if you had walked out, they would have done something to expedite you. When I bought my Volkswagen last December, it was 20 minutes from when I walked in to when I walked out, even with being financed through VW. Some dealerships just suck.
coldcode 13y ago
Car dealers these days are often large conglomerates that go out of their way to ensure dominance. I bought a car from one dealer which was surrounded by 5 other dealers all owned by the same national group. I think that's real common today. Oligarchy is the new monopoly.

71 points by w1ntermute 13y ago

California car dealers accuse Tesla of misleading sales techniques? Is that really the best move for them? Maybe Tesla should hire Ian Ayres[1] as a consultant, give him a team to go around the country exposing misleading and aggressive sales practices at dealerships. [1] The Ian Ayres who uncovered systemic discrimination in auto sales for the Harvard Law Review: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2539&context=fss_papers http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...

300bps 13y ago
Have you seen the calculator on Tesla's web site? I saw it several months ago and my reaction was that it was a load of crap. I'm a huge fan of Tesla's and the sooner car dealerships go extinct the happier I will be. But there's something wrong about that calculator. Check it out for yourself: http://www.teslamotors.com/true-cost-of-ownership http://www.teslamotors.com/true-cost-of-ownership Any reasonable person would see that page and think they can get a Tesla for $601 per month. But that's the "Effective Monthly Cost". The actual monthly cost for the lowest cost model is $980 per month for a 6 year loan. Seriously, a 6 year loan? Honestly, they don't even need to do this. The people buying a Tesla now aren't shopping for a car strictly on price and they're smart enough to not be fooled by such gimmicks.
- zipppy 13y ago
  Not only is the number given misleading, but the factors that contribute to that misleading number are (1) questionable, and (2) unrealistic themselves.
- LanceH 13y ago
  I don't know, "Estimated Payment" is pretty clear at $980 a month, just below effective cost.
  - nilkn 13y ago
    On that page, perhaps, but that's not shown on the main design page: http://www.teslamotors.com/models/design http://www.teslamotors.com/models/design
    - LanceH 13y ago
      It still says "effective monthly cost" versus straight up "monthly cost". Even read in the most naive light, this still more straight forward than the typical auto dealer tactics which are both more numerous and more deliberately designed to confuse. Take the typical ad for a lease of $169 a month. That could actually use an "effective monthly cost" price next to it. Once you add in the $2400 due at signing (ignoring TT&L), it's really $369 a month and much less of a bargain. Cell phones could use an effective cost instead of a their, "iphone for $99*" which just aren't the actual cost. That the effective monthly cost of a Tesla goes down due to subsidies, reduce fuel usage, and maintenance may seem strange, but is very real.
  - 300bps 13y ago
    I don't know, "Estimated Payment" is pretty clear at $980 a month I disagree. $601 per month is in bold almost-black and on my screen is about 115 pixels wide. $980 per month is in dark gray on gray, not bold and on my screen is about 82 pixels wide. In addition, the $601 per month has right under it a giant red button that says, "ORDER" which strongly conveys the idea that you are ordering a car for $601 per month. Then consider even the $980 payment is pretty silly. It's for a 6 year loan. Who gets a six year loan? My opinion is that Tesla is engaging in very misleading tactics here and it tarnishes my otherwise very high opinion of them. I guess there must be a population of people that would reject a car immediately if they saw that it cost $1,157 per month after putting 10% down on a 3.30% five year loan. I guess the person is supposed to initially think they can afford it, fall in love with it, then find a way to make the numbers work? I have no idea.
    - greedo 13y ago
      From the link below, 17% of the loans in the last quarter of 2012 were longer than 73 months... http://online.wsj.com/article/SB10001424127887323646604578403191117526644.html http://online.wsj.com/article/SB1000142412788732364660457840...
tlb 13y ago
https://en.wikipedia.org/wiki/Projection_bias https://en.wikipedia.org/wiki/Projection_bias People who feel guilty about something are quickest to accuse others.

deleted 13y ago

[deleted]

deleted 13y ago

[deleted]

scriptproof 13y ago

Tesla is the new Tucker. Hope it will be more successful.

joezydeco 13y ago
Tucker shipped less than 100 cars, so I think Tesla can say they are more successful than Tucker.
- mikeyouse 13y ago
  Mostly for my own curiosity, I looked at total domestic auto sales when Tucker was producing as compared to today to get a proportion of sales for each company. Tucker closed in 1949, when about 7mm cars were sold in the US annually. [1] So Tucker's 51 cars produced, out of 7mm total leaves them with a .0007% market share. Tesla sold 2,650 cars in the US in 2012 [2], while there were 14.5mm total sold [3]. Tesla therefore had a .018% market share. Tesla is at least 25x the company Tucker was! [1] - http://en.wikipedia.org/wiki/American_automobile_industry_in_the_1950s#Production_by_year http://en.wikipedia.org/wiki/American_automobile_industry_in... [2] - http://en.wikipedia.org/wiki/Tesla_Model_S#Sales_and_markets http://en.wikipedia.org/wiki/Tesla_Model_S#Sales_and_markets [3] - http://news.thomasnet.com/IMT/2013/01/10/u-s-auto-sales-hit-5-year-high-in-2012/ http://news.thomasnet.com/IMT/2013/01/10/u-s-auto-sales-hit-...

Tarang 13y ago

Bypassing car dealers is quite important. I don't think its to to screw dealers over but to make sure margins are needed to make their car for the masses, especially being so nascent with the different parts required. I hope this is successful for the prospect of close to $0 marginal cost of travel.

300bps 13y ago
I don't think its to to screw dealers over but to make sure margins are needed to make their car for the masses It's also because they're completely unneeded for many transactions. I walked into a Nissan dealership utilizing USAA pricing and a cashier's check. It still took FOUR HOURS to drive out with the car. I had to wait two hours just for the "finance guy" even though I wasn't financing anything. I threatened to leave the entire time - I still had to talk to him and he had at least 7 people in front of me in line that were financing. How refreshing would it be to research a car, test drive a car, purchase a car without all these shenanigans meant to upsell you into ridiculous things?
- slouch 13y ago
  The only way franchises make money is on the backend and service, so the quick transaction you want is a loss for them. It's interesting, because getting you out the door without using their employee's time is probably the best way to handle you, but habits.
- greedo 13y ago
  I bet if you had walked out, they would have done something to expedite you. When I bought my Volkswagen last December, it was 20 minutes from when I walked in to when I walked out, even with being financed through VW. Some dealerships just suck.

coldcode 13y ago

Car dealers these days are often large conglomerates that go out of their way to ensure dominance. I bought a car from one dealer which was surrounded by 5 other dealers all owned by the same national group. I think that's real common today. Oligarchy is the new monopoly.