Should Tesla be permitted to sell cars direct to consumer ?

An article in the Wall Street Journal (June 18, 2013) describes the electric car company Tesla’s attempt to sell direct to consumer from its own stores. The company can do so in states such as New York, New jersey, Massachusetts, California and Florida but has been blocked by North Carolina from even owning stores. Tesla claims that since it does not have any franchised dealers, they would face no harm due to its sell direct pricing. But existing dealers, aiming to protect their market access, worry about existing auto manufacturers creating new companies to leverage ecommerce for cars. The origin of the dealer laws is to prevent manufacturers from competing with dealers – a channel conflict problem. Should Tesla, which claims it will be a far more vigorous advocate for electric cars than existing dealers, be permitted to sell direct in the absence of any existing dealers ? If Tesla is permitted to sell direct, and existing auto makers are not offered that option, would the resulting supply chains result in an unfair competitive advantage for Tesla ? Should exceptions be made for emerging technologies with niche markets, such as Tesla, with small sales volumes ?

About aviyer2010

Professor
This entry was posted in Operations Management, Service Operations, Supply Chain Issues and tagged , , , , , , , , . Bookmark the permalink.

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