Tesla in Texas: two innovations interacting?

Selling innovative products

If you are selling something, then you want people to buy it, but how? The challenge is greater if your product is more innovative. But maybe other innovations can come to the rescue.

Resistance from existing distributors

Tesla_logo

For Tesla, the electric car manufacturer which is shaking up the motor industry, Texas is different. Tesla believe that existing car dealers have little incentive to sell electric cars, so they decided to sell them direct through their own sites, rather like a kind of Apple Store chain for cars.

But in Texas the car dealers don’t like that and they have laws to stop it.

Tesla are allowed to display their cars in their own showrooms (or “galleries”) in Texas, but they are not allowed to sell them. See: Tesla’s description of the situation.

Some observers think that this is a major problem, for example: Tesla’s challenge to dealerships sputters in Texas.

Buying products innovatively

But at the same time, in many other industries, stores are suffering through customers using mobile devices to compare prices while shopping. This leads to the behaviour known as “showrooming” where customers view and choose products in stores, but do not buy them there, preferring to buy them online more cheaply.

Combining the two?

In Tesla’s case, in Texas this appears to be exactly the behaviour that they would like from their customers! Who is to say that customers in a Tesla “gallery” cannot use their mobile devices to access the Internet, look at prices and delivery times, and, even, place orders? And in Tesla’s case, this is not so bad. After all, when buying a car from any manufacturer, it is not as if customers expect to take a car away with them as they leave; and Tesla’s cars can only be bought direct, so there is no price competition.

In fact, I wonder whether the laws of Texas prevent Tesla from providing their customers with access to the Internet, and connected computers … with large screens … very large screens … you know, so that more than one person can see them!

Two innovations interacting

This is an interesting interaction between the behaviours of car manufacturers, car dealers and car buyers based on the two largely unrelated innovations of electric cars and Internet access using mobile devices.

There are a variety of future scenarios in this confrontation. As electric cars (from Tesla and, now, other manufacturers) increase in number, they will eventually be sold through dealers. It will be interesting to see how this alters the situation for Tesla and its customers.

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