Archives for August 1st, 2013
Sales figures for EVs are so far off those of conventionally-powered vehicles, that it’s almost comical. However, in the EV world 61 units sold in the first month is a very good performance. That is exactly how many RAV4 EVs Toyota managed to sell in September, the car’s official sales debut – the highest number ever achieved by such a vehicle, in the US.
That means that the Japanese automaker sill has 2,139 units to go, until they reach their target number of 2,200. They may increase that number, if the demand is deemed high enough, though. However, with a price tag of $49,800, before tax incentives,the RAV4 is still a rather expensive vehicle to buy, so its appeal will still remain limited, despite being a very capable vehicle with a range of just over 100 miles (160 km).
For those who don’t want to buy the all-electric SUV, Toyota is offering a lease plan, which will cost you some $599 per month. We will have to wait and see in another few months, just how well the RAV4 EV actually does, but if the debut is anything to go by, it may do very well. Keep in mind that at their debut, the Nissan Leaf sold 19 units, while the Tesla Model S only managed to sell 10 examples.
The Obama administration is well known for its support of plug-in vehicles, including EVs, so his reelection as president of the United States will make Tesla CEO, Elon Musk, sleep much more soundly for the duration of his term in office.
Musk added that he would fully support the raising of the federal tax credit for EVs, from the current $7,500 to as much as $10,000 per each green vehicle bought. Also, considering the fact that Tesla received $465-million in loans from the DOE, while under the Obama administration, they will probably receive more, if needed, despite the topic being a very delicate one, at the moment.
On an unrelated topic, but equally newsworthy, Musk announced that the first Supercharger fast charging system will be installed on the East Coast, in Washington DC, with Boston to follow shortly.
Story via autoblog.com
While the exterior of the upcoming Tesla Model S looks normal, wait until you get inside and discover that the only physical buttons on the dashboard are for the four-way flashers and the glove-box.
Tesla is stepping into the future by ditching the old idea of having a center console covered with buttons, switches and knobs, and replacing them with one single 17-inch display that literally controls every feature of the EV.
From the moment you open the driver’s door, the high-resolution touchscreen powers on, enabling the driver to use or adjust every system of the car. The touchpad gives the possibility to adjust vehicle parameters, such as opening the panoramic glass roof, adjusting the ride height, lights, steering response, the amount of regenerative braking and more. Also it operates the infotainment systems. It controls the HD radio (classic or online), device connectivity, the GPS, phone and it works as an Internet browser too.
For simplicity, it has an iPad-like interface, with user-friendly design and lots of visual icons to make it comprehensive for every driver. Also, the top and bottom parts of the screen will never change, to solve the “muscle memory” issue and less distract the driver. Some functions can be used from the integrated buttons in the steering wheel for that matter.
State laws may put a kink in Tesla Motors’ retail plans, as the EV automaker’s factory stores are being questioned by dealer associations and state regulators, reports Automotive News. Tesla hoped to recreate the Apple buying experience with its factory stores, but dealer associations in a number of states claim those stores create unfair competition for conventional dealerships.
The main complaint is that Tesla’s stores are in violation of state franchise laws, which bar factory ownership of dealerships. Tesla currently operates 17 stores in the U.S., with most located in shopping malls. Recently, the Secretary of State’s office in Illinois told Tesla officials the company was breaking state law by listing CEO and founder Elon Musk as the owner of its Chicago store. Tesla said it would comply and asked for 30 days to respond.
Elsewhere, dealer associations are challenging the legality of Tesla stores. In defense of its Boston store, Tesla told city officials that the store wouldn’t conduct sales.
“We do what we’re capable of doing, and we do whatever they let us do,” Tesla’s vice president of sales George Blankenship told Automotive News. “It’s unique for each location. If we can’t be a dealer in a mall, we won’t do reservations on-site. We tell people where to go on our website to make a reservation.”
But the Massachusetts State Automobile Dealers Associations has issues with Tesla’s plan, claiming product presentation and directing customers to Tesla’s website is part of the sale.
Tesla doesn’t face the same hurdles in all states, as the company operates within the limits of the law in California. In the Golden State, manufacturers can operate dealerships so long as they’re more than 10 miles away from a private-capital dealer selling the same brand. Since there are no private-capital Tesla dealers, the company is covered. That same law caused problems for Chrysler Group earlier this year, when the company’s new Motor Village in downtown Los Angeles was investigated for violations of state franchise law.
According to the National Auto Dealers Association (NADA), factory ownership of dealership is restricted or prohibited in 48 states. NADA said in a release:
“Tesla may not yet recognize the value of the independent, franchised dealer system, but as its sales increase, NADA is confident it will re-examine its business model.”
Six Tesla stores are scheduled to open this fall, and if the launch of the Model S is successful, don’t be surprised to see a few more popping up around the U.S. before long.
Source: Automotive News (Subscription required)
Tesla Motors gallery in Houston Galleria, opened October 2011, with Model S on display
Tesla Motors is facing a formidable opponent it may not have sufficiently appreciated: the auto dealers of America, and their state associations.
Tesla, you may remember, is selling its electric cars online, not through franchised, independently owned dealers, and delivering them directly to buyers from the factory.
In doing so, Tesla Motors [NSDQ:TSLA] has removed the two parts of car shopping that customers clearly hate most: haggling and buying.
Its Tesla Stores, it says, are simply educational showrooms where no cars are actually sold.
Dealer groups–who view the approach as a dire threat–do not believe this, and they are both changing state laws and suing Tesla to prevent the company from opening its stores.
By the beginning of this month, Tesla faced lawsuits in four states over its stores.
On Monday, Tesla CEO Elon Musk weighed in, posting what was for him a relatively polite, conciliatory response to those challenges on the company website.
“In many respects,” he wrote, “it would be easier to pursue the traditional franchise dealership model,” which would save Tesla money and broaden its distribution much more quickly.
The problem, he argued, is that any conventional dealer has a fundamental conflict in explaining the advantages of battery electric cars when they rely on gasoline vehicles for the bulk of their sales and profits.
The 2012 Tesla Model S is so different from any other car, he said, that consumers require a great deal of education before they can even start to think about buying.
That’s what the Tesla Stores do, he wrote: let the public learn about the Model S from product specialists–who are not on commission–and, critically, about electric cars in general.
‘Revenge of the Electric Car’ premiere: Elon Musk arrives in a Tesla Roadster
“Their goal and the sole metric of their success is to have you enjoy the experience of visiting so much that you look forward to returning again,” Musk said.
Contrary to spirit of the law?
He acknowledged existing state laws and pledged that Tesla follows them. “We do not seek to change those rules,” he wrote, “and we have taken great care not to act in a manner contrary to those rules.”
In respect to two lawsuits filed against the company, he said Tesla believes they are “starkly contrary to the spirit and the letter of the law.”
Musk noted that they were filed in one case by a Fisker dealer, and in the other, by “an auto group that has repeatedly demanded that it be granted a Tesla franchise.”
He also noted that U.S.-style franchise laws do not exist elsewhere in the world, and described Tesla’s plans for service facilities in some detail.
Laws in 48 states
In 48 states, according to the National Automobile Dealers Association (NADA), franchise laws forbid or severely restrict the ability of automakers to sell vehicles directly to the public.
Tesla Store – Portland OR Enlarge Photo
Tesla Store – Portland OR
The specific wording of those laws varies from state to state, but most are based on the rationale that letting big automakers sell cars to customers would stifle competition.
And there’s some history–from half a century ago–that supports the notion that franchised auto dealers may face unfair competition from factory stores selling the same cars.
Tesla Motors, of course, doesn’t have a single franchised dealer.
It has only factory showrooms, and the only way to purchase a Tesla Model S is to order it online.
[UPDATE: Yesterday, NADA upped the ante. It said in an e-mailed statement it was seeking a meeting with the startup automaker to explore “serious concerns about Tesla’s intentions.”
Its chairman William Underriner told reporters the dealers’ group “has ‘a whole mess of lawyers in Washington’ who work on state franchise laws,” which presumably NADA could deploy in every state where Tesla has or seeks to open a store or service facility.]
Changing Colorado law
But dealers insist that Tesla’s showroom workers are part of the sales process, even though they can’t take money for cars.
They view that as a violation of state laws, and are fighting the company on several fronts.
In Colorado, for instance, the state dealer association got a bill passed in 2010 that amended the laws governing dealer operations and their business arrangements with automakers.
The bill, which was signed on March 22, 2010 and took effect immediately, prohibited Tesla from opening any further stores in the state.
Tim W. Jackson, president, Colorado Automobile Dealers Association Enlarge Photo
Tim W. Jackson, president, Colorado Automobile Dealers Association
As the association wrote in its 2010 End of Session Report:
An existing provision in Colorado law already prevented a manufacturer from operating a dealership so long as they were not [sic] franchised dealerships. This statue [sic] narrows provision [sic] so a manufacturer that has any dealerships in Colorado, whether franchised or not, is prohibited from operating a dealership.
A Tesla Store in Colorado had opened in 2009, spurred in part by interest in a then-active $42,000 tax credit for the purchase of a Tesla Roadster.
Asked for comment on the 2010 Colorado legislation, Tesla spokeswoman Shanna Hendriks said only:
Tesla’s business model was developed in the best interests of consumers and the advancement of electric vehicle technology. In doing so, we have worked closely with regulators to operate within compliance of all current state and municipal laws.
That’s as close to a “no comment” as you’ll get. Tesla currently has just one Colorado facility, in Lone Tree, south of Denver.
Dealerships: the best way to protect buyers
Two weeks ago, Tim Jackson, president of the Colorado Automobile Dealers Association, spoke at length with Green Car Reports on dealers’ reasons for opposing the Tesla model and fighting its stores.
It’s really, he explained, all about protecting consumers. He offered three different reasons for the group’s action.
Tesla Motors gallery in Houston Galleria, opened October 2011, with Model S on display
First, he said, independent dealerships usually continue in business to provide service even if an auto company or brand shuts down the supply of new cars.
If Tesla were to fail, he pointed out, it would close all its company-owned stores and service facilities, leaving Tesla owners without recourse.
Owners of Oldsmobiles, Pontiacs, HUMMERs, Saabs, Daewoos, Isuzus, and other vanished makes got varying access to service and parts through independent dealerships long after they disappeared from the market, he maintained.
Second, the dealers feel–as Musk acknowledged in his letter–that Tesla could spend its money much more wisely than on building its own stores.
Imagine, Jackson suggested, what Tesla could do if it applied the money it’s now spending on stores and service centers to its product development plans instead.
And third, he argued, all auto dealers will be hurt if Tesla fails.
If that were to happen, and consumers were left high and dry without a place to have their Tesla cars serviced, he said, it would do great damage to the good reputation of all auto dealers.
Jackson acknowledged that most car buyers have no idea automakers are legally forbidden from selling cars to them directly.
He reiterated the association’s position that the public is best protected by having independently owned dealerships, rather than direct sales by carmakers.
Like Apple, like Tesla
The model for the Tesla Stores is none other than Apple’s outrageously successful chain of retail shops. In fact, both companies’ stores have been designed by the same man, George Blankenship.
“The [traditional] model is that [carmakers] do a bunch of research, hold a bunch of focus groups, and they decide that this is a car we should build,” Blankenship said at the July opening of the Portland store.
“They design that car, they engineer it and manufacture it, and then they sell it to some dealer who then tries to sell it.”
“That’s just not how we’re doing it.”
Meanwhile, Tesla has said it had already logged more than 1 million visitors in its various stores by mid-July.
And the company is moving forward with plans to open 10 more stores in high-end locations by the end of this year.
Heading into January, Musk wrote, Tesla will have 19 stores, three galleries, and 26 service centers in the U.S.–including service centers in cities where it has no showrooms.