“Our opposition comes from two groups, primarily from dealer groups and secondarily from General Motors,” Tesla General Counsel Todd Maron said at an FTC conference on Tuesday.
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Tesla has built its business by selling its cars directly to consumers. But in several states in the United States, automakers are required by law to partner with franchise dealerships on car sales. According to Tesla general counsel Todd Maron, that traditional franchise dealership model is counterintuitive to Tesla's mission. And by opposing Tesla's direct distribution model, traditional auto manufacturers like General Motors are behaving anti-competitively.
"With respect to General Motors, their position boils down to this: Because they voluntarily chose generations ago to use a certain business model, [the company feels] everyone that comes after should be required as a matter of law to use the same model," Maron said during a Tuesday FTC workshop on auto distribution. "That's code for 'Tesla is able to sell the product to consumers for a lower price than we're able to through the franchise system.' We don't think they should have that policy."
Maron then pointed to a recent quote from General Motors CEO Mary Barra: "Unlike some electric car customers, Bolt EV customers never have to worry about driving to another state to buy, service or support their vehicle." According to Maron, this is evidence of Barra remarking on GM's ability to block Tesla from selling cars directly to consumers and then bragging about "the fact that our customers can't buy our cars as easily as theirs."
Maron insists Tesla's direct-sales model is crucial to the company's viability. Here are seven reasons why the company feels the traditional franchise dealership model is at odds with its own:
Maron insists that Tesla stores are most effective in locations with high foot traffic.
"We do this for a reason," he said. "It's not surprising that when new technology comes out, consumers don't go to it. You need to bring the new technology to the consumer. That's a standard, well-accepted thing if you go to any business school ... You have to make it convenient for people."
But Tesla custom builds its cars. It doesn't have the same inventory as a traditional automaker. "Inventory is the lifeblood of a traditional dealership," Maron said. "Our cars ... don't get built until they are ordered. This is untraditional for the franchise dealer."
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