Why Tesla may not need dealerships to win market share

MILAN -- Are dealers really crucial for selling cars? Tesla’s marketing and distribution system seems to prove otherwise.

The U.S. electric-vehicle maker has managed to wrest customers from competitors because of the strength of its brand as well as aggressive pricing, despite the absence of a dealer network -- and even as it inconveniences buyers by making them drive hours in some cases to pick up their cars.

In Italy, for example, Tesla registrations tripled in 2023 to 16,633 from 5,605 in 2022. 

Because Tesla does not rely on dealers to sell cars -- most transactions occur online -- it has to deliver them directly to buyers. With all the new customers in Italy, it moved deliveries for northern Italian customers from its store in the outskirts of Milan to Group Cat, a third-part logistics services ouside Vercelli, a small city halfway between Milan and Turin.

Vercelli is not easy to reach. It is a one-hour drive from Milan or Turin, assuming you have a second car and someone to drive it; or a one-hour train ride from either city plus a 15-minute taxi ride or Tesla shuttle from the station in Vercelli.

The extra steps did not please everyone who had already ordered their cars. 

“Tesla has its logistics problems, but we have our own, and I won’t be able to pick my car up for two weeks!” complained Marco 3, a user on Teslari.it, the most popular Tesla owners’ forum in Italian. Another member, Alexanco, already a Tesla owner, was even more angered: “Four years after [I bought my first Model S] the sales experience is much worse! Good for them the product is better than the competition, otherwise I’d move on.”

Tesla owners are a famously tight bunch, though, and another forum member living in Vercelli offered to “pick up any of you from the nearest motorway exit and bring him/her here,” asking only for “just a coffee and a chat.”

Tesla uses the same delivery process in other countries. Participants to a French Tesla forum often grumble about the delivery center in Valenton, a southeastern suburb of Paris that is hard to reach without a car.

When a friend told me he would have to pick up his new Tesla in Vercelli, I volunteered to drive him there. Once we entered the compound, on the tarmac were several hundred Teslas, with a few dozen being readied for delivery on the same day. 

A small container-style kiosk hosted a couple of tables where two Tesla employees helped buyers complete bureaucratic formalities. Other personnel worked in parallel to add license plates and clean the cars. A number of customers, though, have complained on forums about their cars being not exactly clean on delivery.

Customers receive little instructions on how the car actually works and are directed to drive their new Tesla 15 km to a nearby Supercharger to top up the battery, which is delivered with 10 to 35 percent charge. The overall process can last from half an hour to nearly two hours.

Given the recent rise in Tesla sales in Italy, most customers were receiving their first Tesla, and many of them looked like children opening a Christmas present. 

That can only bode well for Tesla, which appears poised to disrupt the traditional dealership model at the same time it is leaving legacy automakers such as Volkswagen and Stellantis far behind in the EV market.