Tesla’s Real Disruption: Upending the Sale Process

Last week, Tesla announced it will offer a version of its Model 3 sedan for $35,000, a price the company believes will make it a mass market car.  The announcement also included the news that Tesla was switching to online sales only and will close numerous stores and eliminate several sales and marketing positions.  Shifting to an online-only sales model will allow the company to lower prices on all cars by 6% on average.  https://www.tesla.com/blog/35000-tesla-model-3-available-now

While much attention is given to the advances Tesla has made in its products, this change in its sales process might have a more lasting impact on the automotive industry and the economy in general than any of its technological advances.  Most states legally mandate automobile manufacturers use dealers to sell cars.  Tesla faced numerous legal challenges by states when it started selling cars through stores it owned; it has no dealer network.  If the elimination of stores and sales staffs gives Tesla a cost advantage, expect automobile makers and dealers to react.  Don’t be surprised if the manufacturers lobby to change the dealer network structure.

With information readily available on virtually all products, expect more companies and industries to follow Tesla’s lead.  If all you are is a glorified order taker, your job is in jeopardy.  Provide value or find something else to do.  There will always be a role for companies and people that add value.

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