Some of the most interesting things that make Tesla Motors different from all other car manufacturers are their unusual business model and the way they sell their cars. The American car market imposes strict rules regarding car sales, requiring that manufacturers sell vehicles through franchised car dealerships, instead of direct sales. But, Tesla have chosen to skip dealerships and try and sell their cars directly to consumers. This is prohibited in over 40 states, which means their options are quite limited. However, since car sales are regulated on a state level, there are a couple of states that allow direct auto sales. That’s the case with New York, Florida, and Massachusetts, among other states, where Tesla Motors have their own dealerships. They have been trying to convince other states to change the existing laws and allow direct car sales, and they announced earlier this week that they have received an approval by the state of Virginia to start operating their own dealership there.
Tesla Motors has been negotiating with the Virginia Department of Motor Vehicles, and the Virginia Automobile Dealers Association, and have finally been allowed to apply for a dealership license in this state. The state’s DMV had previously denied Tesla’s request to operate a dealership in Virginia, but now, it has decided to make certain concessions and compromises and allow the electric car maker to open its own store. Now, Tesla have to apply for a license at the Virginia Motor Vehicle Dealer Board, which is the state auto dealers regulatory agency. Along with a store, Tesla plans to open a service facility nearby.
This way, Tesla becomes a part of a very significant exception in a highly-regulated market that only allows cars to be sold through authorized dealers. That is why it’s a huge surprise that the Virginia Automobile Dealers Association has agreed to such an exception. Car dealers have been opposing this idea ever since Tesla introduced their sales model, because they believe it would hurt their business a lot. Other car makers are not too excited about the idea, either, since they believe it gives Tesla an unfair advantage.
Opening a retail store in Virginia is a huge thing for Tesla, since it will be close to the nation’s capital, where a lot of potential customers for their cars live. Tesla sells luxury electric vehicles that are targeted towards the high-end demographic, so the area around Washington, D.C., might be perfect for the company to boost its sales.
Elon Musk, the chairman and CEO of Tesla Motors, has been advocating a radical change to the existing practice of selling cars through dealers, as he believes that they are not interested in selling electric cars, as they would have to put much more effort into explaining the benefits of electric cars to customers, which they consider to be just a waste of time. That’s why Musk thinks that his company can sell much more cars if they were allowed to operate their own stores, where they would employ people who understand how electric vehicles work and would be able to educate consumers on why such a vehicle is good for them.