Tesla Mall Stores
As an all-electric luxury sedan, the Tesla Model S is a new type of car. Fittingly, it will be sold in a new type of dealership. In fact, Teslas will not be sold in traditional dealerships at all; they will be sold at mall stores.
“We want to engage with people when they’re not thinking about buying a car,” George Blankenship, Tesla’s sales czar, told CNN. Blankenship, who helped design Apple’s retail stores, thinks potential customers will be easier to convince at the mall, since they aren’t prepared to talk to a salesman. A Model S, which stickers for roughly $60,000 to $100,000 would be quite the impulse buy.
Tesla may be trying to lure disoriented mall shoppers, but its sales pitch will be decidedly low pressure. Shoppers will be allowed to browse, take pictures, and let their kids sit in the cars. That will be a nice change of pace.
The salespeople will not be the stereotypical goniffs, either. “The people in our stores are more likely to be from Nordstrom’s than from a car dealer,” Blankenship told CNN. Since they don’t work on commission, the people manning Tesla’s stores will be less aggressive. Like Saturn, Tesla has a no-haggle sales policy.
Tesla’s mall strategy seems to be more about publicity than moving metal. Blankenship says a typical dealer gets 20 visitors a day, while a typical mall store gets 3,500. However, it is unclear how many of those people would actually plunk down $57,400 to $105,000 for a car.
Since the cars are built to order, the stores will not have inventory. Tesla wants to sell 5,000 Model S sedans by the end of the year, and already has a waiting list 10,000 names long, so the stores will not be under much pressure to meet sales targets.
The stores will also be much smaller than traditional dealerships. Imagine a typical mall store with a couple of cars replacing the clothing displays, and you’ve got the idea. Test drives will take place in parking lots, and customers will be directed to a separate service center once they buy their Teslas.
Sales potential aside, there is also a legal issue with the Tesla-owned mall stores. The first store recently opened in White Plains, New York, a state where it is illegal for car companies to own dealerships. Regardless, Blankenship said the stores, “generally speaking,” comply with all applicable laws.
Tesla may be the first company to set up all of its stores at malls, but the idea of taking cars out of the conventional dealer environment isn’t entirely new. In Paris, Renault, Peugeot, and Citroen have stores that sell nothing but t-shirts and toy cars, but help publicize each company’s full-size models. Certain Ferrari dealers are also amicable toward visitors who are not buying, but just want to see the cars.
What makes Tesla’s approach so novel is that mall stores will comprise its entire dealer network. Will it work? Cars are a lot more expensive than iPods; only one-percenters have the cash to buy a Tesla without really thinking about it. As long as Tesla keeps its sales goals low, that may not be a problem. If it wants to compete with more established car companies, Tesla may have to leave the mall.