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Despite Dealer Concerns, Tesla Strikes Deal To Sell In Ohio
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Car dealers in Ohio say they’ve reached a compromise with Silicone Valley-based Tesla, the electric automaker with a unique and controversial business model. The company sells directly to customers, not through a dealer. There’s no haggling; the price of each car is non-negotiable.
Software engineer Kent Crabtree, who lives just outside Dayton, has a passion for sophisticated electronics. He found plenty in Tesla Motors’ Model S sedan. Drivers can control many of the vehicle’s functions through a center mounted 17-inch computer touch screen. Crabtree’s Model S has a 416 horsepower motor. It quietly but quickly slips onto Interstate 70.
It’s quiet when it takes off. We’ve just entered in the interstate and we’re going 70 miles an hour even before we got off the ramp. It definitely is a performance car.
The Model S is the only electric vehicle – or EV – that Tesla currently manufactures. Even though it weighs about 5,000 pounds it can accelerate from zero to 60 in about four seconds. The starting price is $70,000.
A new model
Crabtree loved his first Tesla so much that he bought a second. He says he prefers Tesla’s business model. Customers buy directly from the company, not through a dealer. Crabtree still remembers the day he spent four hours at a dealer haggling over the price of a minivan. He says after that experience buying from Tesla is easy.
“The only thing I got to miss out of the car buying experience was, ‘Okay, let me see if the manager will approve that price.’ ‘Let me try to make this deal for you.’ There was no dealing at Tesla. The price is on the website. It is the price you pay,” Crabtree says. “I am absolutely sold on Tesla and their no-haggle process.”
Company spokeswoman Alexis Georgeson says the heart of the shopping district at Easton Town Center appealed to Tesla.
“We place all of our stores in high foot traffic locations where we have the opportunity to inform as many people about EV’s and our company and the advanced technology behind Model S as possible,” Georgeson says.
Visitors to the Tesla store can see a Model S on display. Sales associates answer their questions about electric vehicles. Buyers can test drive a Model S. Georgeson says the approach is a vital part of the Tesla business model.
“These stores really fit our business model at this point because it’s a low pressure environment. Because we’re not trying to push large amounts of inventory, we just want people to come in and learn something about the vehicles and it is very crucial to our survival,” Georgeson says.
Dealers speak out
Tesla has chosen to sell cars directly. The lack of a network of dealers has put other electric automakers out of business. In many states including Ohio the company the company has been fighting auto dealers associations.
Joe Cannon is a vice president at the Ohio Automobile Dealers Association. He says having multiple dealers competing for customers helps the buyer get the best price.
“You can shop a host of dealers. Not only here in the Central Ohio market but also get online and shop dealers across the state. So that is very good for consumers as it relates to vehicle pricing. It’s a very competitive nature that the current system fosters,” Cannon says.
Cannon also claims that dealerships play an important, beneficial role as advocates between the consumer and the manufacturer.
Tesla does not buy those arguments. One company official believes dealers want to maintain a monopoly over car sales. And that ultimately they’d like to run Tesla out of business. At the least, Georgeson says, Tesla sales could be stunted now that Tesla is limited to only a handful of stores in Ohio.
“Certainly that prevents us from growing any further in Ohio and having the opportunity to bring the technology of Model S to more people,” she says.
The agreement between Ohio car dealers and Tesla will allow three company stores, one each in Columbus, Cincinnati and Cleveland to go forward. But it prohibits any more Tesla sales outlets in the state.