The real revolution is about how we sell cars
For veterans of the auto industry, the company’s incredible achievement isn’t the popularization of electric vehicles. Perhaps this was inevitable as the consequences of climate change began to hit Americans.
The big achievement, instead, was to make direct-to-consumer auto sales possible.
There are a combination of state and local laws that govern car sales in America. But when Tesla opened its doors in 2003, one rule remained constant almost everywhere: automakers couldn’t sell cars to buyers.
They had to work through agents as intermediaries, and those agents had to be independent companies.
This structure developed in the first half of the twentiethThe tenth century, largely as a means of spreading risk. A bad model with little public appeal could drown out an automaker, and companies didn’t know if their new designs would succeed until after they hit the market. So, working with sales experts who know the local communities helped them succeed and spread success when they failed.
It can be said that these conditions are over today. Thanks to the proliferation of the press and car enthusiasts online, automakers generally know the public’s response to a new design before it hits the market. They are better at designing consistently successful cars.
Therefore, Tesla pushed for the right to sell cars directly to consumers.
In some states, it worked. The company’s lobbying laws have been changed. Tesla now has direct dealerships in some states. In others, it operates “showrooms” where interested shoppers can see cars but must order them from home.
Related: Mystery shoppers say traditional dealers are better at selling electric vehicles
Ironically, Tesla has moved its headquarters to Texas but cannot sell cars there. Texans can order a Tesla to be delivered to their home but must handle it themselves.
However, in a few states, Tesla is still prohibited from running any kind of fair.
Tribal lands are not subject to state jurisdiction
However, indigenous tribes control the land within the state but are not subject to most of its laws. Tribal lands are subject to federal law.
As Stephen Bevar of the American Civil Liberties Union explains in the book The Rights of Indians and Tribes, which discusses federal Indian lawAnd the “The tribes were sovereign nations centuries before the arrival of the Europeans on this continent, and they continue to exercise the powers of a sovereign government.”
Tribal land, legally speaking, is something akin to occupied foreign lands. It is often governed by treaties that tribes have signed with the United States (although the federal government has a poor record of honoring its treaty obligations). But, crucially, these are not treaties between a tribe and any state government.
The tribes then enforce their laws on their lands and are often subject to federal law. But they sit outside the jurisdiction of the state.
Therefore, Tesla just opened its second store on tribal lands.
Offers Move Tesla Service to Albuquerque and Santa Fe areas
Both are located in New Mexico, which prevents automakers from owning dealerships or even performing indirect servicing on cars. Prior to this move, New Mexico residents could order a vehicle from out of state but had to carry it themselves and bring it to nearby dealerships in Arizona or Colorado for service.
Now, they can bring it to their first Nambé Pueblo country, where they will find a fully functional Tesla store complete with service bays. It is north of Santa Fe.
Next May, a second will open on the grounds of Santa Ana Pueblo, about 30 minutes north of Albuquerque.
Albuquerque Magazine explains, “Although New Mexico prohibits direct-to-consumer auto sales—the only kind of sales Tesla does—as sovereign states, Nambi and Santa Ana pueblos do not have to follow state law.”
Under an agreement with the tribal government, Tesla will train tribal members to work as service technicians.
Car sales are developing, and it is difficult to predict the development
Tesla cannot operate in every state and lacks service centers near some fairly large auto markets. Traditional automakers have an advantage because it’s still much easier to get a new Hyundai serviced in many areas than it is to your Tesla.
Related Topics: Ordering a Factory Car – All You Need to Know
With traditional automakers releasing more and more electric cars, Tesla’s massive lead in electric car sales is eroding.
But the company’s ingenuity has left it in an enviable position wherever it gets a bridgehead – it does not split the profit from car sales with dealers.
It is clear that many new electric start-ups, such as Rivian and Lucid, are embracing the Tesla model rather than reaching out to existing dealer groups to build relationships.
How will traditional automakers compete?
Most of them seem to be sticking with the sell-out model for now.
Volvo has announced plans to sell part of its entire range online.
Ford is publicly considering switching to a Tesla-like sales model. But, earlier this year, Ford CEO Jim Farley pulled that prospect off the table to entice dealers to commit to selling electric cars.
Maintaining a dealership network for these companies gives the advantage of a massive footprint – perhaps a service bay within an easy drive of you for most automakers. There may not be one for Tesla.
But with 574 federally recognized tribal governments in 35 states, Tesla’s new strategy could do much to shut down this feature.