Tesla and The Electric Luxury Automobile

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By Rebekah Williams

Tesla’s new Model S is experiencing its share of good sales, and widespread controversy. 

A decade after the movement to popularize the affordable electric car market, a company named Tesla Motors released their flagship model, the Model S, making international headlines.

The Tesla Model S was named Motor Trend’s Car of the Year 2013. In overall sales, it outsold the Mercedes S-class, the BMW 7 Series and the Audi A8 last quarter. In California, it’s most popular state, Tesla outsold 10 other car companies in the first half of 2013.

In fact, they are selling so well that Tesla Motors has completely repaid their federal loan, granted to them by the Department of Energy in 2010 as part of the Advanced Technology Vehicle Manufacturing program. Tesla is the only U.S. car company to fully repay their government loans.

A luxury line car, the Model S  is earning points for more than just style. In an independent study by the National Highway Traffic and Safety Administration, the Tesla Model S received the best safety rating of any car, in any category, ever.

Despite all of these facts, not all of the hype surrounding Tesla Model S has been positive. Many argue that, because electric vehicles only constitute 0.5 percent of the total U.S. new vehicle market, this one car will not make enough of a difference to make large environmental waves. However, the rapid increase in public charging stations could increase interest and demand in cars much like the Model S.

The current MSRP price tag of $69,900 does still make this car unaffordable to much of America. This is a significant decrease in price from previous electric cars though, suggesting that the future of green cars will start to be within reach for the middle-class American consumer.

The biggest controversy has arisen from the way in which Tesla has decided to market their Model S. Using only showrooms in multiple states, Tesla is selling the car online. The novelty of the situation is that they are bypassing the dealerships and targeting the customers directly.

This has received the biggest attention in North Carolina, where a bill has been proposed with the intention of eliminating “unfair competition.” The entire dispute comes down to whether or not selling directly to the customers, avoiding the third party middle man of a dealership, creates “unfair competition” within the market or if Tesla just had a great idea and, thus, profited accordingly.

While this bill doesn’t explicitly call attention to Tesla, Tesla would be the only company affected.

The bill has been backed by the North Carolina Car Dealer Association, which has suffered from the recent success of the Model S. Interestingly enough, they recently gave $8,000 to the bill’s sponsor, state Senator Tom Apondaca (R-N.C.). Similar but unsuccessful attempts have been made in Minnesota, Massachusetts and New York.

Environmental strides have been made in the manufacturing and production of this highly successful electric car. This may all be set back due to the manner in which the car is advertised and sold. What needs to be resolved is whether this business ploy simply does not play by the rules or if overzealous car dealership companies need to learn from Tesla and change their business strategies.

For more information on Tesla or the Model S, visit Teslamotors.com.

 

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