As established automakers move toward electrification, Tesla will compete more directly with traditional luxury brands like Audi, BMW, and Mercedes-Benz.
Tesla has so far had limited competition in the luxury electric vehicle segment, but that will change in the next decade as auto companies plan to electrify a larger percentage of their offerings. As that happens, Tesla will have new challenges to face, and the viability of its unique sales model will become clearer.
Unlike most auto companies, Tesla sells its cars to consumers directly, rather than licensing its brand to independent dealerships. That model gives Tesla more control over how it presents its vehicles and interacts with customers, but it also makes it more difficult and costly to achieve the kind of scale some of its competitors have. And Tesla has fought legal battles for the right to sell its vehicles directly to consumers in some states, like Connecticut and Oklahoma, where it’s currently prohibited from doing so.
Tesla’s stores also look different than traditional car dealerships, designed with a minimalist philosophy that echoes innovative retail companies like Apple and Warby Parker. Tesla’s stores could end up influencing how other auto companies sell their cars — or remain high-profile outliers.
In April 2018, I visited a Tesla showroom and Mercedes-Benz dealership in New York City to see the differences between how a relatively new luxury brand and an established one sell their cars. My time in each revealed contrasting sales models that spoke to the fundamental differences between Tesla and some of its competitors.
Here’s what I saw.