Why you might buy your next car online

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In 2019, many automotive experts said that Tesla made a big mistake by choosing to only sell cars online, arguing that whatever bad feelings people have for dealerships, they are necessary for the car business.

But the strategy adopted by Tesla CEO Elon Musk, which combines direct sales with a limited number of stores and service centers, seems to prove the naysayers wrong. The company dominates the fast-growing market for electric vehicles, while other manufacturers struggle to sell vehicles due to a shortage of computer chips.

Tesla’s approach, which has been copied by other fledgling EV makers such as Rivian and Lucid Motors, could eventually have major repercussions for the auto industry. Most automakers and auto dealers are making big profits right now because the shortage of new cars has driven up the price of both new and used cars. However, car companies and dealers may have to eventually embrace some of the changes Tesla has introduced in order to win over buyers who are used to buying cars online.

People who have traded conventional cars for electric vehicles made by Tesla and newer companies said they are happy with the experience and will consider buying future cars in the same way.

“Easiest major purchase of my life, insanely easy,” Rachel Ryan, who lives near Los Angeles, said of her 2021 Tesla Model Y purchase. “I bought it while my husband was at work,” she added. “When he got home, I told him that he would no longer drive my minivan.”

Ryan said the only problem she had with maintenance was a flat tire due to a nail. “Tesla came to my house to fix it,” she said. “Any questions I have, I just email them and they get resolved within minutes.”

Buying online is a must for people who want to buy an electric vehicle made by Tesla, Rivian or Lucid, whose customers can only buy online and directly from the manufacturer. But online car shopping attracts the bulk of all car shoppers, even those who buy internal combustion engine vehicles through dealerships, says Michelle Krebs, executive analyst at Cox Automotive.

“Our data shows that consumers want to shop more online, but most of them don’t want to completely give up visits to the dealer,” Krebs said. “They just wanted the dealer experience to be something different – focused on the product, product features and test drive.”

She said that some dealerships began to partially or completely digitize the buying process in the early days. coronavirus pandemic when showrooms close like other retailers. In Europe, some automakers have gone even further. Daimler, Volkswagen and Volvo sell cars directly to consumers or have announced plans.

American automakers have also made it clear they would like to make big changes. CEO of Ford Motor Co. Jim Farley told an investor conference this month that the company’s distribution and advertising costs per vehicle were about $2,000 higher than Tesla’s. Farley said Ford only wanted to sell electric vehicles online at non-tradable prices, without holding a large stock of vehicles at dealerships.

He added that dealerships will remain important, but they will have to become more “specialized”. He compared what’s happening in the auto industry to the retail business, where the rise of Amazon has forced established retailers to sell more online and use physical stores in new ways.

“This is similar to what happened between Amazon and Target,” Farley said. “The target could have left, but they didn’t. They have moved to an e-commerce platform and then use their physical store to add products and make returns much easier than Amazon.”

Established automakers are unlikely to move away from dealerships for another reason: State laws often require them to sell cars through franchised dealers and can make it difficult or impossible for automakers to deal directly with customers.

Tesla has lobbied state lawmakers to change the laws that govern the sale of cars, and in many places forced lawmakers to allow companies and other automakers that never had dealerships to sell cars directly to customers.

But in some states, like Texas, where Tesla is now based and has a factory, the company has struggled to convince lawmakers to change laws and regulations that favor dealerships. For example, Texas offers a $2,500 rebate for people who buy electric cars, but Tesla buyers are not eligible because these cars are not sold by franchised dealerships.

Rachel Ryan in her Tesla Model Y at her home in La Ca ada Flintridge, California on June 10, 2022. Tesla’s success in selling its cars online may lead other automakers to follow suit. (Alex Welsh/New York Times)

The National Automobile Dealers Association, which represents dealers, has long opposed direct car sales and called on lawmakers to require Tesla to use dealerships, arguing that dealerships are vital to the auto industry and the local economy. They also said Tesla’s approach is far less user-friendly for car buyers and owners.

“Franchise dealers are absolutely essential to the widespread adoption of electric vehicles in the US,” Jared Allen, a spokesman for NADA, said in an email. And as more traditional automakers enter the EV market, “effective sales to these mass-market customers require leveraging, not abandoning, the existing franchised dealer network,” he added.

“We are the face of the manufacturer in every small town in America,” Bill Fox, former association chairman, told AutoGuide.com in 2015.

Tesla was criticized not only by dealers. Some Tesla owners complain that fixing or fixing problems with their cars can be an ordeal.

The automaker operates about 160 service centers in the United States, far fewer than more established companies — Chevrolet, for example, has more than 3,000 dealerships across the country. Tesla promises to send technicians to customers’ homes for minor repairs, but larger problems should be handled by mechanics at service centers.

James Clafen of Ithaca, NY runs a YouTube channel dedicated to electric vehicles and related topics. He bought Tesla in 2019 and posted videos showing how difficult it was to solve various problems because he lives a few hours away from a Tesla service center.

In an October 2019 video, he quipped about issues with his Model X SUV that included a hole in the panels and a dent in the door seal. “I have no desire to make this video. I was afraid of it, hoping that something positive would happen,” he said. “Unfortunately, after five weeks of owning a Model X, the Tesla service experience has been very poor.”

Tesla did not respond to a request for comment.

Other owners who live far from Tesla service centers say the distance was not a problem. This may be because electric vehicles tend to require less maintenance than internal combustion engine vehicles.

Bill McGuire, editor-in-chief of Mac’s Motor City Garage, a website for car enthusiasts, said he drove 99 miles from his home in Toledo, Ohio to Clarkston, Michigan for a test drive at a Tesla store and then picked it up car at a Tesla service center in Columbus, Ohio.

“This was my first online car buying experience — it was a little unexpected and mostly enjoyable,” said McGuire. “Some people may need to hold hands a lot more.”

The only problem he had with his Model 3 was condensation in the taillights. Tesla sent a technician and the taillights were replaced in his garage.

Other young EV companies like Rivian and Lucid have even fewer showrooms and service centers than Tesla. Rivian has 19 in the US, while Lucid has just 10, with seven more scheduled to open this year. This did not dissuade tens of thousands of people from booking cars from the two companies.

Like Tesla, both automakers are offering to send technicians to customers’ homes for minor repairs, while major repairs will be done at service centers. To allay customer fears that more substantial mechanical work could be a problem, Lucid goes so far as to promise free shipping to the nearest service center for vehicles in need of a major overhaul.

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