Selling online without negotiated price is a big change. That should make the dealerships really uncomfortable in the long run… he's kind of saying "oh the dealerships could rent out Mustangs" but is that actually realistic?
Diplomacy is the art of saying “good dog” until you make it to the rock. Ford is learning what Tesla knew from the start: dealership interests aren’t aligned with EV manufacturers. There’s very little service revenue, and dealers are incentivized to add “market adjustments” to vehicles (which Ford dealers have been doing) creating a poor customer experience. Ford has existing dealerships and is going to have a heck of a time hacking around dealer franchise law compared to EV automakers who have no established dealer network. Someone on Twitter recently posted their Model S turning over 400,000km with only
$3k in maintenance costs. Imagine at scale what that does to dealership revenue when 5, 10, 15 million EVs are sold per year (which will happen in the next 5-10 years).
> "We only profit in one way: from new car sales and new car sales alone," Maron said. "We can't ... profit from services because our cars have far less parts than gas-powered cars. There's no regular service visits for engine tune-ups and oil changes. ... We don't make money off financing programs. We don't have insurance products or add-ons. A franchise dealer would look at this and scratch their heads. They would not know how to make money on this model."
> Maron says Tesla is fully committed to its mission of replacing all gas-powered cars with electric vehicles -- a mission auto dealers may not be eager to embrace.
> "We don't simply believe that electric vehicles represent a nice complement to gas-powered cars," Maron said. "We believe it's imperative they are replaced entirely by electric vehicles. ... It would be impossible for traditional dealers to convey this message adequately. This isn't a knock on them, but dealers are not fundamentally committed to the mission of EVs — we are. They make 99% of their revenue off of gas-powered cars. If you're opening a Yankees team store, are you going to ask a lifelong Red Sox fan to manage it?"
That is very impressive actually. Though your typo made me laugh out loud.
> Someone on Twitter recently posted their Model S turning over 400km with only $3k in maintenance costs.
400 kilometers and a $3k maintenance bill somewhat reflects the image of Tesla that you see a lot on the internet. Whether or not that is actually the case.
Unfortunately, manufacturers' interests are often not aligned with retail customers' interests.
For example, with Tesla, the company optimizes delivery numbers of cars sold by sacrificing quality control, and their service center model is anemic and almost an afterthought, especially when it comes to addressing the QC issues their customers experience.
For every Tesla with 400k miles on them with a few thousand dollars in maintenance costs, there are a dozen cars that are delivered to customers like this one[1] from today on r/TeslaLounge, with 17 blatant issues upon delivery that QC should have caught early on in the process. There are stories on that subreddit about customers having to wait months, without a loaner car, for service centers to fix their cars or to even get service centers on the phone about the status of their repairs and cars.
Dealerships act as an intermediary customer that can perform QC, repairs, customization, service, maintenance, reject deliveries etc that manufacturers choose to skimp out on.
Due to non-random sampling, anecdotes are not evidence when it comes to a phenomena at this scale. Even four randomly sampled entries are better than 100 posts of people complaining if the latter are more likely to appear in your feed than someone getting theirs with no issue.
You need an actually random sampling of delivered Teslas to determine how extensive QC issues are and whether the average one can go 400k km with only $3k servicing. Also, they defects reputed to vary substantially over time (e.g. one model year might have 5x the rate of two years later).
> the company optimizes delivery numbers of cars sold by sacrificing quality control
How do you know this? Did you see their internal data?
There are lots of anecdotes going around about Tesla's quality. However, with all the TeslaQ it is hard to believe that there is real correlation between anecdotes and data. Here are my anecdotes - I owned 6 Teslas over last several years. Not one of them had any QC issues. I had one service done because I hit tire debris and front break dust shield started making noises. Tesla fixed that for me quickly with no charge. As for the data - during earnings calls they mentioned that they do pay close attention to their customer experience data and they had period of time where service was lagging. But they started addressing this issue and saw improvements. The way they are growing I do believe they need to keep close eye on customer experience, but looks like they understand that themselves and use data to make sure they are on top of this. Unfortunately there's not much reliable independent data to have better understanding of this issue.
Add: The intent of my comment was to ask if parent info is based on specific data or just anecdotes. As an example, I gave my own anecdotes and mentioned that they are not reliable correlation to the data. Somehow the responses I've got are all about anecdotes, mine or others, also some personal judgement of my ability to appreciate cars or judgment of my life circumstances that required me to have these many Teslas. Can we get back to discussing the main point I'm making - do we have data to make any of these judgements?
??????? Why on earth would you need this many Teslas? Maybe if you are buying so many teslas then it makes sense why you don't need them serviced - you barely give them enough time to wear themselves out!
I don't think the poster buys a Tesla, drives it for a few months, and sends it to a junkyard. I'm pretty sure that just because the other person stops owning it, the Tesla does not stop being useful to SOMEbody.
Sorry there's just no way this is true. It doesn't even make sense. For this to be possible the loan payment would have to be less than the lease payment after depreciation. Even before depreciation this almost never happens without a huge down payment (which negates the point entirely).
Maybe it's cheaper than leasing the latest and greatest, but not everyone has an unlimited pool of money all the time, and the assumption that this type of purchasing behavior is in any way typical or representative of anything is absurd and out of touch at best, and purposefully misleading for the benefit of Tesla at worst.
Just because you don't notice issues don't mean there aren't issues. Tesla is widely regarded by "car people," both those who own them and those who don't, as having some of the worst fit and finish of any production car in the US. It's been that way since the Roadster. Here's a video review of the most expensive Tesla you can buy, by someone who rates cars professionally and rates it among the best he's ever driven, with paint flecks on the mirrors and other pretty egregious issues given the price point - https://www.youtube.com/watch?v=qen0ZlZM0ZA - and the video is less than a year old so it's unlikely given the long history of these and similar issues that they've made radical changes to their processes in the last 9 months or so.
Same in my experience, though it's not as extensive as yours.
It's surprising how often you see negative anecdotes about quality control amplified as representative of a larger trend. It often seems there is an agenda compelling many to work so hard circulating negative opinions.
I'm here to chime in on having very few QC issues on my model 3 despite having gotten it in 2018. Not sure where all the service nightmare stories come from, every time I have dealt with them they've fixed the issue.
yea i've had 2012 leaf for decade now, zero issues. i've had a tesla for over a year now, zero issues. From what i understand, if i do have an issue, i'll just have to push some buttons in the tesla app, and everything will be figured out for me.
I think a lot of the contrary voices are people scarred by ICE experiences and searching for comparable "gotcha boogeyman" to EV's to satisfy themselves with their current car situation, whatever it is.
Dealerships are rent seeking entities that exist purely due to laws that force consumers to deal with them and only them. They are not in either consumer or manufacturers interest.
If dealerships are so beloved by customers and so beneficial to them, why would they lobby so hard against customers doing business with manufacturers? They wouldn't need to if customers truly preferred them. Instead, Car salesman are despised even more than lawyers! Everything a dealer can do, a mechanic can do for cheaper. It's a ripoff and the law forces it to be a ripoff
Because customers don't know what value dealers provide. They think direct would be better because they only see the negatives of the current situation and not the positives.
Which is really true for pretty much everyone in this argument on both sides.
I whole heartedly agreed on this point but have grown to see another side of the issue. I don’t want to over glamorize it but in the north east car dealers have done exceptionally well, and often were the wealthiest people in the towns they serviced. A dealership in Pennsylvania recounted to me how the founder of the dealership more or less built the town square and at one pointed owned more than half the town. Now this may seem negative but the founder is long dead and the dealership now employees a several dozen locals all making very strong salaries, all with minimal educational requirements (just a bachelors cause it’s in vogue).
Overall I guess the point I want to make is even thought it is rent seeking (many industries are) this one seems to provide for so many communities all across America. I find it hard to believe that ford will pass up the savings to the consumers. We all know that profits will be returned to shareholders.
This only convinces me dealerships should be gotten rid of. That's a lot of money sucked out of the car buying process. I'd rather pay less to a manufacturer than pay for a dealer to own a town in PA.
wow 17 borderline cosmetic opinions on a fully functional vehicle.
how dare they sell that vehicle.
Not to mention that when they bought it, Tesla gave the buyer the opportunity to reject it and have another specimen manufactured at no cost. they decided to keep it because it appears their vanity is literally only skin deep.
Those are issues that would be caught by any competent quality control process, and that particular example is just from the top of the r/TeslaLounge page from a few hours ago. At any point you can log into spaces for Tesla customers and find dozens of stories of just like that one, or worse, when it comes to quality control or service center service[1][2][3][4][5][6][7][8][9][10][11].
And you make a great point about the importance of rejecting deliveries, which is exactly what a dealership would have done upon inspection instead of forcing layman retail customers to do it free and to their detriment. We even have Tesla customers asking why other customers choose to take deliveries at the end of the fiscal quarter[12], because Tesla has a reputation of pushing out as many vehicles as they can in order to boost delivery numbers, even if that means delivering cars in poor condition. When quality and service is consistently that bad, you can't blame the customer for accepting a delivery of the car they spent tens to hundreds of thousands of dollars on.
Also, your comment goes against HN guidelines[13]:
> Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.
> Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.
Is there really that much service revenue for modern ICE cars that isn't stuff BEV cars need too? Modern powertrains are pretty bulletproof, 10k oil changes and 30k air filters will get you to 100k miles. "Tune ups" aren't really a thing anymore either, especially in the first 100k.
Brakes? Maybe you're cutting out one or two pad slaps in that 100k.
Oil changes? Yeah, you've eliminated those, the lowest margin service dealers do.
Suspension components, air conditioning, etc? No difference, and that stuff shouldn't need to be touched in the first 100k anyway.
Tires? BEVs eat tires.
Still need wiper blades, cabin filters, etc. But those aren't big items either way.
I guess I just don't see where all this recurring service revenue comes from. Cars just don't break until they're 10-15 years old. Maybe some cars are really that unreliable still?
I own a fairly reliable ICE car from 2009 with ~100k miles, and I've had to get servicing for belts, water pump, brake pads, sway bars, oil changes, etc. I estimate I spent about $5k over the life the car on servicing.
That's excluding tires, wiper blades and air filter changes.
Owners of less reliable ICE cars probably spend more.
I've been using the vacation reasoning for a long time. I've just about convinced myself to get an EV and to rent an ICE for vacations. It keeps the mileage off my odometer that way, too.
> It doesn't sound that reliable if you've had to replace that much already with just 100k miles.
My observation is that it depends on the brand of the car. If it's a Toyota or Honda, or other well to do brand that people with credit scores reminiscent of FDA minimum cooking temperatures cannot afford it's the owner's fault that the timing belt snapped at exactly six miles more than the recommended change interval, they should have got it done proactively.
If it's a Nissan, GM or <clutches pearls> Chrysler then it's obviously the car's fault that it needs a fair number of suspension parts after spending 120k being fully sent over rural gravel roads with 300lb of tools in the trunk.
This pattern of double standards that absolves "things that should be nice" from blame when they fail to meet those expectations and blames more modest products even when their failures are reasonable can be seen across many classes of products, not just cars.
I think it’s worth noting that mileage doesn’t necessarily correspond to maintenance expenses. It’s only a rough rule of thumb.
People like to talk about mileage because it’s an easy-to-measure stand in for the age of a car based on its usage. But over time they forget that like in humans, there’s a lot of variation at the same age.
There’s other factors like road conditions, cost of parts, cost of labor in different parts of the country, unexpected events like fender benders, etc. that the mileage number doesn’t capture.
The same 100k mile car driven in a leafy suburb where not much goes on is going to be different from a car with the same mileage driven under harsher conditions.
> The same 100k mile car driven in a leafy suburb where not much goes on is going to be different from a car with the same mileage driven under harsher conditions.
Scotty Killer on YouTube said something slightly different. He said highway miles are almost one tenth of city miles. Or in other words, stop and go traffic is ten times as bad as constant driving without traffic. At least for the engine and the transmission I guess.
With a 300 mile range, I'd need at least 2 stops that are 4-6 hours, unless if I find a super rapid charger. That turns a sucky 12 hour day with 1-2 hours of stops into a 16 hour trip with probably 1-2 hours of additional stops still.
my car tells me to take it for service minimum once a year, for maintenance that's going to cost $500-$800 depending on the alternating schedule. 2-3 hours in the bay max. It's mostly visual, filters and fluids... material costs are small.
If there are problems, it'll be $170/hour plus parts...
A lot of people just do what the computer says and take it to the dealer. The workshop is always full... it has about 20 bays.
That's a lot of income for the dealership. If you drive a lot it'll be more than one a year...
I do as much maintenance as I can myself. If it's something I cannot manage (last year I had a split hose on the transmission radiator line) I take it to an independent shop.
They don't make their service revenue primarily from brand new cars, for the obvious reasons you've stated. It's when the timing chains, water pumps, head gaskets, piston rings, clutches, etc break, or the preventative maintenance to keep them from breaking (Audi timing chains, 10x $$$ if you don't replace them on schedule because of the interference engine), including the regular fluid flushes, battery replacements, air filters, etc. 80% margins on the little things add up :)
Using my experience with a ICE Chevrolet from 20k-120k miles basically nothing big happened before 100k, especially nothing that wouldn't happen in an EV. One set of tires replaced, front brakes, and a couple tire alignments. I did transmission fluid and spark plugs at 100k, and had a catalytic converter replaced and a coolant leak after 100k. None of that went to a dealership though.
I've bought 3 cars since 2008, I've spent $0 at the dealer on maintenance, they're all ICE... you shouldn't be going to the dealer unless it's warranty work. [well partly true, had a covered recall].
That said I had a dealer cuss me out for bringing them a quote from a mechanic for the same clutch replacement. "I can't f**ing cover my dealership like that" as if it was my problem. Same dealer who charged me $2k for a repair when they had the recall letter in their inbox.
Junkyards are an option for indy mechanics, unless insurance is being billed. I had a choice between maybe 3 months for a new part or next-day for a junkyard pull. Chose the junkyard pull, but I trust my mechanic to find control arms that aren't bent.
my car, my kids car, my wife's car, my motorcycle + bought near a bus route to work + pandemic. Son's car will go away sometime but it's around if I need a replacement car.
$3k in maintenance costs for 400,000km? I call bull shit. In Tesla tire sizes, you're looking at $1000 for a cheap ass set of tires. Certainly not gonna last 100,000 miles either.
Electric personal mobility devices are now more popular than mechanical bycicles and motorcycles.
Electric devices require significantly more servicing than mechanical ones. On the flip side, people seem content to treat electric devices like they're disposable and just buy a new one every year.
I don't think this dynamic won't hold for larger-sized EV's.
> dealership interests aren’t aligned with EV manufacturers. There’s very little service revenue
Citation needed. Both my EVs and ICEs needed similar amount of service. Breakage of drive trains are super rare nowadays (expect for over engineered performance stuff and just broken designs), same as breakages of batteries (cough, Bolt, cough).
All stuff my cars needed a service for in last 20 years were comfort features, gizmos, internal materials, electrical goblins, etc. Both ICEs and EVs.
Oil change is maintenance not service. But ok, let’s include that. It’s done at the same time as rotating tires, so it only adds few extra bucks of revenue for dealers (yes, you can rotate yourself/at other places, same as you can do oil change).
Transmission fluid for modern cars lasts about 100k miles. So you’ll do it maybe once, unlikely at your dealer as you won’t pay dealer tax for an old beater.
Exactly the same for timing belt and spark plugs.
Drive trains aren’t money makers for dealers for a long time.
Timing belt is the only expensive thing on that list (because of labor) and very few American market vehicles use timing belts anymore. The market has gone almost entirely to timing chains these days.
That's how it already works in Europe. Prices are set by the manufacturer and most cars are built to order. Dealerships rarely have their own branding, they basically work as franchises integrated with the manufacturer's network.
Their role is to collect orders, provide test rides and service the cars.
This might be right, but I'm not so sure. Public perception is that dealerships are adverse to customers because of information asymmetry + price haggling, and that online sales will hurt them -- but in many conversations with multiple different car industry insiders, they all say that dealers make almost no money car sales, and instead make almost all of it on financing, service and parts. That you can almost model the car dealing parts of a dealership as lead gen for the service desk / finance desk.
I don't know if that's right (anybody with more info care to comment?), but it's at least enough to give me pause on the "dealers will hate nonnegotiable pricing" claim.
You are missing used car sales. Most people who buy a new car trade in their old car and the dealer makes a killing on that. (when the car is leased that almost always amounts to a trade in from the dealer's perspective, though once in a while the lease company will sell the car in some way other than the dealer).
You are correct that there is no real money in new car sales anymore.
Commissions are 30-40% of an auto dealer's costs as a % of gross profit. If salespeople don't have to negotiate price, you can cut a lot of that cost and focus on higher margin (e.g., financing) and subscription products (e.g., parts & services) that deepen customer loyalty. The big groups will be better at making these investments (and the investments needed to sell/maintain EVs) and will continue to consolidate what remains a highly fragmented industry (i.e., the two largest dealer groups, AN and LAD were each only 1.75% of new car sales in 2021).
I wouldn't cry for nor count the dealers out just yet.
I mean, I'm all for the dealerships dying. They do nothing but waste peoples' time. We don't actually need them and the scripts that the salespeople and buyers effectively recite to each other like a Shakespeare play.
https://twitter.com/pluginalberta/status/1531406942119137281
> "We only profit in one way: from new car sales and new car sales alone," Maron said. "We can't ... profit from services because our cars have far less parts than gas-powered cars. There's no regular service visits for engine tune-ups and oil changes. ... We don't make money off financing programs. We don't have insurance products or add-ons. A franchise dealer would look at this and scratch their heads. They would not know how to make money on this model."
> Maron says Tesla is fully committed to its mission of replacing all gas-powered cars with electric vehicles -- a mission auto dealers may not be eager to embrace.
> "We don't simply believe that electric vehicles represent a nice complement to gas-powered cars," Maron said. "We believe it's imperative they are replaced entirely by electric vehicles. ... It would be impossible for traditional dealers to convey this message adequately. This isn't a knock on them, but dealers are not fundamentally committed to the mission of EVs — we are. They make 99% of their revenue off of gas-powered cars. If you're opening a Yankees team store, are you going to ask a lifelong Red Sox fan to manage it?"
https://www.buzzfeednews.com/article/johanabhuiyan/tesla-sla... (2016: 7 Reasons Why Tesla Doesn't Want To Sell Through Dealerships)