Tesla to open five dealer outlets

The electric roadster will be coming to showrooms soon. Think of them as Apple stores, but everything inside costs $92,000 and up.
Written by Michael Kanellos, Contributor
Want to kick the tires on an electric sports car from Tesla Motors? You'll get a chance starting this fall.

The San Carlos, Calif.-based company will open up five customer service centers in conjunction with the public launch later this year of the Tesla Roadster, an all-electric sports car whose name can be uttered in the same breath with similarly classed gas-burning sports cars from Porsche and Ferrari.

Tesla Roadster

The service centers will be located in Chicago, Northern California, Southern California, New York and Florida, according to a Daryl Siry, vice president of marketing. Each of the centers will have a couple of the cars in different colors, displays on the technology used in the vehicles, technicians and, of course, cheery, helpful salespeople ready to take that cashier's check.

More will follow, Siry added, largely because the company will start producing a line of sedans in 2009. "To do 10,000 units for Whitestar (the codename for the sedan) we need to be in a lot more places," he said.

Unlike most other car manufacturers, Tesla will not sell its cars through independent dealers. Instead, it will sell them through its Web site and company-owned dealership/service centers. The thinking is that selling, understanding and servicing an electric car is a different skill and not one that most traditional dealerships possess. Chairman Elon Musk (who also founded PayPal) outlined the dealership strategy when the company unveiled the Tesla cars in Santa Monica last year.

Siry also added that the company wants to control the customer's buying experience. Most of the time, buying a car is unpleasant: dealers are paid to move the cars they have on the lot. Changing that arrangement could help Tesla-owned dealerships gain an edge in sales, he said. Additionally, selling through independent dealers might hurt the company's plans to sell direct. Large manufacturers like Ford, for example, can't sell cars directly in a state where an independent-dealer Ford franchise exists. Thus, by establishing company-owned dealers, Tesla will circumscribe where it can sell direct.

Owning its service centers, however, means hiring employees and managing real estate across the globe.

The two-seater roadster sells for $92,000 and will likely mostly be sold to a small segment of the population. In 2009, however, the company plans to come out with two four-door sedans that will sell in the $50,000 range that it will build in a plant in New Mexico.

Other companies, ranging in size from giants like Nissan to tiny Zap, also plan to do all-electric family cars.

In Norway and England, Think Nordic this fall will come out with an electric town car. It will cost around $17,000, but buyers will also have to pay a separate fee to lease the battery from the company. Think is expected to buy lithium ion batteries for its cars from Tesla.

So far, Tesla says the its roadster is selling fairly well. It has taken deposits for over 350 cars and sells another one or two a day.

Thanks in part to the success of the Toyota Prius, electric cars are being marketed as vehicles for saving the environment; how the car actually performs is an afterthought. But some proponents, like Tesla, are touting the performance characteristics for these machines. With an electric car, drivers can go from zero to 60 in a few seconds without shifting gears (because there are no gears). Maintenance is low and, rather than emit loud, belching sounds, electric cars hum.

Electric cars, however, do have an Achilles' heel: batteries. Electric cars have a range of about 110 miles (the Think) to 225 miles (the Tesla Roadster) before needing a recharge. Thus, electric cars are less practical than hybrid cars or plug-in hybrids, which have gas engines that can keep the car going when the battery can't do it alone. The recharge can take five or more hours, although some companies believe they can bring that time down. Batteries also cost quite a bit, which makes it difficult for electric car makers to achieve price parity with conventional cars.

Driving range and price were two of the primary reasons that the first wave of electric cars didn't sell well, according to car execs and some electric car proponents.

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