Tesla is a big name in car manufacturing, and let's be honest, not just for their vehicles.
Since the debut of their Roadster in 2008, Tesla has been consistently growing and updating its vehicles, services, and company more generally. To say that they have been successful is a bit of an understatement, as Tesla has not only experienced significant revenue increases but their brand name has almost become synonyms with EVs. Before, angry outbursts and violent commenting ensues, recognize that this is not to say that there are no EVs available apart from Tesla, but rather to acknowledge that Tesla has been a prominent name in the game and has had a significant impact on the accessibility and public opinion of EVs.
One of the main things that are radically different about Tesla is its sales model. They have brought about significant changes to the traditional dealership model, presenting a global alternative to what was previously understood to be the normal way of buying and selling cars.
Let's go on to look at how Tesla's sales model stacks up to the traditional model, seeing how their model is highly responsible for their success in the market.
Tried And True Model Of Car Dealerships
Traditional car dealerships have been the dominant platform for purchasing a car, be it new or used.
Upon walking into a dealership, a buyer is immersed in a world of the perfectly polished showrooms of cars, lost in the beauty of the newest model and the fresh car smell that is loved by all. Dealerships will usually stock mostly brand new cars and significantly fewer used cars, placing the emphasis on buying a new vehicle. However, the big thing that is lost among the flashy cars and exciting smells is various fees that are attached to buying a car from a dealership. These fees contribute to the price of new cars and increase them significantly. Unfortunately, some fees are also applied to used cars as well which often makes buying a used car from a dealership more expensive than buying from a private seller. This is not to blame salespeople or the dealerships, as they are dependent on profits and revenue to survive, just like any other business, however, it is a brief explanation of how dealerships operate and its results on the price.
Admittedly, the internet has brought about some changes as the internet has allowed buyers and sellers to deal directly with each other, without the need for a dealership. Without the dealership as the middle man, sellers are able to keep more of the money that they sold their car for and buyers are able to get better prices as the seller no longer had to factor in the dealerships' cut of the selling fee.
New And Improved Tesla Model
Tesla's model of selling cars is radically different from existing models.
Tesla does not have car dealerships in the traditional sense. Tesla does have stores, however, these stores are more aimed at providing education about EVs and helping the customer understand what owning a Tesla would be like, rather than selling a car in that moment. Consequently, just as InsideEVs explains, Tesla stores are filled with EVs specialists, not the traditional aggressive salespeople who live off commissions and are desperate for sales. The buying experience is radically different as the people inside the respective stores have completely different jobs to do and thus approach prospective clients accordingly. Furthermore, cars cannot be bought from Tesla stores directly. Wait, what?
Teslas are ordered online. Yes, the ordering process can be facilitated in one of these stores, but the same process can be completed from the buyer's home. The price you see is the price you get. There is no hidden service fee or commission that is added on to the purchase of a Tesla. Furthermore, Tesla staff are paid on a salary meaning that there is no haggling that comes from commission-driven salespeople and that purchase times are drastically reduced. Prospective buyers do not even have to visit a Tesla store to buy a Tesla as everything can be done online, with all the information also available online. Sure, there are Tesla specialists in-store who can help with deciding whether a Tesla is a right fit for a buyer, but this is not a requirement like with the traditional model.
Tesla's Success Is Directly Due To Their Model
The radical new retail model demonstrated by Tesla has proved to be incredibly successful.
This new model has dramatically changed the buyer's experience of purchasing a car, highlighting that the invasive haggling, extended periods of consultation, and hidden fees do not have to be part of the purchasing process. Consequently, the increased support of customers has led many people to drift towards Tesla for buying EVs instead of traditional dealerships, which combined with the quality of Tesla vehicles, has led to significant increases in revenue for Tesla.
Statista highlights that Tesla's revenue has grown exponentially from its inception, growing from $15 Million in the 2008 financial year to $31.54 Billion in the 2020 financial year. Admittedly, there are a variety of other factors that contribute to the success of Tesla, however, it must be admitted that the radically new retail model of Tesla is responsible in some part.
Sources: HotCars, InsideEVs, GreenCarReports, Medium, Statista and TorqueNews