Tesla: Advocating for the public’s interest in Virginia

Tesla wants to meet consumer demand for its innovative electric vehicles by opening a store in the Richmond area. Tesla has never had a franchise agreement anywhere in the world. The U.S.-based company has fully complied with Virginia law by applying for permission from the Department of Motor Vehicles to open the store. Henrico County’s Board of Supervisors has approved a site near Short Pump where Tesla can operate a showroom and service center.

The Virginia Automobile Dealers Association has engaged in a campaign of misinformation to oppose the application and block Tesla from opening the store.

MYTH: Car dealers say they want to sell Tesla vehicles in Virginia, even if it means they have to sell them at a financial loss.

Fact: Independent car dealers have a history of discouraging consumers from purchasing electric vehicles, which hurts the public, as well as Tesla. Dealers’ service departments count for much of a dealer’s profit; Tesla vehicles, which have no oil, gas or traditional transmission, have far fewer service needs than combustion engine vehicles (New York Times).

MYTH: Car dealers say the car-buying experience for a Tesla is the same as it is for any other vehicle.

Fact: A Tesla vehicle is essentially a computer on wheels. Tesla’s vehicles are powered by one of the most sophisticated battery packs in the world. Customers typically spend 30 to 60 days learning about the company, its vehicles and their features; deciding what to purchase; and awaiting delivery of their custom-ordered vehicle.

MYTH: Tesla is trying to destroy the car dealer franchise system.

Fact: Tesla’s vehicles are geared toward a very small segment of the overall car-buying population, and the company has publicly stated it means no harm to the current Virginia franchise system.

MYTH: Car dealers say they are the only experts needed to serve the public interest in selling a Tesla.

Fact: Research shows consumers who purchased plug-in electric vehicles “rated dealers much lower in sales satisfaction than conventional vehicle buyers” (UC-Davis). In one study, secret shoppers found few dealers “provided accurate and specific answers about battery life and battery warranties. And many seemed not to have a good understanding of electric-car tax breaks and other incentives or of charging needs and costs” (Consumer Reports).

MYTH: Tesla took advantage of taxpayer dollars to stay in business.

Fact: Tesla was awarded a $451.8 million loan in 2010 through the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing program. The company paid back the loan in full nine years early and with an additional $25 million in interest (U.S. Department of Energy). By contrast, federal taxpayers lost $11.2 billion bailing out GM.

MYTH: Tesla gets special federal tax incentives when people buy its cars.

Fact: A customer – not the company – is eligible for a $7,500 federal tax credit when he or she purchases any electric vehicle, meaning the incentive is available across all manufacturer brands. The credit phases out for customers once a manufacturer has sold 200,000 units in the U.S. (FuelEconomy.gov).

By The Numbers

Tesla is pioneering a new sector of the automotive industry with new and innovative technology. In order to serve the public effectively, the company uses a different distribution method than traditional manufacturers.

New Car Dealerships

Franchised Dealers: 452
Tesla: 1

Employees in Virginia

Franchised Dealers: 30,161
Tesla: 59

35

The number of independent dealerships out of 85 visited by Consumer Reports’ secret shoppers, where sales people recommended buying a gas-powered car instead of electric.

15

Percent added to a car’s sticker price because of dealer-related costs.

17.4 million

Number of new, light-duty vehicles sold in 2015 by U.S. dealers.

52,000

Number of Teslas sold in 2015 worldwide.