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Published on March 10th, 2019 | by Maarten Vinkhuyzen


Tesla’s European Sales Problem — Shops Or No Shops

March 10th, 2019 by  

Just two weeks after I wrote that Tesla needed to open a lot of shops in Europe, Tesla announced that it was closing many of its shops. How could I be so wrong? What did I miss? While torturing my feet on the floor of the Geneva Motor Show, I thought more about this problem.

When I remembered Elon’s lesson — don’t think by analogy, go back to first principals — I started to get a grip on it. Look at the basic principles that caused this policy change:

1. In many states, Tesla is not allowed to open shops, galleries, and service centers — it is not allowed to sell directly to the public. (Not a European problem.)

2. Customers generally expect to drive away in the car they just bought at the dealership. (Not a European problem.)

3. Many customers bought the Model 3 sight unseen. Those are fanboys, early movers, people who got a test drive from an acquaintance, or people who were quickly persuaded by word of mouth. (That reservoir might get empty in the USA, and there are not that many of those people in Europe.)

4. Visiting a car dealer is often worse than a root canal treatment at the dentist. (Not so in Europe.)

The arguments why this might be a smart move in the USA don’t hold water in Europe.

Moving all sales online makes selling in all 50 states possible. Even in the USA, though, those sales need brick-and-mortar support on the ground. Now we have defined a whole new problem. How do you support online sales with a brick-and-mortar infrastructure?

My solution would be to create multi-purpose locations in high-foot-traffic areas. Combine a gallery exposition celebrating the brilliance of Franz and Elon design with a coffee shop/internet café (a Tesla driver “Stammtisch” in a corner), and offer a car rental for shoppers who have too much to carry home (or another convenient excuse) so they can rent a Tesla by the hour or day. Last but not least, include a merchandise and energy/solar advisory and store.

In the exposition, we could see the Tesla skateboard and falcon-wing doors, a few half cars with open or see-through parts, and of course a lot of Franz and Elon drawings on the wall. In the café area, the guests sit on car seats and benches. Stammtisch visitors have coffee and are expected to answer the questions of curious people walking in. The first few hundred spent on renting a Tesla can be deducted when ordering a car. Any explanations about Tesla cars is for the rental, not for sales, because sales is an online business. Perhaps get a Starbucks franchise for the coffee counter.

This would solve most if not all of the problems of the USA sales situation.

The European sales have always been built-to-order sales. European cars have so many options that the help of a knowledgeable salesperson is often appreciated. In Europe, a test drive is not 25 minutes with a Tesla salesperson beside you. An hour or half a day is more usual.

Once upon a time, when my dealer called me that he got the MPV I was interested in at the end of the week, and asked me to pick it up for a test drive, I had to decline because I was visiting family that weekend. He thought it splendid — that was why I wanted an MPV, to make road trips with the kids. If I picked it up on Friday, I could bring it back on Monday. That is a test drive. (I ordered the car, got it 4 months later, and drove it for nearly 20 years.)

In Europe, we have about 40 countries with many different cultures and traditions. To some extent, every successful retail organization models its sales process on local customs. That goes for McDonald’s as well as IKEA. It is often similar, but not the same.

To be successful in Europe, Tesla has to do the same. 
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About the Author

Grumpy old man. The best thing I did with my life was raising two kids. Only finished primary education, but when you don’t go to school, you have lots of time to read. I switched from accounting to software development and ended my career as system integrator and architect. My 2007 boss got two electric Lotus Elise cars to show policymakers the future direction of energy and transportation. And I have been looking to replace my diesel cars with electric vehicles ever since. And putting my money where my mouth is, I have bought Tesla shares. Intend to keep them until I can trade them for a Tesla car.

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