Tesla has revolutionised the car industry by introducing their electric cars and altering and disrupting the traditional car-selling methods, a.k.a. the dealership model.
One question that often comes up is whether or not Tesla has dealerships.
The short answer: No, Tesla does not have dealerships.
Unlike most car manufacturers who sell their vehicles through franchised dealers and third-party retailers, Tesla employs a direct sales model via its website and mobile app.
Rather than relying on middlemen (dealers/franchisees) to market and sell their cars, Tesla sells directly to customers via a network of Tesla-owned showrooms (galleries), stores and online ordering systems to handle new vehicle orders.
In this post, we'll look closer at Tesla's model and discover why selling directly is a big deal and breaks the usual norm. 😊
- Tesla has no dealerships or a franchise model for vehicle sales
- The company sells cars directly to customers through their website and app
- Many conventional automakers cannot do this due to laws in place to protect the dealership model
- Even Tesla is not allowed or has limitations to sell directly in certain US states
Let's look at all of this in detail.
Does Tesla Have Dealerships?
No, Tesla does not have any dealerships. Tesla operates differently from legacy automakers, opting for direct car sales through its website and app, completely bypassing the need for dealers/franchises.
You buy a car directly from the maker without middlemen who usually add a markup to the price.
Instead of dealerships, Tesla operates showrooms in states that allow direct-to-consumer sales or make exemptions for the company.
You can test-drive their electric cars, ask any questions you might have, and even place your order. This customer-friendly approach allows for a seamless buying experience that differs from the typical car dealership experience.
It eliminates the need for customers to negotiate prices or haggle with salespeople, simplifying the car buying experience for customers.
Although this decision puts them at odds with certain state regulations and traditional car dealerships, it also indicates a larger shift in retail disruption that questions established distribution models.
Additionally, Tesla offers a range of used cars through their pre-owned programme. You can browse the available inventory on their website and, like buying a new car online, proceed with your purchase completely online. This process is quick, hassle-free and adheres to the company's overarching direct sales model.
While some might still refer to Tesla's stores as dealerships due to our conditioning from the conventional car industry, this is not an accurate description – they are direct Tesla stores.
Does Tesla Have Franchises?
No, Tesla doesn't have a franchisee model.
As we've established by now, Tesla chooses not to have any third party between the auto manufacturer and the customer.
Even though, with the franchise model, the maker has more control than a dealership, Tesla is committed to a 100% direct sales model operating through their stores, galleries and service centres.
All Tesla vehicle orders are placed using the Tesla website.
Now, you might ask…
Why Doesn’t Tesla Have Dealerships?
Tesla does not have dealerships because the company believes that to effectively communicate the advantages of their cars over “traditional” vehicles with internal combustion engines, they sell direct rather than relying on conventional third-party dealer franchises.
There are many benefits of not having dealers between the company and customers.
Not having dealerships in the middle is a win-win for both Tesla and its customers.
The sales model is more efficient and cost-effective for customers.
By eliminating the middleman (dealers/franchises), Tesla can offer vehicles at a lower cost.
Without needing to pay dealership commissions, Tesla saves money on sales processes and passes those savings onto customers through lower car prices.
Dealers add a markup to the price they get from the car manufacturer, and this can be rather significant.
In addition, dealers usually pressure customers to purchase additional products or services they do not need or may not even want.
Tesla’s direct-to-consumer sales process bypasses these markups and associated pressure tactics.
However, in the United States, Tesla has faced legal disputes over directly selling vehicles in numerous states, such as Virginia, Texas, and New Jersey, due to local laws safeguarding the dealership model.
These dealership laws prohibit or limit direct manufacturer auto sales, requiring new cars to be sold only by independent auto dealers.
To protect its business model, Tesla has entered into a series of disputes with various state laws that require manufacturers to sell through franchised dealerships (source).
But why is selling cars directly such a big deal in the US?
Why is Direct Selling a Problem for Car Makers?
Laws against direct sales in the United States have a historical context dating back to the 1930s.
During this time, automobile manufacturers began forming partnerships with independent dealers to handle retail sales and vehicle servicing.
Automobile franchise/dealership laws vary from state to state in the United States.
These laws have endured into the 21st century and have even expanded to include online sales within the same state.
Many of these state laws were initially implemented to prevent manufacturers from engaging in unscrupulous business practices by protecting independent dealerships from the risk of being undercut once the brand was established and the dealers had done all the hard work.
The primary objective of these laws is to safeguard the car dealership model from manufacturers opening their competing outlets, which could be perceived as exploiting the manufacturer-franchise relationship.
As such, certain states view Tesla's direct sales model as potentially disruptive or even illegal.
Certain states, such as Arizona and California, embrace Tesla's direct sales model, recognizing its advantages for consumers.
Their shared perspective is that current dealership franchise laws are a form of protectionism, restricting competition and ultimately harming consumers.
They believe bypassing franchise dealerships enables customers to enjoy cost savings on vehicles and services by eliminating dealership markups and promoting improved business practices.
Nevertheless, there are numerous US states where Tesla is either prohibited from selling cars directly or faces significant restrictions.
Despite these obstacles, Tesla continues to push for their direct sales model and has not granted any franchises anywhere in the world thus far.
Which States Have Banned Direct Sales of Tesla Vehicles?
Here is a list of states in the US that have banned or restricted direct sales of Tesla vehicles:
- Alabama (Banned)
- Arkansas (Banned)
- Colorado (Limited)
- Connecticut (Banned)
- Delaware (Limited)
- Georgia (Limited)
- Idaho (Banned)
- Indiana (Limited)
- Iowa (Banned)
- Kansas (Banned)
- Kentucky (Banned)
- Louisiana (Banned)
- Maine (Banned)
- Michigan (Banned)
- Minnesota (Limited)
- Mississippi (Banned)
- Missouri (Limited)
- Nebraska (Banned)
- New Jersey (Limited)
- New Mexico (Banned)
- New York (Limited)
- North Carolina (Limited)
- North Dakota | Banned)
- Ohio (Limited)
- Oklahoma (Banned)
- Pennsylvania (Limited)
- Rhode Island (Banned)
- South Carolina (Limited)
- South Dakota (Banned)
- Texas (Banned)
- Vermont (Limited)
- Virginia (Limited)
- West Virginia (Banned)
- Wisconsin (Limited)
- Wyoming (Banned)
How Has Tesla Been Able to Sell in States That Prohibit Direct Sales?
In states where direct selling of cars is prohibited, Tesla has had to be creative to navigate these restrictive dealership laws. The company has adopted various strategies to sell its electric vehicles.
In some cases, Tesla operates galleries or information centres where car buyers can view and learn about Tesla models. However, these locations do not sell cars.
Employees aren't allowed to discuss prices, offer test drives, or make sales.
Instead, they direct customers to make their purchases online or at a Tesla store in a state where direct selling is permitted.
You can go online and configure your preferred model online, select the features you want, and order a new EV.
Make sure you use a referral code when you place your order to get discounts or freebies.
As you'd notice, prices are transparent and easy to understand, with no haggling or hidden fees.
Additionally, Tesla has been contesting legal battles in several states to change the laws prohibiting direct sales. They argue that these laws are outdated and create an unnecessary barrier to selling their EVs.
In some states, Tesla has won these legal battles and gained the right to sell directly, though the number of stores they can operate is often limited.
In states that haven't yet succeeded in altering the legislation, Tesla continues to challenge these restrictions and is actively lobbying for changes that will allow them to sell directly to consumers.
How Many Tesla Stores Are There in Europe?
As of Dec 2023, Tesla has 218 stores in 24 European countries.
Germany boasts the highest number of Tesla stores in Europe, with an impressive count of 37. Following closely behind is the UK, holding second place with 36 stores. France and Norway are the joint third contenders, proudly hosting 21 Tesla stores each.
Here is a list of the European countries with the number of stores/galleries they host:
|Country in Europe||Number of Tesla Stores|
How Many Tesla Stores Are There in the UK?
As of Dec 2023, there are 36 Tesla stores spread across the UK. England has the highest number, with 29 stores accounting for about 80% of all UK Tesla locations.
How Many Tesla Stores Are There in the US?
As of Dec 2023, there are 237 Tesla stores in the United States.
California leads the pack with 61 stores, constituting about 26% of all Tesla showrooms in the US.
Tesla stores and showrooms are spread across 37 US states and territories, with over 195 cities hosting at least one.
Remember that as you explore Tesla stores and galleries, you can always use their website's interactive Find Us map to locate Tesla charging stations, service centres, and stores near you.
Summary: Does Tesla Have Dealerships?
Tesla does not have car dealerships in the conventional sense. They have adopted a direct sales model, where customers purchase vehicles through their website, app, or Tesla stores.
Tesla has disrupted the traditional dealership model by employing a direct sales approach focusing on online sales and services experience. Their strategy has made buying new and used electric cars more transparent, straightforward, and enjoyable for you as a customer.
Tesla's unique approach has shifted the industry's perspective on car dealers and altered how vehicles are sold.
Frequently Asked Questions
Are there any Tesla dealerships in the US?
As mentioned earlier, Tesla doesn't have traditional dealerships. Instead, they have 237 showrooms and company-owned stores across the US where customers can view and test drive their vehicles before purchasing online.
How does Tesla bypass dealership laws?
Tesla gets around dealership laws by not having an inventory of vehicles to sell to franchise dealerships. They manufacture and sell their electric vehicles directly, ensuring their cars aren't required to be sold at traditional dealerships mixed with fossil fuel-powered vehicles.
Why is Tesla prohibited in certain states?
Tesla is prohibited in certain states due to strict dealership laws that enforce franchise dealership networks. These laws prevent automakers from selling their vehicles directly to consumers, which conflicts with Tesla's direct-sales model.
How many dealerships does Tesla have in the UK?
Again, Tesla doesn't have traditional dealerships. In the UK, Tesla operates 36 showrooms and company-owned stores where you can view and test-drive vehicles. The buying process is completed online through Tesla's website.
Where do Tesla sell their cars?
Tesla sells their cars directly to customers through their online platform or stores.
Does Tesla have dealerships near me?
To find a Tesla showroom or store near you, use Tesla's online locator tool. Simply enter your location, and the tool will provide directions to the nearest Tesla facility.