Dealer groups getting very uncomfortable with Tesla

It’s perhaps a sign of how far Tesla has come that the California New Car Dealers Association has asked the California Department of Motor Vehicles to investigate Tesla’s advertising practices. Tesla includes fuel savings, a federal tax credit as well as ‘time savings’ from not having to go to the gas station on its website.

The claim is a little nutty, though the fact that every one from Bloomberg to the Los Angeles Times covered the story indicates just how visible Tesla has become. The claim itself also shows just how threatened dealer groups feel by the company.

This request for an investigation is really not about Tesla’s advertising practices. It’s about the fact that Tesla is bypassing the entire dealer system and effectively selling direct to consumers. And if Tesla succeeds with this retail strategy, it’s conceivable that other automakers might lobby to change the entire system, which today restricts automakers from operating dealerships. There is, no doubt, as Apple and others have shown, certain advantages to operating your own retail strategy. I don’t think the likes of Ford or Toyota would be that interested, but on the high end, I’m sure BMW and Porsche would be more comfortable running their own dealerships.

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Adam Lesser

Analyst Gigaom Research

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