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Car Dealerships Out?

Can Tesla keep selling cars with no ads and shuttered showrooms?

In 2018, of the 140,000 Tesla Model 3s sold, 78% of the sales were made through the website. Tesla also appeals to a deeply unusual user: affluent technology enthusiasts, invested in the Tesla brand and comfortable with buying online.

82% of buyers last year didn’t even take a test drive. For these core devotees, the move is unlikely to affect their interest, just as Tesla’s no-advertising model hasn’t hindered its publicity.

But we say Sri Lankan context will be different upon the online presence of the target market.

Elon wired

On April 8, 2019, Bloomberg revealed that Tesla had laid off dozens of sales staff from Tesla showrooms in Chicago, Brooklyn, New York and Tampa. The news came a month after Musk wrote an internal email to Tesla employees describing how the electric car firm would shift away from brick-and-mortar stores in favor of online sales.

But are these are the actions of a cash-strapped company struggling to shore up its bottom line, or a visionary firm choosing to shun stores because the majority of its customers prefer to shop online anyway? It’s complicated.

However, the dealership business model is a costly affair as its been proven over centuries. Over 20% of the new car sold will be gone as dealership costs. Also, the dealership business model makes lots of money by providing after-sales services, where EV s require no costly maintenance.

Interesting times ahead, with no dealerships, just direct sales, made online. It will be a tough to swallow for traditional companies who maintain costly dealership structures, in both Sri Lanka and globally.

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