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2012 Tesla Model S Shows Up On eBay, Will Owner Profit?

2012 Tesla Model S Signature

2012 Tesla Model S Signature

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Well, that didn’t take long, did it?

It’s not unusual to see rare and exclusive cars pre-sold to buyers before cars are delivered–the practice has been going on for decades, every time the latest supercar hits the streets.

We didn’t expect to see a 2012 Tesla Model S sold so soon, though–and with a Buy It Now price on the eBay auction of $145,000, the seller stands to make a healthy little profit should they find a buyer.

The model being sold is one of the thousand limited edition Signature models, and the buyer will get the actual car, rather than a reservation slot–something Tesla will not allow.

With Signature Red paint, a white leather interior and the 85 kWh, EPA-rated 265-mile battery pack–as well as other Signature edition features–the car will certainly be to a high specification.

It also features an upgraded tech package, Dolby 7.1 premium sound system, and other Model S amenities.

The car is already being built, and is set to be delivered on October 14. The auction itself runs until 10:18 PDT on September 20, provided someone doesn’t pay the full price–over $47,000 more than MSRP–to end the auction early.

So why is the car for sale so soon? The seller doesn’t say, but it’s not beyond possibility that they were banking on pre-selling it all along, hoping to make a tidy little profit in the process from someone wishing to jump the queue.

It also has us wondering–how long until more Model S Signature editions appear on the market? And what price would you pay to get behind the wheel?…

Hat tip to Martin at eCars.bg

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By Antony Ingram

Tesla Model S To Be Evaluated By Consumer Reports

2012 Tesla Model S

2012 Tesla Model S

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Let’s hope that the Tesla Model S fares better than the Fisker Karma did.

That’s the first thought that sprang to mind when we heard the news that Consumer Reports had bought its very own Model S all-electric sport sedan to test.

The respected consumer testing magazine notoriously savaged the Fisker Karma in a review last September.

Specifically, the $106,000 range-extended electric luxury sport sedan died on the test track and otherwise proved to be badly built, with confusing controls and minimal interior space for such a large and heavy car.

The magazine was more impressed with the Tesla Model S following an early drive in a borrowed car last November.

The Model S “shatters every myth,” it wrote, and redefined the experience of traveling on all-electric power.

Two weeks ago today, after waiting more than two years following its $5,000 deposit, CR took delivery of its 2012 Tesla Model S.

It specified the Model S with the largest 85-kilowatt-hour battery pack and the $1,500 additional charger to bring charging capacity up to 20 kilowatts.

As an early-build car, the magazine’s Model S also comes with the air suspension, along with a large sunroof, and tan Nappa leather upholstery.

Tesla Model S

Tesla Model S

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The total price was $89,650, roughly in line with the Audi A7 or Porsche Panamera luxury sport sedans.

Confronted with the option to pick up its Model S at Tesla’s Queens service center or have it delivered to the door on a flatbed truck, the magazine chose the latter alternative.

As usual, Consumer Reports masked the identity of the buyer so that Tesla Motors [NSDQ:TSLA] likely didn’t know that the magazine was actually buying the car.

As CR’s Gabe Shenhar says, “We can’t wait to pile some break-in miles on our Model S and start testing it.”

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By John Voelcker

Tesla Model S Top Speed: More Than 130 MPH, Emission-Free

Top speeds are more relevant than many people think.

That even applies to cars like the Tesla Model S, though perhaps more for bragging rights than any practical purpose. And as bragging rights go, 133 mph isn’t too bad for an electric car.

While there aren’t many places you can legally explore a modern car’s top speed, those three-figure numbers are usually a good indication of how well your car will cruise at freeway speeds.

A car designed to travel two or three times the speed limit will generally be relaxed, quiet and economical at the limit itself.

The Tesla Model S Performance is relaxed and quiet at pretty much any speed.

In fact, as you’ll see (and hear) in the video above (via our sister site Motor Authority), wind and road noise are only really audible on camera at 90-100 mph, more than most people will regularly cruise at.

Acceleration only starts to tail off as the car breaks into the 120s, and it’s all done at 133 mph. We make no guesses as to what the range might be at that sort of speed, even with the 85 kW battery pack–not that the Model S’s gasoline-powered rivals will be particularly economical at 133 mph and above…

What’ll be most remarkable to anyone unfamiliar with the Model S is just how quickly it reaches its top speed. Motor Authority measures it at 12 seconds to 100 mph (it could be less, as the driver appears to pull away fairly gently at first) and 26 seconds to 133 mph.

We don’t condone exploring your car’s top speed on the roads, of course, but it’s nice knowing the Model S has plenty in reserve when you’re at a steady highway cruise.

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By Antony Ingram

Tesla Model S: More New Versions Coming, Says CEO Elon Musk

2012 Tesla Model S Signature

2012 Tesla Model S Signature

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Tesla being what it is–a venture-funded startup battery-electric automaker in Silicon Valley–every utterance from its CEO Elon Musk becomes newsworthy.

So a generalized hint at future development of its main product, the 2012 Tesla Model S electric sport sedan, becomes fodder for news stories.

In this case, the brief mention came during Monday’s earning call covering the third-quarter financial results of Tesla Motors [NSDQ:TSLA].

As noted by AutoblogGreen, CEO Musk said, “There are a few other variants of the Model S that we’ll come out with next year that I think are going to be pretty exciting.”

He also then mentioned ongoing work on the company’s next new vehicle, the 2014 Tesla Model X electric crossover, as well as the start of work on the third-generation car it hopes to launch later in the decade.

Frankly, we suspect that Musk may have been talking about an upcoming handling package for the Model S, already widely discussed as an option on the Performance model.

But speculation runs rampant around any Tesla news, so a few other possibilities might include:

  • An all-wheel drive version of the Model S, using the optional AWD being developed for the Model X
  • An even higher-capacity battery pack, to take the highest-range Model S above its current 265-mile EPA range estimate
  • Additional electronic features, some of which could be retroactively downloaded into existing Model S cars.

If we had to guess, we’d put our money on all-wheel drive.

It’s become a necessity in the high-end luxury market, included on more than 80 percent of Mercedes-Benz S Class sedans ordered in snowy markets.

And Jaguar’s addition of an all-wheel drive option to its XF mid-size and XJ full-size luxury sedans shows just how important it is.

To retrofit AWD into existing cars, much less those already two to four years into their model cycle, is no small task–but Jaguar says the sales gain will be well worth it.

So let’s start the guessing games here: How much should Tesla charge for an AWD option on, say, the high-end 2014 Model S electric sport sedan?

Leave us your thoughts in the Comments below.

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By John Voelcker

2012 Tesla Model S: Consumer Reports Joins Chorus Of Praise (Unofficially)


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It isn’t easy to impress Consumer Reports.

Fisker Automotive knows this better than most, after its Karma range-extended sedan was savaged by the magazine earlier this year.

In contrast, the 2012 Tesla Model S looks to have gone down rather well, CR describing it as “a revelation”.

High praise indeed, and it’s sure to join Motor Trend‘s ‘Car of the Year’ verdict on a list of things Tesla should be proud of.

2012 Tesla Model S: First Drive

In their test of the model, Consumer Reports describes the Model S as “the electric car that shatters every myth”–adding that range anxiety is effectively “gone” thanks to the 265-mile range.

The quick charging times, vivid performance and interior room also got plenty of praise. Only a lack of interior storage space, and the flashy but occasionally impractical door handles came in for criticism.

Of course, this test is only a brief look at the Model S, and the magazine’s normal practice is to buy a model itself–just like it did with the Fisker Karma.

Only then will we know CR‘s full verdict on the car–but we’d be surprised if it’s anything less than similarly-praised after longer exposure.

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By Antony Ingram

2012 Tesla Model S: Will Winter Weather Ruin Its Range?

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

HI-RES GALLERY: 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011


  • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

    • 2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

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The first two 2012 Tesla Model S all-electric sport sedans to roll off the Tesla production line last month were shipped to Chicago, where they’re presumably now tooling around in the Midwest’s record-setting summer heat.

But how will the cars’ impressive EPA range of 268 miles hold up six months from now, when the Windy City turns bitterly cold?

For now, Tesla Motors [NSDQ:TSLA] isn’t answering that question.  A company spokesperson told us that “we’re not yet fully ready to discuss” the car’s range in seriously cold weather.

Tesla’s range-calculator program  (available at its retail stores, but not yet on its website) offers some hints–but it only goes down to a temperature of 32 degrees. That’s fine for the lucky folks in California, but for many of us, 32 degrees in January would be a heat wave.

For a variety of reasons, electric cars suffer a significant loss of range in cold weather. When the temperature hits the teens, my Chevy Volt’s summer range of 40-plus miles drops to about 25 miles–a loss of 40 percent. Nissan Leaf owners report similar numbers.

Will the Model S suffer the same fate, or does Tesla know something that Nissan and Chevy don’t?

For me, that’s not just an academic question. I’m Model S owner number P 717, hoping to take delivery late this year.

I’m currently debating between the basic 40-kWh battery pack (good for 160 miles) and the $10,000-more-expensive 60-kWh battery, good for 230 miles. Those range estimates are both Tesla numbers; the official EPA ratings for range on those two battery-pack capacities have yet to be announced.

My minimum travel requirement is to New York City and back without recharging, which is about 120 miles. At  first, I assumed the 160-mile battery would be enough.

But after living through a winter with the Volt, I’m not so sure.  If the Model S suffers the same 40-percent loss as the Volt, I’m looking at a cold-weather range of 100 miles–which would leave me stranded somewhere on the Palisades Parkway in New Jersey or lower New York state.

So the $10,000 question becomes: In seriously cold weather, will the 2012 Tesla Model S suffer range losses similar to those of the Volt and Leaf?

A few months ago, Elon Musk assured me in a personal e-mail that “we are probably closer to a 20-percent drop than a 40-percent drop.”  (Pretty cool that the CEO will respond in two hours to a customer query out of the blue.)

A blog on Tesla’s website by Musk and company CTO J.B. Straubel says that under “very cold” conditions, range at 55 mph may be reduced by 10 to 15 percent.

Tesla’s Model S range calculator, which I tried out in the Tesla store in White Plains, New York, predicts a loss of  about 8 percent at 50 degrees and 15 percent at 32 degrees. But that’s as low as it goes.

2012 Tesla Model S display screen [Photo: Flickr user jurvetson]

2012 Tesla Model S display screen [Photo: Flickr user jurvetson]

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If we extrapolate that curve (actually, it’s a straight line) down to 17 degrees, we get a range loss of 21 percent–only about half that of the Volt. Take the curve down to 0 degrees, and we have a 27 percent loss–giving a range of about 118 miles on the 40-kWh, “160-mile” battery. 

But how accurate is that extrapolation?  I’d rather make my $10,000 decision on the basis of real-world testing and experience. And at the moment, almost none of that is publicly available.

According to Tesla’s range calculator, cabin heating causes most of the Model S range loss in cold weather. At 55 mph, the model I’m considering has a range of 170 miles at the ideal 70 degrees.

When the temperature drops to freezing, that range goes down to 145 miles. But if you’re willing to  turn off the heater, range jumps back up to 162 miles.

So what do you think? Should I pony up the extra $10,000 for the bigger battery? Or just bundle up for my winter trips to New York City? Or, maybe just burn some gasoline in the Volt?

Leave me your thoughts in the Comments below.

David Noland is a Tesla Model S reservation holder and freelance writer who lives north of New York City. This is his first article for High Gear Media.

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By David Noland

100 Tesla Model S Cars Join Las Vegas Project 100 Sharing Scheme

2013 Tesla Model S

2013 Tesla Model S

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Let’s assume for a moment that you’re interested in electric cars. (Not a far-fetched idea, since you’re reading a blog called “Green Car Reports”.)

You’re intrigued by the growing number of options in extended-range vehicles like the Chevrolet Volt, but most of all, you’re interested in fully electric rides. The Nissan Leaf isn’t quite your style, but the Tesla Model S might fit the bill — especially in light of Tesla’s new leasing program. But before you sign on the dotted line, you’d really like to take one for a long test drive.

According to The Verge, if you’re heading to Las Vegas in the near future, you might be able to do just that, thanks to something called Project 100.

VEGAS REVAMPED

Project 100 is a new initiative spearheaded by Zappos CEO Tony Hsieh. It’s one of many programs that fall under the umbrella of the Downtown Project, which aims to make Las Vegas a technological and cultural mecca.

Project 100 hasn’t officially launched yet, but initial reports indicate that it’s going to be much more than a simple car-sharing service like Zipcar. Not only will Project 100 members be able to share vehicles, they’ll also have access to bikes, bus passes and more. The goal is to keep Las Vegas residents on the go without being bogged down with the hassle of owning a car:

Ultimately we decided to build something different that’s designed to replace your car 100% of the time. You have one key to your car and we wanted to build something that replaced that one key with one membership and not force you to decide each time which system was best for your need right now.

Of course, to keep those folks rolling, they’ll need to pay a high-roller price: “We’re aiming to keep the monthly cost for most members in the same range as a traditional monthly car payment + insurance which averages around $400 per month.”

Project 100′s first fleet of vehicles will include the Tesla Model S — 100 of them, to be exact. That’s the largest single U.S. reservation in Tesla’s history. Why 100 Teslas? Hsieh is glad you asked:

We chose the Tesla Model S as our primary vehicle for a lot of reasons. It’s a beautiful yet functional sedan that’s very fun to drive. It’s also a big computer on wheels which gives us the opportunity [sic] optimize the member experience over time and test a lot of theories about how people use vehicles. Tesla thinks like a startup and our conversations with their program and engineering teams so far solidified that they were the right long-term partner. Most importantly we wanted to replace peoples’ traditional vehicles with vehicles that do less harm to the environment than a traditional gas-powered vehicle. Since Teslas are 100% electric with excellent driving range, the choice was clear.

Project 100 hasn’t officially opened to the public, so we don’t yet know if it’ll offer daily or weekly memberships to Las Vegas visitors. (We’d be surprised if it didn’t, though.) You can keep up with Project 100′s progress by signing up for email updates on the front page of its website.

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By Richard Read

Tesla Model S Already A Future Classic? Auto Library Thinks So

2012 Tesla Model S

2012 Tesla Model S

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Put a group of auto enthusiasts in a room, ply them with suitable amounts of alcohol, and soon conversation will turn to ‘future classics’.

The term refers to a modern car which gains the kind of respect and appeal of a classic vehicle in its lifetime, guaranteeing it a similar status many years in the future.

And according to some, the Tesla Model S electric sedan already makes the grade.

The Sacramento Bee reports that Detroit’s National Automotive History Collection has already decreed the Model S a “collectible vehicle of the future”.

Of all the models released in 2012, it’s the Model S which is most likely to be desired by future car collectors–that’s the suggestion of Friends of the NAHC, which supports the automotive archive at the Detroit Public Library.

Members vote annually on the North American-built vehicle most likely to reach classic status–and Palo Alto-based Tesla’s sedan is the first non-Detroit vehicle to be declared a collectible.

The honor is the latest in an increasing roster of achievements for the electric luxury sedan, including our own Best Car To Buy 2013 title.

The Model S joins other big American names such as the 2010 Chevy Camaro, 2008 Dodge Challenger and 2005 Ford Mustang on the list–as well as last year’s winner, the 2011 Chevrolet Volt.

Given the car’s significance, current-day appeal and it’s assured future classic status, we’d go as far as saying the Model S is a modern classic–a significant vehicle which already defines its time, and praised highly by auto enthusiasts.

Can you think of any other green vehicles which might become classics? Let us know in the comment section below.

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By Antony Ingram

Tesla Model S: Glitches, Quirks, and Peccadilloes Roundup

2013 Tesla Model S

2013 Tesla Model S

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To put it mildly, the Tesla Model S has been a resounding success.

The New York Times has called the all-electric luxury sport sedan a game-changer, comparable to the Model T Ford. It’s won virtually every 2012 “Car of the Year” honor, including the only unanimous Motor Trend award in the magazine’s 65-year history.

Tesla Motors [NSDQ:TSLA] has a waiting list of nearly 20,000 eager buyers. Its production line is now humming at full capacity. And the 3,000-odd customers who’ve taken delivery of their cars are, for the most part, ecstatic.

But nobody’s perfect.

In fact, it would be something of a miracle if there weren’t at least a few teething troubles from a revolutionary, clean-sheet-of-paper design, built by a fledgling startup company, relying heavily on software, and assembled on a brand-new production line.

The Tesla Model S, too, has had its share of glitches, quirks, and peccadilloes.

In an ordinary car, these minor blips would likely pass unnoticed. But the Model S is no ordinary car.

Under a microscope since the prototype was revealed four years ago, the car has attracted a devoted clique of fanatical followers who pore over every scrap of Model S minutia.

(Count me as one of them; my 2013 Model S, with the 60-kilowatt-hour battery pack, is now due to arrive in just a couple of weeks.)

Here, in any case, are some of the handful of blemishes sighted on the otherwise happy face of the Tesla Model S, as recounted by owners on Tesla Motors’ own online forum.

*Self-opening door locks. Several owners report having returned to their supposedly locked cars to find them unlocked, with one door slightly ajar. This has occurred both after manual remote locking with the key fob, and in the “walkaway” auto-lock mode, where the car locks itself when the key fob recedes to a certain distance.

*Sticking sunroof. Owners have reported difficulties opening the sunroof, which is controlled entirely from the touch screen.

2012 Tesla Model S

2012 Tesla Model S

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*Software glitches. Model S software update 4.1 was designed partly to offer a “sleep” mode to reduce power consumption when shut down.  But it has proven prone to bugs, with numerous reports of unpredictable glitches with the panoramic roof, door handles, locking, wipers, displays, and controls. (In fact, the two problems listed above are likely software problems, not mechanical.)

Rebooting seems to resolve many of these malfunctions, but for a few owners, rebooting has become almost a daily occurrence.

Laments one owner on the Tesla on-line forum, “You shouldn’t have to look to the east, raise your right hand, do the hokey-pokey, and tap the screen randomly to make something work!!!”

Responded another owner, wearily, “You obviously have no experience with software. The hokey-pokey is a basic required user skill.”

Tesla is currently remotely downloading Model S software version 4.2, to cars in the field. It eliminates the sleep mode that apparently caused most of the problems. “Reduced power sleep mode remains a high priority for future software releases,” says Tesla.

*Fogged windshields.  Numerous owners have reported poor defogger/defroster action in cold or humid conditions. Tesla has already come up with a new vent design, and expects to have retrofit kits available  at its service centers soon. Estimated installation time is less than an hour.

2012 Tesla Model S

2012 Tesla Model S

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*Balky charge port doors. Owners report that the doors, disguised as part of the left taillight, occasionally don’t open or close properly, and sometimes  pop open repeatedly. One poor fellow had his charge cord jam in the socket, immobilizing the car. He had to be rescued by a Tesla service rep.

*Substandard Floor Mats. Even top-of-the-line Model S cars come with no mats for the back seats, and cheap, low-quality mats in the front footwells.  “They are the crappiest ever,” complains one owner. If you want nicer ones, Tesla will sell you “premium” mats for the front and rear footwells for $400.

*No regenerative braking in the cold.  The recent Midwest cold snap has revealed an odd characteristic of the Model S: In subfreezing temperatures, the regenerative braking doesn’t kick in until the car has been driven 10 or 15 miles.



2013 Tesla Model S

2013 Tesla Model S

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This is apparently because Tesla engineers don’t want a cold battery to receive the sudden charge that occurs when a Model S driver suddenly backs off the throttle, or descends a steep hill. So the regen is automatically disabled or limited until the battery warms up.

This has proven disconcerting to a few owners who weren’t expecting it. “I was caught off guard by this over the weekend,” commented one owner on the Tesla forum.  “It’s not hard to adjust to, but with something as important as braking, the car should stop in a consistent, predictable way.”

“It’s a wart on what is otherwise a superior, consistent driving experience,” commented another. And, oddly, the Chevy Volt suffers no such quirk. Its regenerative braking functions consistently in all temperatures.Do Chevy engineers know something that Tesla’s don’t? Or vice versa?

A few Model S owners have suffered more than one of these problems.

One unfortunate buyer who took delivery in late December–when Tesla was rushing to deliver as many cars as possible before year’s end–reported multiple problems with his car’s paint, GPS system, body trim, and door handles.

“I am so frustrated with all of these problems,” he wrote recently on the Tesla forum. “Had I known about this before I made a final order I never would’ve purchased this car. I wish I could take this car back to them now. Be forewarned.”

But the vast majority of Model S owners aren’t suffering any problems, or seem far more willing to cut Tesla some slack and give the company time to work out the few bugs.

One of them summed it up this way: “The car is just too awesome to whine about little problems that will (eventually) be taken care of.”

David Noland is a Tesla Model S reservation holder and freelance writer who lives north of New York City.

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By David Noland

Tesla Dodges Traditional Dealerships—And Questions Remain

Tesla Store – Portland OR

HI-RES GALLERY: Tesla Store – Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR

  • Tesla Store  -  Portland OR


  • Tesla Store – Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

    • Tesla Store  -  Portland OR

Tesla Motors [NSDW: TSLA], by nearly all accounts, is an automaker that’s doing things differently. It’s based in Silicon Valley, not Detroit. And it’s transitioning from making a very modest number of Tesla Roadster models to, it plans, tens of thousands of all-electric Model S luxury sedans—with an impressive EPA driving range of up to 265 miles.

And, in what may be surprising to anyone who’s ever bought a new vehicle or been involved with the industry, there’s one other key difference: Tesla plans to do it entirely without traditional dealership franchises.

Instead, it’s building on the success of the ‘store’ strategy fine-tuned and carefully expanded by Apple—fine-tuned actually through the same person who’s now Tesla’s VP of sales and ownership experience, George Blankenship.

But through the years, other such attempts to sell cars from an automaker directly to the consumer have fallen flat. When we caught up with Blankenship last week, just before the opening of the electric automaker’s new Portland store, we asked him why the company is going about retailing its vehicles so differently.

“It’s sort of been that way for a hundred years; that is the model,” said Blankenship. “The model is that they do a bunch of research, hold a bunch of focus groups, and they decide that this is a car we should build; they design that car, they engineer it and manufacture it, and then they sell it to some dealer who then tries to sell it.”

“And it works, it works with thousands of cars sold every single day,” summed Blankenship, who pointed to Tesla’s different development process and revolutionary product. “That’s just not how we’re doing it.”

As we outlined last week, Tesla’s store strategy is clearly working—for informing new people about electric cars, bringing new people into the Tesla fold, and eliciting deposits on the Model S. The automaker has been hitting 11,000 visitors or more in a single week at at least one of its stores, and among its new stores designed around foot traffic it passed a million visitors so far in 2012.

Stores, not dealerships. Does it matter?

But wait. Aren’t dealerships—and our franchise system over them—highly regulated by the states? How can Tesla sell cars this way?

According to Leonard Bellavia, a franchise lawyer and expert in this field, they can’t—even when they avoid following a conventional dealership model. And while the money might not technically change hands at or to the dealership, Bellavia still believes that state and local governments may decide that such ‘factory stores’ can’t operate in their current way.

“Most states prohibit ‘factory stores’ and that is why Tesla is quick to point out that it doesn’t sell cars but rather refers customers to its website,” said Bellavia. “The problems it will encounter stem from the fact that the ‘selling’ of a vehicle does not require the actual signing of a contract and the taking of money.”

Selling, as used in relation to these state statures, generally also includes a long list of associated activities like displaying, test driving, or even demonstrating a vehicle’s features, Bellavia notes. “Tesla admits that it will facilitate the delivery of a vehicle in its locations, which also constitutes ‘selling,’” he adds.

“Every single state, every municipality, that a car company does business in, has a different set of rules and regulations,” said Tesla’s Blankenship, who noted that the company’s strategy has of course been vetted by their legal team. “What I know is that we do what we can do in every area, we comply wherever we go and do what we’re allowed to do.”



Tesla Store in LA

Tesla Store in LA

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Public safety, consumer protection, and liability not the same?

Franchise lawyer Bellavia has another argument, though: that the states might have a legitimate public-safety issue because stores aren’t licensed dealers. “The advantage of a franchised system is that independent dealers have a vested interest in their business, with many millions of dollars invested,” he argues. “There is a financial incentive to abide by laws, and satisfy customers as the penalty is the loss of a huge investment.”

The Tesla buyer in states other than California “does not have the same protections, and may be told that they are dealing with a California company and therefore have a far more difficult time seeking redress,” Bellavia believes.

Franchised dealers are under contractual obligations to franchisors (either manufacturers or distributors), and accept legal liability under state and local laws applying to licensed dealers.

Dealerships bring dollars to the local economy

There’s also the fact that our franchise sales system, like it or not, pumps a lot of money into the economy and employs far more people than all of the automakers, combined, do directly. U.S. new-vehicle dealerships (there are about 17,540) employed a peak 1.1 million people in 2008, and with the economic recovery it’s on the rise again, to about 933,500 in 2011, according to the NADA.

The amount of money that dealerships bring to local economies is rather astounding as well. The average U.S. dealership in 2011 had an annual payroll of $2.6 million, split over 53 people, for an average annual amount of more than $49,000 per employee. Nationally dealership payroll totals $45.8 billion—11.7 percent of the total U.S. retail payroll. And on a local basis, dealerships provide extensive support to civic and charitable organizations.

2012 Tesla Model S Signature

2012 Tesla Model S Signature

Enlarge PhotoFor Tesla, a viable model

For now, no states or municipalities have decided to pick that fight with Tesla, and as a niche player Tesla doesn’t pose a major threat to the franchise system. And for Tesla, keeping it simple, keeping their overhead and liabilities low, and keeping its structure simple, is looking like a strategy for survival.

“We have the car; it costs a certain amount to build; and we have that margin, and we don’t give any of that up,” said Blankenship. “We look at it more as a retail model, as a business, where we will make a margin on each car, not ‘How much can I make and put this car on the road?’”

“That’s how we’re going to bring cashflow into the company, to specifically do business like a retailer, not like an auto dealer.”

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By Bengt Halvorson

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